Top Banner
11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 1/16 ExtenZe infomercial via YouTube 14 False Advertising Scandals That Cost Brands Millions KARLEE WEINMANN AND KIM BHASIN SEP. 16, 2011, 5:33 PM In advertising, there's a big difference between pushing the truth and making false claims. Is a product really "scientifically proven," and are "results guaranteed"? For companies that cross the line, it can cost millions. Major brands have had to pay up, facing scrutiny from competitors and the FDA. Most of us have been victims of false advertising. The question is, will companies change their marketing policies, or continue to prioritize profits over the consumer's right to know? We found 14 major brands that have faced false advertising scandals -- some are still ongoing, and not all companies have had to pay up, but each has dealt with a fair amount of negative publicity.
16

14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

Jun 01, 2020

Download

Documents

dariahiddleston
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 1/16

ExtenZe infomercial via YouTube

14 False Advertising ScandalsThat Cost Brands MillionsKARLEE WEINMANN AND KIM BHASINSEP. 16, 2011, 5:33 PM

In

advertising, there's a big difference between pushing the truth and making false claims.Is a product really "scientifically proven," and are "results guaranteed"?

For companies that cross the line, it can cost millions. Major brands have had to pay up,facing scrutiny from competitors and the FDA.

Most of us have been victims of false advertising. The question is, will companies changetheir marketing policies, or continue to prioritize profits over the consumer's right toknow?

We found 14 major brands that have faced false advertising scandals -- some are stillongoing, and not all companies have had to pay up, but each has dealt with a fair amountof negative publicity.

Page 2: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 2/16

Flickr

Activia yogurtDannon's popular Activia brandyogurt lured consumers intopaying more for its purportednutritional benefits -- when itwas actually pretty much thesame as every other kind ofyogurt.

Falsely touting the "clinically"and "scientifically" provennutritional benefits of theproduct, Dannon even got afamous spokesperson, JamieLee Curtis, for the supposeddigestion-regulator. But after awhile, some customers didn'tbuy it.

A class action settlement lastyear forced Dannon to pay up to$45 million in damages to the consumers that filed the lawsuit and others who said they'd beenbamboozled. The company also had to limit its health claims on its products strictly to factualones.

Source: ABC News

Page 3: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 3/16

www.flickr.com

Taco Bell's seasoned beefWhen consumers raisedquestions about what wasactually seasoning Taco Bell'sseasoned beef, the companydidn't know how to respond.

It was simply using oat filler --which means the meat isn'tseasoned beef at all, accordingto USDA standards. Thefranchise had been tricking itsconsumers into thinking itsproducts were of a higher gradethan they actually were.

Taco Bell took the opportunityto poke fun at itself, hoping tomitigate the PR disaster. Thecompany even took out a full-page newspaper ad thanking complainants for suing. So far, sogood. Taco Bell's proactivity and willingness to address the controversy have restored some faithin the fast food giant.

The woman who started all the hullabaloo ultimately dismissed her lawsuit.

Source: Ad Age

Page 4: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 4/16

Olay

Definity eye creamIn 2009, an Olay ad for itsDefinity eye cream showedformer model Twiggy lookingwrinkle-free -- and a whole lotyounger than her years (sheturns 62 next week). Turns outthe ads were retouched.

British lawmakers yankeddigitally altered spots, citing notonly a gross misrepresentationof products, but the ad'spotentially negative impact onpeople's body images.

Source: Yahoo! Shine

Page 5: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 5/16

Screengrab from AmsterdamAdBlog on YouTube

Hyundai and KIA vehicles' horsepowerHundreds of car owners wereextremely disappointed to findout that Hyundai and Kiaoverstated the horsepower insome of their vehicles.

In 2001, the Korean Ministry ofConstruction and Transportationuncovered themisrepresentation, which forsome models was as much as9.6 percent more horsepowerthan the cars actually had.

A class action lawsuit insouthern California claimed thecompanies were able to sellmore cars and charge more pervehicle because of the falseclaims. In the end, the autopowerhouses had to pay customers -- the settlement was estimated to be between $75 million and$125 million.

Source: GirardGibbs.com

Page 6: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 6/16

Groupon

Groupon's tourism adsGroupon was sued by a SanFrancisco-based tour companyearlier this year for allegedlyrunning misleading ads onGoogle. Groupon's accused ofusing keywords related tocertain tourist attractions totrigger ads, while not actuallyoffering coupons related to anyof those attractions.

The class-action suit is currentlyongoing -- it was approved by ajudge in August after Groupontried to get it dismissed.

Sources: MediaPost, AdWeek

Page 7: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 7/16

Ben+Sam on Flickr

Rice Krispies & Frosted Mini-WheatsKellogg's popular Rice Krispiescereal had a crisis in 2010 whenit was accused of misleadingconsumers about its immunityboosting properties. The FederalTrade Commission orderedKellogg to halt all advertisingthat claimed that the cerealimproved a child's immunitywith "25 percent Daily Value ofAntioxidants and Nutrients --Vitamins A, B, C and E,"stating the the claims were"dubious."

Just a year prior, the companysettled with the FTC overcharges that its Frosted Mini-Wheats cereal didn't live up toits ads. The campaign claimedthat the cereal improved kids' attentiveness by nearly 20%, and was shot down when the FTCfound out that the clinical studies showed that only 1-in-9 kids had that kind of improvement --and half the kids weren't affected at all.

Source: CNN

Page 8: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 8/16

By welivefast on Flickr

AirborneHerbal supplement Airbornewas a national hit throughoutthe 1990s. Marketing of theproduct claimed that it helpedward off harmful bacteria andgerms, preventing everydayailments like the flu andcommon cold. But did Airborneactually have these benefits?

Apparently not, which sparked ahuge false advertising scandal.There were no studies tosupport Airborne's effectivenessthat met scientific standards --so the Center for Science in thePublic Interest (CSPI) gotinvolved.

The high-profile scandal endedwith a huge settlement, with Airborne having to pay $23.3 million in the class-action lawsuit, andan additional $7 million settlement later. The exact benefits to users of Airborne remainunestablished.

Source: NPR

Page 9: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 9/16

ExtenZe infomercial via YouTube

ExtenzeExtenze has claimed to be"scientifically proven toincrease the size of a certainpart of the male body."

But in 2010, the company hadto pay a $6 million settlement todisappointed, less-endowed meneverywhere.

Source: BNET

Page 10: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 10/16

By GoodNCrazy on Flickr

SplendaThe Sugar Association saysSplenda's "Made from Sugar"slogan is misleading, and thatthe sweetner is nothing morethan "highly processed chemicalcompound made in a factory,"reports CBS.

In 2008, the association firstfiled a suit against Johnson &Johnson subsidiary McNeilNutritionals, which thencountersued the associationengaging in a "malicious smearcampaign." The two partiesreached a confidentialsettlement before going to trial.

Equal also took its rival to courtin 2007, accusing "the makersof Splenda of confusing consumers into thinking its product was healthier and more natural thanother artificial sweeteners." The two parties also reached a confidential settlement.

Page 11: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 11/16

By eflon on Flickr

PennzoilPennzoil was ordered to pullads that showed their oilperforming better than theircompetitors after a NewJersey judge called them"false and misleading" and"repugnant." Houston-basedPennzoil was claimingsuperiority over four differentbrands, including NewJersey-based Castrol.Pennzoil is no longer allowedto claim that their oil isbetter at protecting carengines than Castrol.

Brett Favre is shown in thetelevision and internet ads,using Pennzoil as face paint before the big game.

Source: Houston Chronicle

Page 12: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 12/16

By sling@flickr on Flickr

New BalanceA New Balance sneaker thatreportedly helped users burncalories were called outwhen studies did not find anyboosted health benefits fromwearing the shoe.

The toning sneaker, claimedto use hidden boardtechnology, were advertisedas calorie burners thatactivated the glutes, quads,hamstrings and calves.Plaintiffs discovered that theshoe was instead an injuryhazard, without any secrettechnology, and are seeking$5 million in compensation.The sneakers cost about $100.

Source: Reuters

Page 13: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 13/16

By alexstaubo on Flickr

KashiDespite claims to the contrary,Kashi Company's "All Natural"products were chock full of"almost entirely synthetic andunnaturally processedingredients," according to to theclass action lawsuit filed againstthem. In fact, ingredients thatare considered prescriptiondrugs and federally-classifiedhazardous substances werefound to be the primaryingredients in the so called"natural" foods.

The lawsuit, on behalf aproposed class of all U.S.consumers, says that Kashi putthe all-natural labels on theirfoods even though they knewthe claim to be false. For example, Kashi GoLean shakes are composed almost entirely ofunnatural processed ingredients.

Source: Top Class Actions

Page 14: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 14/16

the impuslivebuy via flickr

Eclipse gumEclipse gum claimed that itsnew ingredient, magnolia barkextract, had germ-killingproperties. Businessweekreports:

Consumers sued Wrigley[in 2009] in federal courtarguing the subsidiary ofprivately held Mars Inc.made misleadingadvertising claims aboutthe germ-killing propertiesof Eclipse.

As part of the settlement,Wrigley will change how itmarkets and labels its gum.It agreed to pay $6 millionto $7 million to a fund thatwill reimburse consumers up to $10 each for the product and cover other costs of thesettlement, according to the law firms Blood Hurst & O'Reardon and Robbins GellerRudman & Dowd.

Page 15: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 15/16

By Small Town OK on Flickr

Classmates.comMillions of people lit up whenClassmates.com sent them anemail saying old friends weretrying to contact them,promising to rekindle oldfriendships and flames ifsubscribers upgraded to a"Gold" membership.

But even with an upgrade, theexpected reunions never came.Turns out the social networkingsite used the ploy to get users topony up extra dollars. In 2008,one miffed user filed suitalleging the "deceptive" emailswere false advertising.

He eventually bested thewebsite, which agreed to payout a $9.5 million settlement -- $3 for every subscriber who fell for the dirty trick -- to resolve thecase.

Source: Mashable

Page 16: 14 False Advertising Scandals That Cost Brands Millions False...11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider ... 11/17/2014 14 False Advertising

11/17/2014 14 False Advertising Scandals That Cost Brands Millions - Business Insider

http://www.businessinsider.com/false-advertising-scandals-2011-9?op=1 16/16

Screengrab from BleedingRose2727 YouTube

Companies spend tons of money to market theirproducts

Check out the 12companies thatspend the most onadvertising >

* Copyright © 2014 Business Insider Inc. All rights reserved.