False advertising laws prohibit businesses from making deceptive claims that mislead consumers into purchasing products or services. Consumers may file lawsuits, seek financial compensation, and hold companies accountable through federal and state regulations designed to prevent fraudulent marketing practices.
By Brad Nakase, Attorney
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False advertising, misleading labeling, and other forms of deceitful advertising are illegal in the US under both state and federal statutes. Consumers are granted crucial rights under false advertising regulations, which enable them to pursue financial compensation in cases where they have been deceived.
It is possible to file a false advertising lawsuit. Customers can sue companies for deceiving them into buying more of their product or paying more for their service under a number of state’s specialized false advertising laws. It is possible to file a common-law fraud suit regardless of whether your state has a statute against deceptive advertising.
According to the rules of false advertising, in order for a consumer to have a case, they must be able to prove that: (a) the ad was misleading or false; (b) the deceit was “material,” which usually means the business lied about something important; (c) the customer saw the ad; and (d) they bought the product because of the ad. Customers may establish dependence by demonstrating that they would not have made a purchase had it not been for the deceptive advertising. If they paid more for the company’s product or service than they would have otherwise, they can prove that they relied on a deceptive advertisement.
It is possible for an advertising to be misleading or outright false. By the same token, what an ad fails to include might be considered “false” as well. It is possible for a customer to sue a business for failure to disclose if an ad leaves out material facts that would have prevented them from purchasing the advertised goods or service.
False advertising can result in many forms of sanctions for companies. The corporation can be subject to criminal prosecution if the deceptive promotion amounts to fraud. Additionally, the corporation may be subject to harsh criminal fines for mail or wire fraud if the ad was disseminated by the mail or the internet.
Businesses can be subject to civil fines for false advertising as well. Civil fines are typically the sole recourse for government agencies when it comes to misleading advertising legislation. If a customer in California receives a deceptive advertising, the state attorney general has the authority to sue the advertiser and seek civil fines of up to $2,500 per incidence. The FTC, a government body tasked with safeguarding consumers, has the authority to levy civil fines of up to $40,000.
However, customers are able to recover statutory fines in certain states. As an example, customers in New York can seek statutory fines of up to $50 per fraudulent ad under the state’s General Business Law (GBL), which prohibits deceptive advertising. Such fines can build up rapidly in a class action lawsuit alleging false advertising.
Customers who fall victim to false advertising practices may have recourse to civil litigation in the form of a damages claim. A court can impose a cease and desist order, directing a corporation to stop spreading a misleading or deceptive advertising. Another option is for the court to mandate accurate product or service disclosures so buyers know what they’re getting.
False advertising manifests in a wide variety of forms. According to the California Supreme Court, fraudulent commercial activities exist across the spectrum of human inventiveness and deception. Therefore, it is hard to go through all the many kinds.
However, there are a handful of typical forms of false advertising. An example of this is the “bait and switch.” In this scheme, the firm may claim a discount or low price to attract customers, but they later reveal that these deals aren’t real.
Hidden fees are another kind of false advertising. Frequently, a business may promote a certain price for its services, such as “only $10.99 a month.” However, due to the existence of hidden expenses that the corporation imposes on all customers, including equipment or maintenance fees, no customer ever pays that exact amount.
Misleading labeling is a third form of false advertising. Some 53% of Americans felt that food labels were often deceiving, and 11% felt that they were entirely untrustworthy, according to a recent survey by OnePoll. Consider foods that claim to be “non-fat,” even if they may have formerly included fat. Some synthetic compounds may be hiding under “all natural” substances. Also, not everything with an “organic” or “green” label is free of pesticides or environmentally friendly.
False advertising also includes deceiving customers into thinking they are getting more of a product than they actually are through the use of fillers or excessive packaging. Chip and candy makers have been the targets of many class action lawsuits in recent years on allegations that their products contain excessive quantities of empty space within.
False advertising also includes changing the units of measurement for a product. To illustrate the point, Intel was sued in a class action. It was claimed that the business intentionally misled consumers into thinking that Pentium IVs were faster than Pentium IIIs by, among other things, advertising them as having more “GHz” than Pentium IIIs, despite the fact that many Pentium III processors actually outperformed many Pentium IVs. Despite the claims made by many chip manufacturers, the “GHz” may not be a reliable measure of a processor’s actual performance.
Another possible misleading unit of measurement for television graphics is the “4K” television standard, which uses a different unit than the “1080p” standard. In contrast to 4K televisions, which measure pixels horizontally, 1080p screens measure pixels vertically. The dimensions of a 1080p TV are 1,920 pixels on the horizontal and 1,080 pixels on the vertical. According to CNET, a 4K TV typically only contains 3,840 horizontal pixels and 2,160 vertical pixels, meaning that in actuality, a 4K TV only has almost twice as many horizontal pixels as a 1080p TV, rather than four times.
The FTC Act
It is considered illegal to engage in unfair or deceptive actions or practices in or affecting commerce, according to section 5 of the Federal Trade Commission Act. Particular forms of advertising or companies are also subject to FTC laws. When consumers inquire about funeral arrangements, for instance, funeral facilities must provide a generic pricing list as per the FTC’s regulations. Or, according to the FTC’s Endorsement Guide, prominent figures on social media or video sharing platforms cannot provide an endorsement of a product unless they have used it themselves.
FDA
Certain rules control the labeling of dietary and pharmaceutical items, and the FDA has the power to enforce these rules under the Federal Food, Drug, and Cosmetic Act. Take the Food and Drug Administration (FDA) as an example. They have regulations about the “nutrition facts” section of food labels and the disclosure of medicine side effects in ads.
False advertising is illegal in nearly every state, giving victims (both customers and businesses) legal recourse. Some important state statutes regarding false advertising are as follows:
1. Uniform Deceptive Trade Practices Act
A number of states have passed laws that prohibit misleading advertising, including but not limited to bait-and-switch tactics, false product claims, and disparaging product reviews.
2. California’s Unfair Competition Law
The dissemination of misleading ads might be viewed as a “fraudulent” business activity under California’s Unfair Competition Law (UCL), which forbids any illegal, unfair, or fraudulent commercial act in a broad sense. The maximum amount a customer can recover for damages under the UCL is the amount they paid for the product or service.
3. California’s False Advertising Law
Any company or individual doing business in California is subject to the False Advertising Law (FAL), which forbids the use of deceptive or misleading claims in advertising their products or services. In many cases, the FAL and the UCL have a large overlap.
4. California’s Consumers Legal Remedies Act
Misleading labeling, ambiguity, and outright deceit are all illegal under California’s Consumers Legal Remedies Act (CLRA). Though it does outlaw some forms of false advertising (such as making misleading claims about a product’s source), the CLRA does not outright ban all forms of false advertising.
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