False Advertising Issues For Emerging Businesses

false advertising claims

False Advertising is the use of false, misleading, or unproven information to advertise products to consumers.

Basics: In the United States, the federal government regulates advertising through the FTC, and additionally permits private litigation through various statutes, most notably the Lanham Act. Each state also has a series of related unfair competition laws which regulate false advertising

These are some common examples of the types of deception that can run afoul of false advertising laws:

  1. Outright false statements
  2. Omitting pertinent information
  3. Photo retouching
  4. Hidden fees or surcharges
  5. Misleading health claims
  6. Manipulation of terms
  7. Incomplete or misleading comparisons

As an emerging business, there are several things you should consider regarding your company’s advertising:

What types of advertising are acceptable?

In general, any truthful statement of fact about your business, its products, and/or services is acceptable. However, you must be prepared to back up any and all statements made to consumers. Terms such as “best”, “largest”, “fastest”, “most reliable”, “easiest” can be very difficult or even impossible to prove so extra caution should be employed if you use these terms of “puffery”. Often these terms are acceptable if presented as an opinion rather than a fact. The safest route is to avoid any slogans or colorful language that you cannot prove (or consult with an attorney prior to doing so).

Are comparative ads acceptable?

The short answer is yes – comparative ads can be very effective. The long answer is that you should be extra-vigilant to ensure that you present an accurate and fair comparison between your product/service and your competition’s product/service. You must be especially careful that any statements you make about a competitor’s product/service are accurate. Problems can also arise when you create an incomplete or inconsistent comparison. By doing a comparative ad, you are directly putting your competitor on notice of the claims you are making about your products and their products. Therefore, the risk is high that any mistakes can lead to legal issues.

ACTION ITEMS

1. Ensure that your advertising is accurate, and any claims of fact can be proven.

2. Do not manipulate terms of art in your industry without being able to justify their use. A term such as “organic” can have many different requirements depending upon the industry.

3. Be extra vigilant in comparative advertising to ensure accuracy, fairness, completeness, and consistency.

4. Consider consulting with an attorney if you are preparing an advertisement that pushes the boundaries.

5. Monitor your direct competitor’s advertisements (and especially comparative ads) to make sure they are accurate and fair.

Douglas Hall has more than two decades of experience assisting businesses with intellectual property litigation and transactional matters. Contact Doug at dhall@lynchlaw-group.com or (724) 776-8000 for guidance regarding advertising your company’s products or services or other intellectual property matters.
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