False advertising is the use of deliberately false statements or deception in advertising, in order to gain a commercial advantage. Advertising is a form of Communication that typically attempts to persuade potential Customers to Purchase or to consume more of a particular Brand As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or misleading advertising.
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False advertising regulations in the United States
Advertising is regulated by the authority of the Federal Trade Commission, a United States administrative agency, to prohibit "unfair and deceptive acts or practices in commerce. The Federal Trade Commission ( FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act "[1] While it makes laymen's sense to assume that being deceptive is being unfair, deceptiveness in practice has been treated separately by the FTC, leaving unfairness to refer only to other types. [2] All commercial acts may be deceptive, not just advertising, but noncommercial activity such as advertising for political candidates is not subject to prosecution under the FTC Act. The 50 states have similar statutes, which generally are very similar to that of the FTC and in many cases copied so closely that they are known as "Little FTC Acts. " While the terms "false" and "deceptive" are essentially the same for most, being deceptive is not the same as producing deception. What is illegal is the potential to deceive, which is interpreted to occur when consumers see the advertising to be stating to them, explicitly or implicitly, a claim that they may not realize is false and material. The latter means that the claim, if relied on for making a purchasing decision, is likely to be harmful by adversely affecting that decision. Evidence must be obtained for what consumers saw the ad saying, and for the materiality of that, and for the true facts about the advertised item, but no evidence is required that actual deception occurred, or that reliance occurred, or that the advertiser intended to deceive or knew that the claim was false.
The goal is prevention rather than punishment, reflecting the purpose of civil law in setting things right rather than that of criminal law. The typical sanction is to order the advertiser to stop its illegal acts, or to include disclosure of additional information that serves to avoid the chance of deception. Corrective advertising may be mandated [3],[4]. But there are no fines or prison time except for the infrequent instances when an advertiser refuses to stop despite being ordered to do so. [5]
The actual statute defines false advertising as a "means of advertisement other than labeling, which is misleading in a material respect; and in determining whether an advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual. " [6]
Pricing-based methods
In the UK, most price based methods of false advertising are prohibited and strictly regulated. Hence, the methods detailed below are rarely encountered and used only by the most disreputable operators.
Rebates
Rebates were originally intended to pass savings directly from the manufacturer to the consumer. A rebate is an amount paid by way of reduction return or refund on what has already been paid or contributed A rebate is an amount paid by way of reduction return or refund on what has already been paid or contributed In common usage saving generally means putting money aside for example by putting money in the bank or investing in a Pension plan However in the U. S. they have become probably the biggest way to trick shoppers into paying more than the advertised price. Stores advertise a "sale" price and note only in the fine print that it is not the price at which it is actually sold for, but instead an "after rebate" price, which also fails to include sales tax. A sales tax is a Consumption tax charged at the Point of purchase for certain goods and services Many rebate fulfillment companies have been accused of intentionally reneging on obligations to return money to the customers.
Inflated price comparison
In comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in the order to create the impression that the sale price is very low. The intent is obviously to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service. Consumers refers to individuals or households that use goods and services generated within the economy. Some clothing stores in particular have essentially every item on "sale", and some grocery stores advertise "savings" over their regular prices for those using loyalty cards. Loyalty programs are structured marketing efforts that reward and therefore encourage loyal buying behaviour — behaviour which is potentially of benefit to the firm
In the United Kingdom, under the Sale of Goods Act, any item in a sale must have been sold at the non-sale price for at least 28 consecutive days. Many companies sidestep this requirement by selling items at very high prices in a single store (often in expensive parts of London) for 28 days, before selling the items at the "sale" price in their other stores.
Introductory offers
An introductory offer is an offer for an ongoing service that is valid for a limited period. After this period, the price or terms of the agreement change, often without further notice to any consumers which have accepted the initial offer. This differs from bait and switch because the terms or "bait" are in fact actually delivered (making it only deceptive rather than inherently false), but the switch still occurs later on. In Retail sales, a bait and switch is a form of Fraud in which the party putting forth the fraud lures in customers by Advertising a product or service Bait is any substance used to attract Prey, eg in a Mousetrap.
The most common form of this is credit cards, which offer low interest rates to start and then rise greatly afterward. A credit card is part of a system of Payments named after the small Plastic card issued to users of the system Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets Enormous increases in rates are often triggered by a single late or overdraft, in addition to the enormous fees for the late or overdraft. An overdraft occurs when withdrawals from a Bank account exceed the available balance which gives the account a negative balance - a person can be said to have A fee is the Price one pays as Remuneration for Services especially the Honorarium paid to a doctor lawyer, Consultant Credit card companies have been criticized in the U. S. for luring college and university students with these offers and then making huge profits from the fees and rates after the students get themselves into debt. College ( Latin collegium) is a term most often used today to denote an Educational Institution. A university is an institution of Higher education and Research, which grants Academic degrees in a variety of subjects The word student is etymologically derived through Middle English from the Latin second-type conjugation Verb "studēre" Debt is that which is owed usually referencing Assets owed but the term can cover other obligations
Introductory offers are also very common for cable TV, satellite TV, VoIP, and Internet services, especially those with bundling. Satellite television is Television delivered by the means of Communications satellites as compared to conventional Terrestrial television and Cable Voice-over-Internet protocol ( VoIP, vɔɪp is a protocol optimized for the transmission of voice through the Internet The Internet is a global system of interconnected Computer networks Product bundling is a Marketing strategy that involves offering several products for sale as one combined product The intent is to get the consumer used to receiving the service before the price goes up, so that they will continue on as customers with a much higher profit margin for the service provider. Intent in Law is the planning and desire to perform an act, to fail to do so (i Profit margin, Net Margin, Net profit margin or Net Profit Ratio all refer to a measure of Profitability. A service provider is an Entity that provides services to other entities
Other deceptive methods
Misrepresentations
Utilizing words such as descriptive terms or location terms to increase the perceived value of a product. An example would be advertising "Maine lobsters" when in fact the lobster are from the Pacific ocean, or Vidalia onions which are from Texas instead of near Vidalia, Georgia. The State of Maine ( is a state in the New England region of the northeastern United States of America, bordering the Atlantic Ocean The American lobster, Homarus americanus, is one Species of Lobster found on the Atlantic coast of North America. This article is about the animal For the B-52's song see Rock Lobster. The Pacific Ocean is the largest of the Earth 's Oceanic divisions A Vidalia onion is a Sweet onion of certain varieties grown in a production area defined by law in Georgia and by the United States Code of Federal Texas ( is a state geographically located in the South Central United States and is also known as the Lone Star State. Vidalia (pron vi - DALE - yah is a city in Montgomery and Toombs counties in the U These can also be considered infringement of trademarks in many cases. Trademark infringement is a violation of the Exclusive rights attaching to a Trademark without the authorization of the trademark owner or any licensees (provided that A trademark or trade mark, represented by the symbols ™ and ®, or mark is a distinctive sign or indicator used by an individual Another example is the United Egg Producers' "Animal Care Certified" logo on egg cartons which misled consumers by conveying a higher level of animal care than was actually the case. Both the Better Business Bureau and the Federal Trade Commission found the logo to be deceptive and it can no longer be used. The Better Business Bureau (BBB, founded in 1912 is an organization based in the United States and Canada. The Federal Trade Commission ( FTC) is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act
Seagate Technology and Western Digital, makers of computer storage devices, were sued for misrepresenting the capacity of their hard drives. Seagate ( is the world's largest manufacturer of hard drives and storage solutions Western Digital Corporation ( (often abbreviated to WD) is a manufacturer of computer hard disk drives, and has a long history in the electronics industry as The class action suit filed against the two companies accused them of using a definition of gigabyte that overstated available capacity by about 7%. A gigabyte (derived from the SI prefix Giga-) is a unit of Information or Computer Both companies agreed to settle the suit and reimburse customers in-kind. [7],[8]
Advertising the maximum
Internet service providers may advertise their service as offering "up to 8 Mbit/s", whereas on average use it could be just 1 Mbit/s. The use of "up to" in the description protects them legally, while raising false hopes in the customers. Further, in the fine print it is mentioned that this includes both the download and upload speeds, deteriorating the customer's usage experience even more.
Fillers and over-sized packaging
Some products are sold with fillers, which increase the legal weight of the product with something that costs the producer very little compared to what the consumer thinks that he or she is buying. Food is an example of this, where chicken meat is injected with broth or even brine, or TV dinners are filled with gravy or other sauce instead of meat. Food is any substance usually composed primarily of Carbohydrates Fats water and/or Proteins that can be eaten or drunk by an Chicken is the Meat derived from the Chicken. It is the most common type of Poultry in the world and is frequently prepared as Food Broth is a Liquid in which Bones Meat, Fish, Cereal grains or Vegetables have been simmered and strained out Brine (lat saltus) is Water saturated or nearly saturated with Salt (NaCl A TV dinner (also called frozen dinner, microwave meal or ready meal) is a prepackaged frozen or chilled Meal which usually comes in an Gravy is an English Sauce made often from the juices that run naturally from meat or vegetables during cooking In Cooking, a sauce is Liquid or sometimes semi- Solid food served on or used in preparing other Foods Sauces are not consumed by themselves In modern English usage meat most often refers to Animal tissue used as food mostly Skeletal muscle and associated Fat, but it may also refer Canned tuna may also be labeled with a weight that includes the water or vegetable oil, though these are almost always drained off and are therefore useless. Canning is a method of preserving food in which the food is processed and sealed in an airtight container Tuna, are several Species of ocean-dwelling Fish in the family Scombridae, mostly in the genus Thunnus. Water is a common Chemical substance that is essential for the survival of all known forms of Life. In addition weight in either ounces, grams, milliliters, pounds. . . etc. is printed on the package to indicate the weight of the actual content.
In other cases, packages are under-filled, simply leaving empty space at the top, in products such as coffee cans which cannot be seen into until being purchased and opened at home. Packaging is the science art and technology of enclosing or protecting products for distribution storage sale and use CoFFEE is an Open source Software for computer supported collaborative learning (CSCL in a digital classroom Particularly deceptive is when the same size of packaging is used for less product than it used to. This deceives consumers into continuing to buy the product, which they expect to have the same amount it always has. To evade legal problems, the label is changed to reflect the actual new amount, but this is essentially fine print which anyone is unlikely to notice.
A similar problem in Christmas lights and other light strings is that the length of each set seems to get shorter each year despite containing the same number of lights. The length of the set is given in small print while the number of lights is in large print.
Non-existence of required information
It is mandatory in most countries to have a date of expiry in products. Many countries enforce that a 'normal' food and beverage 'must' expire within 6 months or 1 year. However, some products, intentionally code the manufactured date and not the expiry date or the reverse (where the expiry date is printed but not the date of production).
The other form of information required is the net weight (which means, the actual weight of the product without the weight or size of packaging and fillers) of the product.
Many products also lack the country of manufacture and instead have the country forwarding the product. Some products have a list of countries permitted to sell the product but have no information of the country of origin.
See also
- list of cognitive biases
- list of fallacies
- list of memory biases
- Straight and Crooked Thinking (book)
References
- ^ 15 U. A Cognitive bias is a pattern of deviation in judgement that occurs in particular situations (see also Cognitive distortion and the Lists of thinking-related topics This is a list of logical fallacies. Formal fallacies Formal fallacies are arguments that are fallacious due to an error in their form or technical In Psychology and Cognitive science, a memory bias is a Cognitive bias that either enhances or impairs the recall of a Memory (either the chances Straight and Crooked Thinking, first published in 1930 and revised in 1953 is a book by Robert H S. C. §45 (United States Code, chapter 15, section 45).
- ^ Richards, Jef I. , Deceptive Advertising, Erlbaum (1990), at p. 20.
- ^ Johar, Gita, "Intended and Unintended Effects of Corrective Advertising on Beliefs and Evaluations: An Exploratory Analysis", Journal of Consumer Psychology, 1996, 5(3), 209-230.
- ^ Johar, Gita Venkataramani and Carolyn J. Simmons, “The Use of Concurrent Disclosures to Correct Invalid Inferences,” Journal of Consumer Research, 2000, 26(4), 307-322.
- ^ Richards, id; Policy Statement on Deception, 103 FTC Decisions 110 (1984), appendix to Cliffdale Associates; originally a letter from FTC Chairman James C. Miller to Rep. John D. Dingell (Oct. 14, 1983). For the history of changing from deception to deceptiveness as the standard, see Preston, Ivan L. , The Great American Blow-Up: Puffery in Advertising and Selling, Univ. of Wisconsin Press, revised ed. (1996), at Ch. 8.
- ^ Wilson, Lee. "The Advertising Law Guide: A Friendly Desktop Reference for Advertising Professionals. " Allworth Press, NY, NY. 2000. 25.
- ^ http://www.neowin.net/news/main/07/11/03/seagate-settles-suit-over-disk-capacity
- ^ http://www.neowin.net/news/main/06/07/18/western-digital-pays-up-in-class-action-lawsuit
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