False advertising applies to any promotions or advertising that misrepresent the:
- Characteristics; and/or
- Origin of commercial activities, goods, and/or services.
A business who knowingly releases an ad that contains misleading, deceptive, and/or untrue statements in order to sell their product could be held liable for injuries resulting from false advertising.
The Federal Trade Commission (“FTC”) is the government agency that is responsible for enforcing regulations associated with unfair trade practices, which is how false advertising is classified. Depending on the relief that is sought, legal action for false advertising can be filed in either a civil or criminal court, as false advertising is considered to be both a tort and a crime in the eyes of the law.
Before states began implementing consumer protection and deceptive advertising laws, consumers could only submit complaints to the FTC, who would then notify or penalize the business itself. Now, individuals who have been injured by false advertising can pursue private lawsuits according to the statutes enacted by their state.
An example of this would be if you purchased a protein bar that claimed to have specific nutritional benefits, and no added sugars. If you find that the protein bar in fact has none of the nutritional benefits that the company claims that it has, and it also has added sugars, you may be able to take legal action against the company.
Some of the most common examples of false advertising include:
- Adding misleading information, such as claiming that food contains no sugar when it actually does;
- Claiming inconsistent and/or incomplete comparisons to competitors’ products and/or services;
- Using deceptive illustrations, such as a food item or product appears bigger than it is;
- Advertising a specific price, but leaving out the fact that there are extra fees;
- Claiming that a company is having a “going out of business” sale in order to raise prices; and
- Applying bait and switch tactics. An example of this would be advertising one product, then substituting it with a similar and more expensive product, but claiming that the advertised product is sold out.
What Is Deceptive Advertising?
Deceptive advertising is another name for false advertising, and it is any type of advertising that is false, misleading, or has the effect of deceiving consumers. Some examples of when an ad can be deceptive include:
- Price, quantity, and/or quality or standard of the item;
- Times, dates, and locations that the product is available;
- Information associated with warranties;
- False facts associated with deals or sales; and
- Confusion regarding interest rates or other factors.
According to both state and federal laws, advertising may be considered deceptive even if the creator of the ad did not intend for it to be so. What this means is that a deceptive advertising claim can be raised, even if the ad contained an honest mistake.
Are There Any Federal Protections Against Deceptive And False Advertising?
To reiterate, the FTC is the federal government agency responsible for overseeing and enforcing false advertising regulations. However, the FTC relies on consumers and competitors alike to report unlawful and deceptive advertising in order to stay on top of the task. The FTC will then investigate the complaint, and if it discovers that an ad does in fact violate the law, it may take several different actions.
The FTC will notify and attempt to have the business correct its errors on its own. If the business ignores this request, the FTC can issue a cease-and-desist order, as well as file a lawsuit on behalf of the injured consumers. During the case, the FTC may ask the court to grant an injunction against the business in order to discourage them from continuing to employ false advertising practices.
The FTC can issue fines as well, and may order the business or their third-party advertiser to release new ads that provide correct facts and information. They may also force the business to admit that earlier ads contained false statements. This is authorized by the Federal Trade Commission Act (“FTCA”); more specifically, Section 5 of the Act.
Another federal law that protects against false advertising practices would be the Consumer Financial Protection Act (“CFPA”). The CFPA created 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, such as banks and credit card companies, for unfair, abusive, and/or deceptive practices on behalf of consumers.
One other law that protects consumers against false advertising and deceptive practices would be 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 must be disclosed to consumers, in both drug advertisements and on food labels.
Are There Any Legal Penalties For Deceptive Advertising?
Some of the most common 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 in which there is a defect with the product;
- Injunction to have the ad removed or replaced; and/or
- Civil fines.
The steps for suing for false or deceptive advertising will largely depend on many factors, such as:
- The type of law that applies, such as federal versus state; and
- The cause of action, such as unfair competition, false advertising, fraud, etc.
Cases that involve federal matters must first be filed with the appropriate government agency, before going to court. In such cases, the government agency that is responsible for overseeing the matter will sue on behalf of wronged consumers.
However, when the claim is based on state law, the statutes of the jurisdiction that is hearing the case will control the process. In class action false advertising lawsuits that affect many consumers, or involve businesses from more than one state, the Uniform Deceptive Trade Practices Act (“UDTPA”) may also provide guidance for taking legal action.
In general, you should first report the complaint to your local consumer affairs agency. The state agency will:
- Provide instructions for how to file a complaint;
- Help you determine if you have a private right of action; and
- How much your case could be worth in damages.
Depending on the number of consumers affected, an attorney may recommend filing a class action lawsuit instead of an individual case. Both courses of action will require:
- Filing the claim in court;
- Serving the complaint on the opposing party;
- Going through the pre-trial stages; and
- Either settling with the other side, or proceeding with a trial.
To reiterate, the penalties for false advertising can range from civil to criminal. If a plaintiff successfully sues a company for false advertising, they may recover monetary damages awards and can request that the court issue an injunction against the company, in order to prohibit future false advertising practices.
If the business is charged and convicted of committing false advertising in a criminal court, they may be ordered to:
- Pay considerably large criminal fines;
- Serve some amount of jail time; and/or
- Change their business practices. In some cases, a business may be ordered to pay restitution to its victims.
Do I Need A Lawyer For Help With Deceptive Advertising Issues?
You should hire a business lawyer if you need help investigating a deceptive advertising claim, or if you are a business owner trying to avoid false or deceptive advertising. Your business attorney can help you understand your legal rights and options according to your state’s specific laws, and will also be able to represent you in court, as needed, should legal action become necessary.