Defining False Advertising
September 16, 2014
Defining False AdvertisingA variety of federal and state laws seek to prevent false advertising. Section 43(a) of the Lanham Act gives perhaps the most thorough guidance in a federal context. In order to prove a case of false advertising, the plaintiff must prove the following five elements:
- The defendant made false or misleading statements as to products;
- Either actual deception or a tendency to deceive a substantial portion of the intended audience occurred;
- The deception was material, meaning that it was likely to influence purchasing decisions;
- The goods that were advertised traveled in interstate commerce; and
- Likelihood of injury to the plaintiff.
Pricing-based DeceptionsOne of the many methods advertisers employ that can result in accusations of false advertising is pricing-based deceptions, of which there are several distinct species.
- “Liquidation” – There are a number of cases in which products sold at so called “liquidation sales” have turned out to be as expensive or more expensive than the same products would have otherwise been. By marking up the price “before” the sale and then “discounting”, advertisers are able to suggest serious savings. An added difficulty in liquidation sale cases rests on the improbability of collecting judgments where the guilty retailer is often out of business by the time a judgment is obtained.
- Hidden fees – Service providers who attach fees that are not disclosed to the customer can also face false advertising charges. Adding charges on a bill in a way that might not be noticed or disputed is nevertheless an extremely common practice.
- Misusing “free” – Any American reader will be familiar with a “buy one, get one free” sale, of BOGO. Many consider this to be an example of false advertising because the second item isn’t actually “free,” it is included in the cost of the first.