Advertising is essential for many businesses, no matter how established. Getting the brand name into the public consciousness can ensure a steady flow of repeat and new customers.
The public, however, is protected by state and federal laws. As a business owner, you are prohibited from making false or misleading claims about your product or service regarding price, quality or purpose.
Examples of False or Misleading Advertising
A business that advertises a product that it does not provide or intend to sell once the customer is in the store and offers or pressures the customer to buy a costlier item or service may be practicing a bait and switch tactic that is unlawful.
Contracts that fail to disclose to the customer that an item or service is unavailable or that the offer has expired is prohibited. Often, there are ambiguous offers or promises made that may be overlooked or easily misinterpreted.
Making false health or nutritional claims occurs more often than many realize. A business may not tout the scientifically proven nutritional benefits of a food unless you have actual proof. In a recent case, Taco Bell advertised that its beef was of the highest quality when it was actually oat filler.
Cosmetic products have been known to advertise that wrinkles have disappeared with use of its product while the models depicted were merely touched up photographs.
Most states have their own laws against false or misleading advertisements. The remedy is to enjoin the advertiser from continuing to make the claims but consumers or business competitors may collect damages. If fraud is proven, the business owner or corporation may face criminal penalties.
Section 43(a) of The Lanham Act
Consumers and business competitors are protected under federal legislation. Section 43(a) codified at 15 U.S.C. Section 1125(a), is known as the Lanham Act. The law requires the following:
- The business made a false statement about its own product or that of a business competitor.
- The statements made deceived or was likely to deceive a large portion of the targeted population.
- The deception more than likely influenced the decision to buy the product.
- Interstate commerce was involved.
- The plaintiff was injured or was likely to be injured because of the false statement either by directing sales away from it or by harming the goodwill of its own product.
- A statement proved to be literally false does not require proof of damages to get relief. If a statement is only misleading, then the consumer or business competitor must demonstrate that the statement did send the implied message and that it deceived a substantial segment of the buying public although proof of an injury is required.
Business owners can avoid potential problems by being truthful in all claims being made and by offering factual proof of any nutritional claims or other benefits. Customer testimonials must also be real.
If offering certain items for sale, be sure to have sufficient quantities on hand and do not immediately offer costlier products but rather have them available.