Protections for Misleading Ads and False Claims

Even if we don’t realize it, advertisements impact our daily purchasing decisions. But sometimes, they can be false and misleading. Read on to learn about various legal protections available to consumers against misleading advertisements and false claims. We also explain how to identify and report false advertising.

Contact a local consumer fraud lawyer if you need legal advice specific to your situation or help understanding your legal rights.

Understanding Misleading Ads and False Claims

Good advertising can be clever and compelling. But consumer fraud, including deceptive advertising, is illegal. False advertising differs from “puffery,” which is generally legal. Puffery includes vague or exaggerated claims. These statements are opinions rather than factual statements.

For example, a restaurant claiming to have the “Best Burgers in Town” would be puffery. So would an advertisement claiming to have “the most comfortable shoe.”

False advertising is different. Common examples of misleading claims and deceptive advertising include:

• Incorrect pricing: Misleading consumers about a product’s price
• Misleading claims: Exaggerating the benefits or effectiveness of a product
• Omissions: Failing to provide disclaimers or disclose information about a project’s limitations, risks, or side effects
• Deceptive warranty or guarantee: Advertising that a product is warranted or guaranteed, but the seller or manufacturer has no plans to honor the warranty or guarantee
• Deceptive visuals: Using heavily altered images to make a “before and after” seem more extreme or images that misrepresent the actual product
• Bait-and-switch: Advertising a product at a low price to get consumers to buy something more expensive than advertised once they are in the store
• False endorsements: Providing false testimonials about the product from people paid to make the statements or people who never used the product
• Technical or scientific claims: Making unsupported or exaggerated claims about the technical or scientific benefits of a product

There can be a fine line between effective marketing and plain and consumer fraud. Consumer protection laws prohibit false advertising claims and misleading statements. Misrepresentation is also a prohibited business practice.

Key Laws Protecting Consumers

The Federal Trade Commission (FTC) is the primary federal consumer agency regulating advertising under federal law. The Food and Drug Administration (FDA) regulates prescription drug and medical device advertising. Various state laws also protect consumers from misleading ads and false claims. Key federal laws are below.

Federal Trade Commission Act

Under the Federal Trade Commission Act (“FTC Act”), the FTC creates guidelines and enforces federal laws protecting consumers from misleading advertising claims.

Specifically, section 5 of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts or practices” affecting commerce. The FTC’s role in preventing deceptive trade practices is broad.

The Lanham Act

Lanham Act is available for false advertising lawsuits brought in federal court by a competitor to combat a competitor’s false and misleading promotional statements.

The FTC’s Role

The FTC plays a major role in consumer protection. It enforces truth-in-advertising laws. Federal law requires that advertisements to consumers must be truthful, not misleading, and, when appropriate, backed by scientific evidence. This applies to all advertisements, regardless of medium, e.g., online, television, radio, or print.

The FTC looks closely at advertising claims concerning everything from dietary supplements to high-tech consumer goods. If the FTC finds a case of fraud perpetrated on consumers, it takes any number of actions, including the following:

• Filing an action in federal district court to stop scams immediately through a cease-and-desist order
• Filing lawsuits on the government’s behalf
• Initiating regulatory investigations
• Freezing assets of scammers
• Getting monetary damages for victims
• Preventing companies from perpetrating scams in the future
• Reaching settlements with fraudsters and issuing refunds to injured consumers

In addition to actions by the FTC or other agencies, you may be able to bring a private lawsuit when you’re affected by false advertising.

Under New York state law, for example, injured consumers can recover monetary relief in successful cases. If they win, consumers can also receive their attorney fees and treble damages (three times actual or compensatory damages).

Reporting Misleading Ads and False Claims

You can report misleading advertisements and false claims in several ways. The following entities are also concerned with false advertising and deceptive claims. You may report false advertising violations to the following:

• Better Business Bureau
• State attorney general’s office
• Local law enforcement

The FTC provides a clearinghouse to report advertising misrepresentations at the federal level.

Consequences for Businesses Engaging in Deceptive Practices

The consequences of engaging in deceptive practices could be costly. Consequences for businesses include:

• Redress paid to consumers
• Civil penalties
• Loss of consumer goodwill
• Injunctions requiring the business to stop the prohibited action

Defending against a false advertising lawsuit is expensive. A legal action for violating false advertising laws could cost millions.

The business could also be subject to an administrative enforcement action and forced to pay fines.

Tips for Identifying Misleading Ads and Protecting Yourself

You can identify misleading ads in a few ways. When evaluating claims, make sure the companies back up the claims with:

• Evidence
• Real-world data
• Consumer research

Although determining whether the data is truthful can be challenging, be skeptical of anything that sounds too good to be true.

Ways to identify false advertising include:

• Products claiming to be a cure
• Unverified personal testimonials
• Photographs showing before and after but offering no other context
• Products offered for sale in mass emails
• Products claimed to be a miraculous treatment

Being informed about false and deceptive practices is the best first line of defense against false and misleading advertisements.

More Questions About Misleading Ads and False Claims?

Working with a consumer fraud lawyer can help you understand your legal rights. They can explain how you can address any financial losses or personal injury you received from misleading ads and false claims.