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Business Deceit 101: Filing A Claim Against False Advertising

We all expect overstatements and puffery in advertising. We understand that we’ll never become Tiger Woods by using TaylorMade golf clubs, and Nike Kickback sneakers will never help us make a LeBron slam dunk.

However, actual false advertising is not frivolous or unimportant. It’s a genuine issue, and gullible consumers can suffer substantial money loss when product advertisements mislead them.

False Advertising Explained

Regular advertising influences consumers into making purchases or using services that they might have ignored or avoided under ordinary circumstances.

The law recognizes consumers have a right to review the specifics of the goods or services they’re considering buying and are entitled to know what to expect to receive in return for the money they spend.

Unlucky for us, some businesses have recognized the power in deceiving consumers through distortions in print, which causes people to take unwarranted action.

We can define false advertising as any print, electronic, online, or media publication designed to fool or deceive buyers. The law considers false advertising an unfair trade practice, making it illegal via state and federal regulation.

Example: Mike’s Furniture Store takes out a full-page advertisement in the Anytown Times promoting a contemporary kitchen set retailed for $7,000 but marked down to $4,500. The ad includes a huge color photo which prompts the townspeople to head into Mike’s to take advantage of the remarkable deal.

When buyers arrive and acknowledge the newspaper ad, salespeople inform them the company is no longer offering that particular kitchen set, but the store carries other comparable furniture for purchase that’s a bit more upscale.

Unfair trade regulation categorizes this unlawful practice as a bait-and-switch tactic.

Mike’s participated in false advertising because the company designed an announcement that promised furnishings of which the store had no intention to sell. The false or deceitful publishing is an irregular trade practice designed entirely to lure patrons into the store so that the company can unjustly enrich itself from a rise in sales.

Protections Against False Advertising

FTC: The Federal Trade Commission is a federal agency that oversees false advertising practices, and the authority relies on consumers, attorneys and competitors to reveal and report any form of misleading commercial marketing.

The FTC also bears the right to impose compliance, announce cease-and-desist orders, file class action lawsuits on behalf of consumers, seek judicial action in the form of injunctions and publicize retractions.

Lanham Act: Consumers can further sue businesses for unlawful advertising under The Lanham Act, a federal statute that provides private remedies to victims residing in diverse states. Here, victims inform federal regulators that an advertisement carries deceit, or they can assert the publication is apt to mislead the public.

The courts will further compel plaintiffs to show the defendant’s publishing caused consumer confusion in the marketplace. The Lanham Act authorizes courts to award complainants both legal damages and injunctions when needed.

State Laws: Most states have consumer fraud statutes in the books that regulate commercial advertising. State measures and consumer protection laws provide for public prosecutors and citizens to request legal and equitable relief from damage caused by unlawful advertisers.

False Advertising Lawsuits in a Nutshell

False advertising victims can file both civil actions and federal claims to request relief from harm caused by a business’s deceptive publications.

If an individual is a business owner, and a competitor harms his or her organization via misleading representations in advertising, the party or business entity can sue for loss of profits or for defamation via product disparagement and seek a court injunction that orders the culpable party to cease and desist.

Complaint Filings: Many people join a class of complainants in class actions lawsuits filed by others who experienced similar damages.

Victims can likewise complain directly to the FTC or can sue alone in state court for harms caused by abuse of unfair practice policy.

Pleadings: State and federal statutes require diverse procedural motions for sending a case to court. However, the elements in forming a prima facie case of false advertising are largely the same.

Here, litigants will plea:

  • The defendant distributed a public statement about a company product or service or about a competitor’s commercial activities. 
  • The defendant’s statement either deceives or possesses the power to defraud a specific market. 
  • The defendant’s fraud is prone to influence the purchasing decisions of targeted consumers.
  • The false advertising carries the potential to cause or has already caused loss or damage to the plaintiff.

Remedies: Both state and federal laws determine the remedies made available for victims of unfair business practices. Yet, some folks may decide to sue business organizations under common law tort theory for fraud or misrepresentation, which permits punitive damage awards when complainants prove a defendant acted willfully.  

Likewise, many modern jurisdictions allow juries to award punitive damages by the action of a statutory rule.

How to Find False Advertising in Today’s Markets

Unlawful Advertising appears in many shapes and sizes. Some consumers easily notice illegal advertising schemes while other deceitful practices fool buyers to a point to where it becomes too late to react.

Let’s glance at a few commercial false advertising tactics to learn how easy one can become a victim of company deceit:

Bait and Switch: As mentioned above, bait and switch takes place when businesses advertise goods they never plan to sell or services they have no intention to supply.

Hidden Cost Deceit: Occasionally a product contains hidden fees that organizations conceal within the publication, frequently encountered in banking and travel propaganda.

Just think about all those surcharges concealed in the immense fine print at the bottom of a credit card application to get an idea of what we’re talking about here.

Many states prohibit this form of price deception, mostly found in sales ads and on web pages, because it confuses consumers, as critical information is both troublesome to locate and also tough to read and understand.

Example: Jack sees a bank ad offering a savings account with no monthly service fees. As he reads on, Jack notices fine print that discloses a $3.00 ATM fee for each withdrawal and an added bank charge of $10 for each month his savings balance falls below $100.

Hence, if Jack didn’t unearth these terms before opening his account, he may have unpleasantly learned that his new savings account wasn’t free at all.

Price Discount Deceit: This arises when businesses employ advertisements that offer bogus or inaccurate information about a product’s value. This regularly appears when vendors promote sales or discounts on merchandise and claim the store once sold the item at a higher price, which is false.

Example: Acme Electronics advertises its new iComputers for $500. The ad claims Acme marked down the machines 40% off its usual price of $830; but in truth, the cost of iComputers at the store never rose past $500.

Misleading Illustrations: Advertisement illustrations can mislead buyers too. Sometimes the good or service consumers receive have nothing to do with the images displayed in ads or presented on product packaging.

Most state legislation prohibits businesses from using misleading illustrations that modify or enhance product images with a resolve to sway consumer decision-making.

Inconsistent Comparison: Periodically, businesses attempt to dupe people into thinking their products are better than the competition, without this really being the case.

An inconsistent comparison occurs when an advertisement notes superior qualities in one item and compares it to other related goods while overlooking relevant facts. This leads buyers to regard the promoted item as the best product out there.

Example: Anytown Petro audaciously claims its gas prices beat rival stations at the pump. Anytown’s web page publishes a handful of competitor prices where consumers pay marginally higher prices.

This forces people to think they are absolutely getting the best value at Anytown, which is wrong because the company failed to cite the other gas stations in the city that offer cheaper prices than theirs.

Quality or Origin Deceptions: It is an unfair trade practice to create misleading claims about the quality or origin of goods.

Example: Anytown Diner makes a TV commercial that declares its hamburger meat is “100% All-American Beef,” which attracts many patriotic customers to the restaurant. In fact, Anytown Inc. receives its meat from China, and the owners know this.  

If you feel you are the victim of false advertising contact The Sanders Law Firm today!