It is important to note that the exact definition for what constitutes false advertising will differ from state to state. However, in general, The term “false advertising” refers to any promotions or advertising that misrepresent the nature, quality, characteristics, and/or origin of commercial activities, goods, or services.
In other words, a business that knowingly releases an advertisement which contains misleading, deceptive, and/or untrue statements in order to sell their product will be considered to have committed advertising violations, and can then be held liable for injuries resulting from their act(s) of false advertising.
As far as the entity responsible for punishing individuals that commit advertising violations, there are both state and federal agencies that punish acts of false advertising. The Federal Trade Commission (“FTC”) is the federal government agency that is responsible for enforcing regulations associated with unfair trade practices, which is how false advertising is legally classified.
It is important to note that penalties for false advertising can include both civil or criminal penalties. This is because false advertising is considered to be both a civil tort violation and a criminal act.
As noted above, every state has now enacted both a civil and criminal statute that addressed false advertising with the state. Before states began implementing consumer protection laws concerning deceptive business practices, consumers had to rely solely on the FTC for complaints regarding false advertising. However, people who have been injured by false advertising can now pursue private lawsuits according to the statutes enacted in their state.
There are many different ways in which a business or individual can engage in false advertising, including:
- Adding misleading information, such as claiming that a food contains no sugar when it actually does contain sugar;
- Making inconsistent or incomplete comparisons to a competitors’ products and/or services;
- Using deceptive illustrations, such as an item appearing bigger than it actually is;
- Advertising a specific price for a good or service, but leaving out the fact that there are extra or hidden fees;
- Claiming that a company is having a going out of business sale as a scheme to raise prices; and/or
- Applying bait and switch tactics.
- For example, advertising one product and then substituting it with a similar more expensive product while claiming that the advertised product is sold out, is a common bait and switch scheme.
What Is Consumer Fraud?
The term consumer fraud refers to the set of laws that criminally punish deceptive practices employed by individuals and businesses that lead to financial losses for consumers. As mentioned above, each state will have consumer fraud statutes that criminalize and punish deceptive business practices.
Specifically, consumer fraud is considered to be criminal fraud in many circumstances. In consumer fraud cases, the victim is the consumer, while the criminal actor can be either a seller or advertiser of merchandise.
Typically, the victims of consumer fraud are led to believe that they are involved in a legal and valid business transaction, when they are actually being defrauded in some way. This fraud against consumers is generally associated with false promises and/or inaccurate claims made to consumers. The fraudulent act could also include practices that directly cause consumers to be cheated out of their money.
In general, the FTC will work with local law enforcement in order to investigate and punish consumer fraud. Examples of common acts that constitute consumer fraud include, but are not limited to:
- Sellers failing to provide merchandise in an adequate manner, such as a car dealer who sells lemon cars;
- Sending merchandise to people without their knowledge or consent, and then forcing them to pay for it by threatening to bring legal action against them or threatening to ruin their credit score;
- Sweepstakes and lotteries offering a prize in exchange for a small processing fee, and then failing to deliver the prize; and
- Charity schemes where a party asks for a donation, and then pockets or distributes the accepted donation somewhere other than where they originally claimed it would be distributed.
What Is Puffery and Is It Legal?
The term puffery refers to an exaggerated or extravagant statement that is made for the purpose of attracting buyers to a particular product or service. Puffery commonly associated with advertising and promotional sales testimonials. The FTC defines puffery as a term referring to exaggerations of the quality of a product.
Puffery is often employed by businesses in order to “puff up” the image of their product. Statements or terms of puffery are generally considered to be subjective opinions, rather than objective representations of facts. For example, an individual selling shoe cleaning products may puff up their product with statements such as “this is the greatest state of the art shoe cleaning product in the world!”
Importantly, the laws generally assume that most consumers would recognize puffery as an opinion that cannot be verified. This means that a reasonable person would not take puffery literally.
It is important to understand that the difference between puffery and factual representations is the degree of specificity of the claim. For instance, puffery contains broad, general claims, such as the motto “The Best Coffee in the World.”
Puffery is allowed by the law to a degree. As such, puffery is not prohibited by most advertising laws. In general, a business or seller cannot be held liable for criminal or civil misrepresentation if they issue a statement that amounts to mere puffery.
Additionally, statements of puffery cannot be considered as creating an express guarantee or warranty. For instance, “with this shoe cleaning product, you’ll never need another cleaning product again” would likely not create a warranty.
The reason why puffery is not prohibited under advertising or consumer fraud laws is that most courts consider puffing to be so immaterial and unreliable that it cannot form the basis for liability.
However, if the statement does contain a specific misrepresentation or an outright lie, then the consumer may hold the seller liable for violations such as false advertising or fraudulent representation.
What Is The Difference Between Puffery And False Advertising?
Once again, puffery is allowed to a limited degree by most advertising and consumer fraud laws. Alternatively, false advertising is a criminal act that is punishable under both civil and criminal laws.
False advertisement is motivated by a desire to deceive or mislead the public, while puffery is generally a matter of opinion rather than a factual representation. As such, puffery is generally intended to simply attract more consumers, rather than to purposely deceive the customers.
However, the line between puffery and false advertisement can be thin and blurry. For instance, making a claim that a product has “clinically proven” health benefits when it does not, may be considered false advertising. However, claiming that a product is healthy is more opinionated and may be considered to be simple puffing.
Do I Need A Lawyer For Problems With Puffery Laws?
If you suffered losses as a result of consumer fraud that you believe was more than simply puffing, then it may be in your best interests to consult an experienced business attorney.
An experienced business attorney can help you determine whether a specific representation is mere puffery, or a serious misrepresentation. Then, if it is determined that you were deceived, an attorney can help you seek damages for that deception by initiating a civil lawsuit against the responsible party.
Additionally, if you are a business entity or a seller of products, it may also be in your best interests to consult with an experienced fraud lawyer who handles consumer protection cases. An attorney will be able to ensure that any advertisements, statements, or representations that you make will not expose you to civil or criminal liability. Finally, an attorney will also be able to represent you in court, as needed.
