Deceptive and Unfair Advertising Laws
Deceptive/False/Unfair
Advertising
Emma Kazaryan
Street Law
Introduction to Consumer Law
•
Consumers are people who buy or use goods
or services
•
In the US federal and state laws exist to
protect consumers from businesses that want
to trick or take advantage of them
Deceptive Advertising - Federal Law
•
The Federal Trade Commission (FTC) is
responsible for consumer protection at the
federal level
•
The FTC has rules for “truth-in-advertising”
that require that advertising:
-must be
truthful
and
non-deceptive
-must have
evidence
to back up its claim
-cannot be
unfair
What Makes Advertising Deceptive?
An advertisement is deceptive if it contains a
statement (or omits information) that:
•
is likely to
mislead
consumers acting
reasonably under the circumstances
•
is
material
, which means its important to
the
consumer’s decision to buy or use the product
What Makes Advertisement Unfair?
An ad or business practice is unfair if:
•
is likely to cause substantial consumer
injury
which a consumer could not reasonably avoid;
and
•
it is
not
outweighed by the benefit
to
consumers
What Kind of Evidence Must a
Company Have to Support an
Advertisement Claim?
•
Before a company runs an ad, it has to have a
"
reasonable basis
" for the claims; this means objective
evidence that supports the claim
•
The kind of evidence depends on the claim
•
At a minimum, an advertiser must have the level of
evidence that it says it has
•
Customer testimonials are usually not enough to support
a claim
Ads the FTC Is Most Skeptical Of
•
Ads that make claims about health or safety; for
example:
-ABC Sunscreen reduces the risk of cancer
-ABC Water Filters remove harmful toxins from water
-ABC Chainsaw’s safety latch reduces the risk of injury
•
Ads that make claims that consumers would have
trouble evaluating for themselves; for example:
-
ABC Gasoline decreases engine wear
-ABC Hairspray is safe for the ozone
Penalties for False/Deceptive Ads
•
Cease and desist orders
•
Civil penalties, consumer redress and other
monetary remedies
•
Corrective advertising, disclosures and other
informational remedies
Steps FTC Takes to Determine
Whether an Ad is Deceptive
How would a
reasonable
consumer view this
ad?
What are the
express
and
implied
claims made
in the ad?
Is/are the claim(s)
material
?
Is there
sufficient evidence
to support the
claim(s)?
Note on Washington State Law
•
The Washington Legislature enacted the
Consumer Protection Act (CPA) which is modeled
after the FTC Act
•
The law says: "Unfair methods of competition
and unfair or
deceptive
acts or practices in the
conduct of any trade or commerce are hereby
declared unlawful."
•
The
Attorney General
is authorized to enforce
the Act
Deceptive Advertising in Action, in
Washington
http://www.king5.com/news/get-jesse/WA-
attorney-general-T-Mobile-contract-free-
204765901.html
RCW 9.04.050
False, Misleading, Deceptive Advertising
“It shall be unlawful for any person to publish,
disseminate or display, or cause directly or indirectly, to
be published, disseminated or displayed in any manner or
by any means, including solicitation or dissemination by
mail, telephone, electronic communication, or door-to-
door contacts, any false, deceptive or misleading
advertising, with knowledge of the facts which render the
advertising false, deceptive or misleading, for any
business, trade or commercial purpose or for the purpose
of inducing, or which is likely to induce, directly or
indirectly, the public to purchase, consume, lease,
dispose of, utilize or sell any property or service, or to
enter into any obligation or transaction”
RCW 9.04.050: Read Between the Lines
“It shall be unlawful
for any person
to publish,
disseminate or display, or cause directly or indirectly, to
be published, disseminated or displayed in any manner or
by any means, including solicitation or dissemination by
mail, telephone, electronic communication, or door-to-
door contacts,
any false, deceptive or misleading
advertising, with knowledge of the facts which render the
advertising false, deceptive or misleading,
for any
business, trade or commercial purpose or
for the purpose
of inducing,
or which is likely to induce, directly or
indirectly, the
public to purchase
, consume, lease,
dispose of, utilize or sell any
property or service,
or to
enter into any obligation or transaction
”
RCW 9.04.050 Decoded
“It shall be unlawful to
publish
any
false, deceptive or misleading
advertising,
with
knowledge
of the
facts which render the advertising
false, deceptive or misleading for the
purpose of
inducing the public to
purchase
property or service”
T-Mobile Commercial
•
http://www.youtube.com/wat
ch?v=ZuJPXdj7cDI
Applying the Statute
Did T-Mobile
publish
or display an
advertisement?
Was the advertisement
false
,
deceptive
or
misleading
? [Remember FTC guidelines]
Did T-Mobile
know
that the advertisement was
deceptive?
Did T-Mobile
intend
to induce
people to buy
something?
Filing a Complaint - FTC
Federal Trade Commission
http://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc
Note: the FTC does not resolve individual complaints.
•
Your contact information: name, address, phone number,
•
The type of product or service involved
•
Information about the company or seller: business name,
address, phone number, website, email address,
representative’s name
•
Details about the transaction: the amount you paid, how you
paid, the date
Filing a Complaint – WA State AG
WA State Attorney General
http://www.atg.wa.gov/fileacomplaint.aspx#.UwROhoXj7X5
•
Your name, address, phone number, email
•
The type of product or service involved
•
Information about the company or seller: business
name, address, phone number, website, email
address, representative’s name
•
Details about the transaction: the amount you paid,
how you paid, the date
•
Declaration and signature
Sources:
www.business.ftc.gov/documents/bus35-advertising-faqs-guide-small-business
http://apps.leg.wa.gov/rcw/default.aspx?cite=9.04.050
http://www.atg.wa.gov/fileacomplaint.aspx#.UwRPP4Xj7X6
http://www.law.washington.edu/Clinics/Streetlaw/supplement/Ch4.pdf
Consumer protection laws in the US, enforced by agencies like the Federal Trade Commission, aim to prevent deceptive and unfair advertising practices. Advertisements must be truthful, have evidence supporting claims, and not mislead consumers. Learn about what makes advertising deceptive or unfair and the type of evidence required to support claims.
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Presentation Transcript
Deceptive/False/Unfair Advertising Emma Kazaryan Street Law
Introduction to Consumer Law Consumers are people who buy or use goods or services In the US federal and state laws exist to protect consumers from businesses that want to trick or take advantage of them
Deceptive Advertising - Federal Law The Federal Trade Commission (FTC) is responsible for consumer protection at the federal level The FTC has rules for truth-in-advertising that require that advertising: -must be truthful and non-deceptive -must have evidence to back up its claim -cannot be unfair
What Makes Advertising Deceptive? An advertisement is deceptive if it contains a statement (or omits information) that: is likely to mislead consumers acting reasonably under the circumstances is material, which means its important to the consumer s decision to buy or use the product
What Makes Advertisement Unfair? An ad or business practice is unfair if: is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and it is not outweighed by the benefit to consumers
What Kind of Evidence Must a Company Have to Support an Advertisement Claim? Before a company runs an ad, it has to have a "reasonable basis" for the claims; this means objective evidence that supports the claim The kind of evidence depends on the claim At a minimum, an advertiser must have the level of evidence that it says it has Customer testimonials are usually not enough to support a claim
Ads the FTC Is Most Skeptical Of Ads that make claims about health or safety; for example: -ABC Sunscreen reduces the risk of cancer -ABC Water Filters remove harmful toxins from water -ABC Chainsaw s safety latch reduces the risk of injury Ads that make claims that consumers would have trouble evaluating for themselves; for example: - ABC Gasoline decreases engine wear -ABC Hairspray is safe for the ozone
Penalties for False/Deceptive Ads Cease and desist orders Civil penalties, consumer redress and other monetary remedies Corrective advertising, disclosures and other informational remedies
Steps FTC Takes to Determine Whether an Ad is Deceptive How would a reasonable consumer view this ad? What are the express and implied claims made in the ad? Is/are the claim(s) material? Is there sufficient evidence to support the claim(s)?
Note on Washington State Law The Washington Legislature enacted the Consumer Protection Act (CPA) which is modeled after the FTC Act The law says: "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." The Attorney General is authorized to enforce the Act
Deceptive Advertising in Action, in Washington http://www.king5.com/news/get-jesse/WA- attorney-general-T-Mobile-contract-free- 204765901.html
RCW 9.04.050 False, Misleading, Deceptive Advertising It shall be unlawful for any person to publish, disseminate or display, or cause directly or indirectly, to be published, disseminated or displayed in any manner or by any means, including solicitation or dissemination by mail, telephone, electronic communication, or door-to- door contacts, any false, deceptive or misleading advertising, with knowledge of the facts which render the advertising false, deceptive or misleading, for any business, trade or commercial purpose or for the purpose of inducing, or which is likely to induce, directly or indirectly, the public to purchase, consume, lease, dispose of, utilize or sell any property or service, or to enter into any obligation or transaction
RCW 9.04.050: Read Between the Lines It shall be unlawful for any person to publish, disseminate or display, or cause directly or indirectly, to be published, disseminated or displayed in any manner or by any means, including solicitation or dissemination by mail, telephone, electronic communication, or door-to- door contacts, any false, deceptive or misleading advertising, with knowledge of the facts which render the advertising false, deceptive or misleading, for any business, trade or commercial purpose or for the purpose of inducing, or which is likely to induce, directly or indirectly, the public to purchase, consume, lease, dispose of, utilize or sell any property or service, or to enter into any obligation or transaction
RCW 9.04.050 Decoded It shall be unlawful to publish any false, deceptive or misleading advertising, with knowledge of the facts which render the advertising false, deceptive or misleading for the purpose of inducing the public to purchase property or service
T-Mobile Commercial http://www.youtube.com/wat ch?v=ZuJPXdj7cDI
Applying the Statute Did T-Mobile publish or display an advertisement? Was the advertisement false, deceptive or misleading? [Remember FTC guidelines] Did T-Mobile know that the advertisement was deceptive? Did T-Mobile intend to induce people to buy something?
Filing a Complaint - FTC Federal Trade Commission http://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc Note: the FTC does not resolve individual complaints. Your contact information: name, address, phone number, email The type of product or service involved Information about the company or seller: business name, address, phone number, website, email address, representative s name Details about the transaction: the amount you paid, how you paid, the date
Filing a Complaint WA State AG WA State Attorney General http://www.atg.wa.gov/fileacomplaint.aspx#.UwROhoXj7X5 Your name, address, phone number, email The type of product or service involved Information about the company or seller: business name, address, phone number, website, email address, representative s name Details about the transaction: the amount you paid, how you paid, the date Declaration and signature
