Deceptive advertising, or false advertising, is any advertising that is false, misleading, or has the effect of deceiving customers.
An ad can be deceptive in many aspects, including:
- Price of a product
- Quantity of a product
- The quality or standard of the item
- Times, dates, and locations that the product is available
- Information regarding warranties
- False facts regarding deals or sales
- Confusion over interest rates or other factors
Under state and federal laws, advertising may be deemed deceptive even if the ad’s creator didn’t intend it to be so. A deceptive advertising claim can be raised even if the ad contains a mistake.
What Are the Federal Protections Against False Advertising?
The Federal Trade Commission (FTC) is the primary federal government agency responsible for overseeing and enforcing false advertising regulations. However, given this task’s enormous undertaking, the FTC relies on consumers and competitors alike to report unlawful and deceptive advertising. The FTC will then investigate the complaint, and if it discovers that an ad does violate the law, it can take several actions.
First, the FTC will notify and attempt to get the business to correct its errors on its own. If the business ignores this request, the FTC can issue a cease-and-desist order and file a lawsuit on behalf of injured consumers. During the case, the FTC may ask the court to grant an injunction against the business to have them refrain from continuing to employ false advertising practices.
The FTC can also issue fines and may have the business or their third-party advertiser release new ads that provide correct facts and information and may even force the business to admit that earlier ads contained false statements. The law that authorizes the FTC to carry out such actions is known as the “Federal Trade Commission Act (“FTCA”)”; specifically, Section 5 of the Act.
Another federal law that protects against false advertising practices is the “Consumer Financial Protection Act (“CFPA”).” The CFPA was responsible for creating the Consumer Financial Protection Bureau (“CFPB”), which is the agency that enforces the CFPA. The CFPA authorizes the CFPB to take legal action against financial organizations (e.g., banks, credit card companies, etc.) for unfair, abusive, or deceptive practices on behalf of consumers.
One other major law that protects consumers against false advertising and deceptive practices is the “Federal Food, Drug, and Cosmetic Act (“FFDCA”),” which is enforced by the U.S. Food and Drug Administration (“FDA”). The FFDCA dictates the type of information that needs to be disclosed in drug advertisements and food labels.
Are There Any Legal Penalties for Deceptive Advertising?
Some penalties and consequences for deceptive advertising include:
- Legal damages for losses caused to a consumer
- Refund or exchange of a product
- Public recall of a product (especially in cases where there is a defect with the product)
- An injunction to have the ad removed or replaced
- Civil fines
These types of claims are handled and investigated by the FTC in many cases. Special laws exist depending on the type of product or service being rendered. For instance, particular laws govern advertising for professionals such as doctors and lawyers.
What Is the Federal Trade Commission?
The Federal Trade Commission Act established the Federal Trade Commission (FTC) in 1914. Its purpose is to protect consumers and prevent certain business practices that take advantage of consumers and squeeze other businesses out.
An example would be the FTC regulating companies from forming monopolies or dominating the market. This is also known as antitrust regulation. The FTC protects both consumers and businesses.
The following is a partial list of activities the FTC undertakes:
- Protecting consumers from false advertising and other forms of fraud;
- Enforcing a variety of laws related to consumer credit;
- Regulating business marketing and warranty practices; and
- Enforcing laws and trade regulation rules and developing new rules to protect the marketplace.
The FTC’s main goal is to ensure that the markets are vigorous, efficient, and free of restrictions. Thus, the FTC tries to enforce consumer protection laws that prevent fraud, deception, and unfair business practices.
What Does the Bureau of Consumer Protection Do?
This Bureau of the FTC is responsible for enforcing rules created by the FTC and laws enacted by Congress about consumer protections.
Its actions include:
- Collecting complaints and conducting investigations;
- Suing companies and people that break the law;
- Making rules to maintain a fair marketplace; and
- Educating consumers and businesses about their rights and responsibilities.
The Bureau has eight regional offices in Los Angeles, New York, San Francisco, Seattle, Chicago, Cleveland, Atlanta, and Dallas. It also has eight divisions.
What Are the Responsibilities of the Bureau’s Divisions?
The FTC has a wide range of responsibilities, but within the Bureau, they have created separate divisions that oversee the following concerns:
- Division of Privacy and Identity Protection: handles identity theft, consumer privacy, and credit reporting issues.
- Division of Advertising Practices: enforces federal truth-in-advertising laws.
- Division of Consumer and Business Education: produces educational materials in various formats to help consumers and businesses stay educated on their rights and responsibilities.
- Division of Enforcement: litigates and coordinates with law enforcement.
- Division of Marketing Practices: enforces consumer protection laws by filing actions on behalf of the FTC to stop scams, prevent scam artists from repeating their fraudulent schemes, freeze assets, and obtain compensation for victims.
- Division of Consumer Response and Operations: takes data and interprets it to determine whether the FTC’s efforts at consumer protection are successful.
- Division of Financial Practices: develops policy and enforces laws related to financial and lending practices affecting consumers.
- Division of Litigation Technology and Analysis: working with lawyers and determining the efficacy of technology used in litigation.
What If I Need to File a Claim?
If you need to file a claim for false advertising or deceptive trade practices, you should keep all documents related to the claim. If possible, this may include receipts, purchase orders, and a copy of the ad in question. You should also make a written account of how the advertisement affected your judgment and include an estimation of the losses you received. These can help serve as evidence in an upcoming trial and may be useful if an attorney needs to review your case.
What Are “Deceptive Trade Practices”?
Whenever a business or an individual engages in an activity that is likely to mislead the public may be considered a “deceptive trade practice.” Deceptive trade practices are prohibited due to the negative effects on consumers and the general public.
Federal and state laws prohibit the use of deceptive trade practices. The Uniform Deceptive Trade Practices Act (UDTPA) is an example of federal legislation regulating deceptive trade practices. All states have adopted some form of the Act in their statutes. The Federal Trade Commission Act also governs deceptive trade practices.
Deceptive trade practice laws cover a wide range of business aspects, including trade & commerce, consumer transactions, and goods & services.
What Are Some Examples of Deceptive Trade Practices?
Deceptive trade practices can take a variety of forms. The basic idea behind deceptive trade practice is that the activity results in misleading or misinforming the recipient of goods or services. The most common examples of deceptive trade practices are false advertising and tampering with odometers or other measuring devices.
Some other examples of activities that would be considered deceptive trade practices may include:
- Passing off goods or services as those of another
- Causing a likelihood of misunderstanding or confusion regarding the source, certification, or approval of goods or services.
- Using deceptive designations or representations of the geographic origin of goods/services
- Representing that the goods or services have ingredients, characteristics, uses, qualities, or benefits that they do not have
- Claiming that goods are new or original if used, second-hand, altered, or deteriorated.
- Representing that certain goods or services are of a certain quality, grade, standard, model, or style when they are of another
- Misrepresenting the goods, services, or business of another entity through the use of misleading facts
- Advertising products with the intent to sell them at a different price or quantity than advertised (for example, price reductions)
Thus, most deceptive trade practices are connected with the provision of goods and services.
Should I Hire a Lawyer?
Deceptive advertising causes large amounts of economic losses each year. You may wish to hire a business lawyer if you need help investigating a deceptive advertising claim.
Your attorney can provide you with assistance if you need to file a claim with the court. Also, your lawyer can review your case and determine what your rights and options are in your particular situation.