False Advertising Research Paper

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FalseAdvertising

By:DeannaNanni

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Outline:

1. Abstract

a. Describingthepaper

2. BodyofthePaper

a. WhatisFalseAdvertising?

i. Whyfalseadvertisingoccurs.

ii. WhattheFederalTradeCommissiondoesversewhatFederal

CommunicationsCommissiondoes.

iii. Whyfalseadvertisingcanbeconsidereddeceptiveadvertising.

iv. Advertisinglawverseconsumerlaw.

b. TheTypesofFalseandMisleadingAdvertising

i. Fivedifferentbusinesstacticsthatconsumersneedtowatch

outfor.

ii. BaitandSwitch

iii. HighPressure

iv. DeceptiveformContracts

v. ArtificiallyInflatingPrices

vi. Failuretodisclosure

c. ACaseExemplifyingFalseAdvertising

i. LordandTaylor

1. FTCChargesItDeceivedConsumersThroughPaidArticle

inanOnlineFashionMagazineandPaidInstagramPosts

by50“FashionInfluencers”.

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d. ExampleofFalseAdvertising

i. LaneBryantAd

ii. Exemplifyingthefivetacticsdiscussedearlier.

3. Conclusion

i. Falseadvertisingandhowitsurroundsus.

Abstract:

Thispaperexamineswhatfalseadvertisingis,whattolookforinan

advertisementifyoubelieveitisfalse,andhowyoucansueifyouareharmedbythe

falseadvertisement.Thisisanimportantissuetoaddressintodaysworldbecause

peoplearetryingtosavemoney,andadvertisersaregettinggoodatconvincing

peopletobuyitemstheydonotneed.Ifocusontheconsumerandhowhe/shecan

lookoutforfalseadvertisements.Itispossibletobringafalseadvertisementcaseto

courtifyouaredirectlyaffectedbythead.Ialsoshareanexampleofanadusedby

“LaneBryant”promotingoneoftheirsales.Thetheoryofthispaperissupportedby

primarysourcessuchasrecentcases,theFCC,andtheFTC.Ialsoincludesecondary

sourcesfromarticlesandTruthinAdvertising.Thispaperportraystheimportance

offalseadvertisingandhowitsurroundsconsumer’severyday.

ResearchQuestion:

Whatisfalseadvertisinganddoyouknowwhenyouarebeingexposedtofalse

advertisements?

TextofPaper:

Whatisfalseadvertising?

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Advertisementssurrounduseveryday.Whendriving,billboardsareon

majorhighways,whentakingpublictransportationsadvertisementssurroundthe

wallsofthebusortrains,andwhenwaitingforabusthebusstopsevenhaveads.

Thoseadsaresupposedtogivepeopletruthfulinformationandinformcustomers

onnewproducts.Butsomeadsarenotalwaystruthfulandthatiswhyfalse

advertisingissuchanimportantissue.Companiesaredesperateforsales,whichis

whytheywilltryextrahardfortheiradtoattracttherightaudience.“Today,

companiesareevenmoredesperateforsales,asfamiliesclingalittletightertotheir

dollars”.1Sincefamiliesarealwaystryingtosavemoney,companieswilldo

whatevertheycantoappealaconsumerifitevenmeansputtingoutafalsead.“By

federallawalladsmustbetrueandwhenTheFederalTradeCommissionhasfull

controloverthat.“TheFTClooksespeciallycloselyatadvertisingclaimsthatcan

affectconsumers’healthortheirpocketbooks–claimsaboutfood,over-the-counter

drugs,dietarysupplements,alcohol,andtobaccoandonconductrelatedtohigh-

techproductsandtheInternet.TheFTCalsomonitorsandwritesreportsaboutad

industrypracticesregardingthemarketingofalcoholandtobacco”.2

TheFederalCommunicationsCommissionworkshandinhandwiththe

FederalTradeCommission.“Broadcastersareresponsibleforselectingthe

broadcastmaterialthatairsontheirstations,includingadvertisements”.3TheFCC

expectsthebroadcastersnottoairanymisleadingorfalseadvertisements.TheFTC

isresponsiblefordeterminingifanadisfalse.

Falseadvertisingcanbeknownasdeceptiveadvertisingormisleading

advertising.Deceptiveadvertising“referstoamanufacturer’suseofconfusing,

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misleading,orblatantlyuntruestatementswhenpromotingaproduct.Advertising

lawwillprotectconsumersfromdeceptiveadvertisingthroughtheenforcementof

specificlegislation.Advertisinglawandconsumerlawhasbasicallythesame

function:topromotetruthinlabeling”.4Consumerlawis“Astateorfederallaw

designedtoprotectconsumersagainstimproperlydescribed,damaged,faulty,and

dangerousgoodsandservicesaswellasfromunfairtradeandcreditpractices”.5

“Advertisinggenerallyreferstopaidformsofcommunicationthataredistributedat

theinitiativeofeconomicoperators(radio&television)aspartofanintentionaland

systematicefforttoaffectindividualattitudesandchoicesinrelationtothe

consumptionofgoodsandservices.6“Misleadingadvertisingisanypublishedclaim

thatgivesaconsumeranincorrectunderstandingoftheproducttheyareinterested

inpurchasingorusing”.7Whenbusinessesadvertisetheymustbetruthful.“No

businessmaymakefalse,misleading,ordeceptiveclaimsaboutaproductregarding

its:price,quality,andpurpose”.8Ifacustomersuffersafinancialloss,oranyother

kindofdamageduetomisleadingadvertisingcanparticipateinaclassaction

lawsuittorecovercompensation.9

TheTypesofFalseandMisleadingAdvertisingTactics

Companiesusetacticstolurecustomersintobuyingaproduct.Thereare

quiteafewtacticsthatcompaniesusebutherearefiveofthem.Oneiscalled“Bait&

SwitchAdvertising”.10Thisiscommonlyseeninacircularormagazinewherethe

companyadvertisesaproductthatitdoesnothave.Itusuallyisonsale,sothe

customerismoreinclinedtobuy.Butoncethecustomerentersthestore,thestore

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normallydoesnothaveit,sotheyofferthecustomerasubstitutebrand,whichis

moreexpensivethantheoriginalitemtheyadvertisedbefore.Amorecommonly

seen“BaitandSwitch”tacticiswhenacardealershiprunsanadthataluxurycar

hasdroppedfrom$40,000to$25,000.Theypostthatadsotheycanlurecustomers

tocomeintothedealershipandcheckoutthedifferentcarstheyhave.Oncea

customerwalksinaninquiresabouttheadhe/shewillaskaboutthedealandthe

salespersonwillmakeitsoundslikethedealershiponlyhadoneortwomodels

listedatthatpriceandtheyalreadysoldthem.Whatcanaconsumerdotoprotect

him/herselfineventthishappens?One,ifyouarealreadyatthedealershipyoucan

asktoseethetransactionmadebeforehandtomakesuretheywerenotlying.Truth

inadvertisingsays,“Onestepyoucantakeistocallaheadtoanystoreorshowroom

tocheckthattheproductinquestionremainsinstockandavailableforsale.Besure

toaskforthenameofthesalespersonwithwhomyouarespeakingsothatyouare

abletoreportnotonlythecompanybutalsothespecificsalespersontotheFTCin

theeventacomplaintisfiled”.11

Thenextoneiscalled,“High-PressureSalesTactic”.12Thisnormallygetsa

consumertopurchaseaproducthe/shedoesnotneedorwant.Thisisusuallyseen

throughtelemarketersoranunsolicitedsalesperson.Thebestwaytoavoidgetting

caughtinto“highpressure”istoplaceyourphonenumberona“DoNotCallList”.It

isalsoimportanttomakedecisionsbeforehandinsteadofmakingthemonthespot.

Giveyourselftimetothinkofadecisionbecauseyoucanalwaysgobacktothe

place.Lastly,donotletunsolicitedsalespeopleintoyourhome.Makesuretodothe

homework-researchisveryimportantbecauseitwillsavethecustomertimeand

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beabletomaketherightdecision.Next,understandsalestactics.Salespeoplehave

toreachdeadlines,beawareiftheymentionthisisthelastsofa,orpriceswill

double.Lastly,stopthechatter.Maintainrelationshipswiththesalespersonand

knowwhentocutofftheconversation.Ultimatelytheconsumerisincontroland

shouldbeabletosteerawayfromhigh-pressuresalestactics.13

Nextis,“DeceptiveformContracts”whichiscontractsoragreementsthat

havefineprintoraretoocomplicated.14Theconsumercaneasilyoverlookthis

agreement.AccordingtoTruthinAdvertisingaconsumershouldalwaysreadthe

fineprint.Asaconsumeritisimportanttorememberthatadvertisersaretryingto

sellussomething,andtheycantakeadvantageofusbysayingthefineprintsuper

fastinaradiocommercial,orinanadhavingthefontbesupertinycomparedtothe

headlineandbodytext.15Disclosuresshouldbeclear,whichmeansitshouldnotbe

hidden.Thereisnoruleonhowtinyfontshouldbeorhowlongitismentionedfor

ontheradioortelevision.“TheFTCdoesusea4-prongedtesttodetermineifan

ad’sfineprintpassesmuster:Prominence,presentation,placement,and

proximity.”16Prominencehastodealwithfontsize-canpeoplereadandnotice?

Presentationreferstothewayitissaidandthelayoutofthedisclosure.Next,the

placementreferstowherethedisclosureislocated.Lastly,areproximityandthe

fineprintneartheclaimitqualifiesfor?Iftheconsumercananswernotoanyof

thesefourrulesthenthefineprintdoesnotmeetthestandardsofthelaw.17

Therecanalsobe“ArtificiallyInflatingPrices.”18Thisiswhenaconsumer

seesanadoracommercialandthedealseemstobegreat.Butoncetheconsumer

lookscloselyorinquiresaboutthedealhiddenfeesmaybeinvolved.

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Lastly,“Failuretodisclosure”iswhenthecompanyforgetstotelltheconsumera

dealhasexpiredornotavailableanymore.19Ifaconsumerhasexperiencedfalseor

misleadingadvertisinghe/shemaybeawardedavarietyofremedies.Remedies

include:“Monetarydamages,injunctionsorderingthebusinessestostoprunning

theadvertisements,injunctionsorderingthebusinessestostopengagingin

deceptivepractices,andinjunctionsorderingthebusinessestoincludedisclosure

statementsintheiradvertising.”20“TheSupremecourtrarelytakescareoffalse

advertisingcases.”21Ifaconsumerwantstobringafalseadvertisingcasehe/she

shouldfileasuitinacivilorsmallclaimscourt.22

CaseexemplifyingFalseAdvertisingLordandTaylorSettlesFTCChargesItDeceivedConsumersThroughPaidArticleinan

OnlineFashionMagazineandPaidInstagramPostsby50“FashionInfluencers”

LordandTaylorisanationalretailerandFTCchargedthecompanywith

deceivingconsumers“bypayingfornativeadvertisements,includingaseemingly

objectivearticleintheonlinepublicationNylonandaNylonInstagrampost,without

disclosingthatthepostsactuallywerepaidpromotionsforthecompany’s2015

DesignLabclothingcollection.”23LordandTaylorwentaheadandpaid50online

influencerstopostthemselveswearingthesamepaisleydressfromthenew

collectiononInstagram.LordandTaylorfailedtorevealthateachinfluencerwas

paidthousandsofdollarsinexchangeforthetheirendorsementaswellasgiventhe

dress.WhatLordandTaylordidwrongwastheydidnothavetheinfluencerssay

theywerecompensatedinexchangefortheirendorsements.24TheDirectorofthe

FTC’sBureauofConsumerProtection,JessicaRich,said:“Lord&Taylorneedstobe

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straightwithconsumersinitsonlinemarketingcampaigns.Consumershavethe

righttoknowwhenthey’relookingatpaidadvertising.”25TheFederalTrade

Commissionistoreporttoconsumerswhenanadisfalse.HereLordandTaylordid

notdiscloseimportantinformationthattheseendorserswerepaid.

ExampleofFalseadvertisingLaneBryantadvertisement:

Thisisanexampleoffalseadvertisement.Itsays“40%off

entirestoreonabsolutelyeverything!”Butifyounoticethe

smallerprintsays,“excludesDKNYJEANSproducts,SPANX,

andASSETSproducts.”Thisisconsideredfalseadvertising

because“onabsolutelyeverything”and“entirestore”

makesitfalse.Ifaconsumerjustsaw“entirestoreon

absolutelyeverything”he/shehaseveryrighttobelieve

thatLaneBryantmeanseverything.Everythingelseonthis

adisentirelytrue.Tomakethisadtruethestorewould

needtoput“40%off”!“ExcludesDKNYJEANSproducts,SPANX,andASSETS

products.”26

Conclusion:

AsIwanttogointoadvertisingasacareerIstopandthinkaboutthe

advertisementsIseeday-to-day.AsIwalkthroughamallandlookoutstore

windowsatsignsthatsay,“Wholestore40%off”!Ican’thelpbutwonderifthe

storeisactually40%off?Idecidetogointothestoreandofcourseitiseithersale

itemsthatare40%offoritjustexcludesnewarrivals.Thetrickysignworked

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becauseitstillhadmewalkintothestore.Thatiswhyadvertisingworksevenifitis

falseadvertising.OnetopicItalkedaboutisfineprint.It’slegal,aslongasit

correspondswiththeadandthenakedeyecanreadit.Companieshavecruelsales

tacticsthatworkonanyconsumer.Itisourjobasconsumerstonotfallfortheir

tacticsandbeasmartshopper.Baitandswitch,highpressure,deceptiveform

contracts,artificiallyinflatingprices,andfailuretodisclosurewerethetypeoffacts

mentionedinJacobMeyersarticle.Hisarticleinformedconsumerswhattodoin

situationswhenthosetacticsareused.

WithouttheFederalTradeCommissionwewouldnothaveanybody

regulatingtheadvertisementswesee.TheFederalCommunicationsCommission

canthenbroadcasttheadsaftertheFTCregulatesthem.Thesetwofederalagencies

arewhatpreventusfrombeingexposedtofalseadvertisements.Itisnotonly

advertisementstheycanpreventusfromseeing,it’salsocompanieslike“Lordand

Taylor”whousednativeadvertisementspostedthroughInstagram.Thegeneral

publicissupposedtobeinformedwhentheyarebeingexposedtoanad.Thatis

whyInstagramhassponsoredpostsbecauseweknowwearebeinginformed.

Payingpeopletoposeinadresswithoutthegeneralpublicknowingthatendorsers

aregettingpaidforitisjustasfalseasamisleadingadvertisement.

Itisimportantitkeepoureyeoutforadsthataremisleadingorfalse.The

FederalTradeCommissionistoprotectusfrombeingharmedorexposedtofalse

advertisements.Remembertousethetacticsandalwaysthinkbeforepurchasinga

productthroughanadvertisement.AsseenintheLaneBryantadasmentioned,the

fineprintwilltelltheconsumerwhattherealsaleis.Companieswanttomake

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money,andthebestwaytodothatistoluretheconsumerintobuyingaproduct

withagooddeal.Consumerslovebargainsandtheylovetosavemoney!Overall,if

falseadvertisingharmssomeonehe/shemaybringthecasetoasmallclaimscourt.

Alwaysreadthefineprintinanydisclosureofanadvertisement.Lastly,company’s’

tacticsaretotrickconsumersintogettingagooddeal.Neverbefooled.

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Bibliography

PrimarySources:

"Complaints About Broadcast Advertising." Federal Communications Commission. Web. 22 Mar. 2016. Katz, Mitchell J. "Lord & Taylor Settles FTC Charges It Deceived Consumers Through Paid Article in an Online Fashion Magazine and Paid Instagram Posts by 50 "Fashion Influencers"" Federal Trade Commission. 15 Mar. 2016. Web. 22 Mar. 2016. S.Doc.No.2AdvertisingTrendsandConsumerProtection(2009).Print. "Supreme Court Changes False Advertising Law Across the Country." LexisNexis Academic. Legal Monitor Worldwide, 26 Mar. 2014. Web. 22 Mar. 2016. "Truth in Advertising." Federal Trade Commission. Web. 22 Mar. 2016.

Secondary Sources:

"Consumer." Deceptive Advertising Definition -. Web. 23 Mar. 2016. "The Legal Definition of Advertising." AGCM. Web. 23 Mar. 2016. "False and Misleading Advertising." Jacob and Meyers. Web. 23 Mar. 2016. "Bait & Switch Advertising." Truth In Advertising. 2014. Web. 23 Mar. 2016. Better Business Bureau. Start with Trust®. "High Pressure Sales Tactics." Better Business Bureau. 7 June 2013. Web. 23 Mar. 2016. "The Fine Print - Read It." Truth In Advertising. 2012. Web. 23 Mar. 2016. Meem, Sarah. "How to Sue Someone for False Advertising." EHow. Demand Media. Web. 23 Mar. 2016.

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FootNotes

1AdvertisingTrendspg.22FederalTradeCommission3FederalCommunicationsCommission4“Consumer”5“Consumer”6TheLegalDefinition7FalseandMisleadingAdvertising8FalseandMisleadingAdvertising9FalseandMisleadingAdvertising10FalseandMisleadingAdvertising11BaitandSwitch12FalseandMisleadingAdvertising13BetterBusinessBureau14FalseandMisleadingAdvertising15TheFinePrint16TheFinePrint17TheFinePrint18FalseandMisleadingAdvertising19FalseandMisleadingAdvertising20FalseandMisleadingAdvertising21SupremeCourtChangesFalse Advertising Law Across the Country22Meem,Sarah23FederalTradeCommission24FederalTradeCommission25FederalTradeCommission26TheFinePrint