DECEPTIVE ADVERTISING

Jovana Mandic
MACO 370
Dr. Stewart
11/30/2015

Advertising is a powerful promotional tool and a central component in marketing

practices of every company. The main purpose of advertising is to attract certain audience
and sell them the product. Advertisements are multidimensional and they come in many
different shapes and forms. They vary from being as simple as signs or logos, to,
nowadays, more common written or audio messages, illustrations, pictures and videos.
Different types of communication mediums such as TV, radios, newspapers, online
media, posters, allow constant circulation of advertisements, and the number of people
exposed to them is getting bigger every day. But is the overexposure to advertisements a
good way of staying informed about latest trends and products or something to be
concerned about? Taking into consideration that, to increase the chance of selling their
products or getting a desired message across, companies often intentionally use lies,
twisted information, and puffery in their advertisements, people should start paying closer
attention and question things they see or read in ads. (Jayahaadran, 2004) This essay will
explain deceptive advertising and discuss the ways it affects the beliefs and behaviors of
those exposed to it. The essay will also provide a brief analysis of different types and
methods the companies used to deceive, along with examples court cases and federal law
regulations related to this issue.
Deceptive advertising is as old as advertising itself. Ever since people have
started selling products, they realized that good promotion played a significant role in
achieving better results. Often, the product not attract enough attention on its own, so
instead of improving it, people selling the product started lying about it. Advertisers
throughout the history lied about the things they were selling. (truthinadvertising.org,n.d.)
The testament to this are beliefs were once popular tonics and other liquids that the

advertisers claimed to have ability to cure headaches, stomach pains, low spirits or
even baldness. (Miklos, 2013) In 1929, a German scientist Franz Lickint, introduced the
results of the first epidemiological study that showed correlation between smoking
cigarettes and the lung cancer. However, it took almost an entire century before U.S.
tobacco companies started to publicly to admit that smoking their products caused serious
health problems for the consumers or in some cases even death. (Harris, 2011) Back in
the day, there were not many advertising tactics since there were not many
communication mediums to choose from. The advertisers or in this case sellers
themselves were not focused on targeting specific audiences, but rather on getting the
word out to as many people as possible.
Surely, the simplest but quite the most powerful form of advertising, the word of
mouth, has been used ever since the exchange of products and services first began, the
advertising we know today is considered to have begun in the seventeenth century, at the
same time newspapers were born. An example of such advertising is an old version of the
supermarket noticeboard, created by a Frenchman Thophraste Renaudot who was the
official physician of Louis XIII. Paris citizens, who were looking for jobs, buying or
selling something, were able to use the board and communicate with other people with
similar interests. Most of their ads were informative in nature, consisting of descriptive,
rather than persuasive language. Even in this period, when advertising first started to take
shape, promoting and informing costumers about new products was of key importance. A
great testament to this is evolution of coffee drinking. Consumption of coffee began in
the Middle East, sometime during the fifteenth century. Its existence was kept secret by
Arabs, who wanted coffee beans and drink recipes only for themselves. However, late in

the fifteenth century, a man named Sufi Baba Budan managed to smuggle a few coffee
beans into India. From there, coffee spread to Italy, and other European countries that
started serving the drink in almost every restaurant. Coffeehouses were emerging too and
their popularity, along as coffees, grew so rapidly was the advertising in newspapers.
One of the ads stated: In Bartholomew Lane on the back side of the Old Exchange, the
drink called Coffee (which is a very wholesome and Physical drink, having many
excellent virtues, closes the Orifice of the Stomach, fortifies the heat within, helps
Digestion, quickens the Spirits, makes the heart light, is good against Eye-sores, Coughs,
or Colds, Rheums, Consumptions, Head-ache, Dropsy, Gout, Scurvy, Kings Evil and
many others) is to be sold both in the morning and at three o'clock in the afternoon. This
early advertisement made the drink sound like a magical cure. Even though some of the
things mentioned were accurate (ex. coffee does suppresses hunger), calling coffee a cure
for certain medical conditions was nothing more than an advertising hype. However,
people believed what they have read and coffee houses filled up with costumers ready to
try this magical drink for themselves. (Winn, 2011) Consequences for the business
owners who wrote misleading ads like this did not exist back then. It was not until 1914,
when the Federal Trade Commission (FTC) was formed and given the authority by the
federal government to regulate and punish false advertising. (Advertising, n.d.)
False advertising occurs when an advertisement does not show products or
services in a true light, or through false statements misrepresents competitors products.
Legally, deceptive advertising is defined as any published claim or advertising material
that gives consumers an incorrect understanding or belief about a product or service

being offered. (legaldictionary.net, n.d.) It is illegal under both state and federal laws,
even in cases where the companies misrepresented a product by mistake.
Consumers can be deceived through many types of false advertising. Some of
them are more obvious than others, but many people unconsciously fall for them anyway.
The most popular types include: inconsistent comparison, price-based deception, bait and
switch, misleading illustrations, price reduction deception, and quality or origin
deceptions. (legaldictionary.net, n.d.)
Inconsistent comparison happens when in an advertisement one product is
compared to another by highlighting only its superior characteristics, and ignoring any
overpowering features the other product might have. The consumers are then fooled that
the advertised product is the best one on the market. Bait and switch is another type that
occurs when a product not intended for sale is being advertised. The companies use this
type of false advertising to attract the customers in, with intend to convince them to buy
some other even more expensive product. The illustrations are often the most obvious
ones because the costumers realized they have been deceived as soon as they open or try
the product. This type of false advertising is intended to convince buyers that the product
they purchased looks exactly as illustrated on the packaging. This is of course, not the
case. Food packaging illustrations usually include additional items do not come in the
package. Misleading illustrations often make food products appear bigger than they
actually are. False coloring and photo shopped images are also used to enhance
appearance of the food coloring to make them more appealing to buyers. Price deception
is used by a company to attract costumers and sell them products by convincing them the
price went down when in fact it never did. Companies promote products that are on sale

or are being sold for less when they were never sold at a higher price. It is also against the
law to make statements about the quality or origin of the product if there are not evidence
to back them up. Not providing information about known defects is also considered false
advertising and withholding this type of information can get companies in a lot of trouble
with the law. (legaldictionary.net, n.d.)
All advertisers want their products to stand out and leave a memorable impression
on as many people as possible. Today, they use advertising that not only shows how good
the product is but how much better it is than all the other products on the market. This
concept is known as comparative advertising. Comparative advertising accounts for onethird of United States advertising. The consumers are often aware of some obvious
attempts the advertisers do to sell idea, product or service. When this happens, even
though the exaggeration is noticeable and there is no question that certain characteristics
of the product were boosted on purpose, there are no grounds for legal action since a
reasonable person would not fall for it. This type of misrepresentation is also known as
puffery and can be found in many advertisements, especially on television. The main
purpose of puffing a product is to exaggerate characteristics that make the product look
the best or adjust the criteria to make the product fit the criteria of the market and
outshine the competition. (Edman, 2001)
Even though the commercial freedom of speech guidelines apply to advertising,
the information intended for audience always needs to be accurate and true. Rules that
regulate false advertising usually apply to information found in print, radio, and TV
advertisements, but also the ones on websites, posters, billboards, fliers, pictures, ,

videos, labels, packaging and even in direct, personal communications with consumers.
(nka.com, 2011)
Along with the Federal Trade Commission Act of 1914, an independent
administrative agency known as The Federal Trade Commission (FTC) was created to
regulate these rules. The purpose of the Federal Trade Commission Act specifically is to
prohibit unfair or deceptive acts or practices related to commerce. The FTC was also
granted the authority to regulate other unfair actions made by different business
monopolies through the Clayton Antitrust Act of 1914. Even though the FTC covers
many areas, just like many other enforcement agencies, they also lack certain
disciplinary. The FTC is unable to directly punish those who violate the law since that is
something the judicial system normally does. However, the agency is allowed to give
their input on a particular case and argue advertisers rights and actions in both state and
federal courts. (Gale, 2007) One thing is clear, if there is not for the FTC and their close
watch on the way companies promote their products, who knows what kind of lies would
people be exposed to and how much money they would waste on products whose
characteristics are far from the ones being promoted.
One of the most recent, and also most famous legal cases, related to
misrepresentation and the FTC was the United States vs. Google Inc. The worlds biggest
Internet search engine was accused of placing cookies on users computers that collected
data about their online activities and used the same data for target advertising. (Price,
2006) The FTC charged Google Inc. in 2011 and 2012, Google believing they
intentionally mislead Safari users who used Googles DoubleClick even though they
promised these users they would be safe from cookies as long as their default settings

were set to block them. To settle the case, Google has agreed to pay $22.5 million for the
misrepresented and damages caused to Apple Inc.s Safari Internet browser users and
promised to stop placing cookies or target its users with advertisements. This settlement
presents one of the FTCs efforts in forcing businesses to keep the promises to their
consumers, and this Google Inc.case is the one with the biggest penalty ever resulted. The
Google Inc. was also forced to deactivate every tracking cookie they have placed up to
that point. (FTC, 2012)
Different cases require different legal enforcements. Different legal options exist,
but the one dealing specifically with false advertising is Section 43(a) of the Lanham Act
or the Trademark Act of 1946. The Lanham Act covers four potential cases: unfair
competition, likelihood of confusion, false advertising, and reverse passing off.
(Reichman, 2002)
Rules on unfair competition include the common law tort and the federal statute,
and demand certain amount of honesty in business and commercial fields. A likelihood of
confusion includes any confusion related to background, content, or relationship between
products or services. This includes any word, term, name, symbol, or device that could
potentially caused the confusion. False advertising, on the other hand, applies to all word,
terms, names, and information that do not present the characteristics of products or
services in true light. Finally, the reverse passing off applies when a party fails to show
the true origin of its product by and does not show who created it. This also applies to
companies that remove or hide the original trademark and misrepresent the product in
that way. (15) Following the Lanham Act, the plaintiff must prove that the harm was so

big that monetary damages alone would not be enough to cover it.
(marketingresearch.org, 2015)
One of the famous cases that applied the Lanham Act was the POM
WONDERFUL LLC. Vs. COCA-COLA CO. case. POM Wonderful LLC filed a Lanham
Act suit against the Coca-Cola Co., accusing them that they lead people into believing
one of their Minute Maid pomegranate and blueberry juice were the main ingredients of
their product when it actually consisted mainly of cheap apple and grape juices, which
made POMs products sales go down. The Coca Cola Company was given a partial
summary judgment by the District Court which, ruled that the Lanham Act restrictions
applied to the misleading name and label of the Coca-Cola Minute Maid product. The
regulations of the Lanham Act apply because the drink failed to name all the ingredients
and indicated juices that accounted for an insignificant amount. (supremecourt.gov, 2013)
It is hard for courts to decide what accounts for a misleading advertising. The
most accurate way to determine this is the consumer surveys. Most of the courts believe it
is absolutely necessary to let the advertiser's targeted audience decide how product claims
are interpreted. If there is a competitor whose goal is to challenge how true an advertising
claim is, they would usually take a statistically random sample of American population
and record their opinion a particular product claim. If majority of sample fail to interpret
the claim right, the claim is considered deceiving. Over the past years, the use of this kind
of data in grew dramatically and it became one of the main things used in plaintiff's
evidence. (Edman, 2001)
It may seem that false or misleading advertising are harmful to consumers only
while companies are the one benefiting from this practice. However, this type of

advertising could have fatal consequences the businesses engage in it. No one likes to be
lied to and deceived, so consumers who experience this are likely to put effort into
revenging companies that caused them harm. Not only those customers will not fall for
companies tricks again, but now mad and disappointed they will most likely spread
negative words about the company, attacks them on social media or in extreme cases
even end up taking the issue to the court. (AZCentral,n.d.)
There are also many consequences for those customers who get tricked but are not
aware of it. The main and probably the most obvious negative result of false or
misleading advertising is making the consumers decisions based on false information. If
consumers are lied to, shown misleading images that hide the real characteristics of a
product, it is less likely for them to make good decisions. Waste of money, time or health
harms are just some of the cons. If a product fails to offer what it promised it would,
costumers will experience either emotional, physical, or material loss, or all three of
them. But again there are consumers who never realize they are being lied to since many
deceptive ads include convincing, well thought-through guarantees coated in fine print,
attractive warranties, and other deceitful ways. (AZCentral, n.d.)
As mentioned before, the biggest effect of false advertising is seen in consumers
behavior and decision-making. Thanks to information that false advertising
provides, potential consumers who adopt misinformation are likely to behave based on an
advertisement, showing either an increase or decrease in their consuming habits.
(biglobe.net, 2012) For example, if a teeth whitening product is being advertised on the
market, a looking to whiten his or hers teeth is likely to end up buying and using the
product if he or she happens to believe in advertising claims. This happens when the

advertisement misleadingly offers a solution to a problem the consumer is experiencing

and manages to gain trust backed up by large investments of money into product
promotion and anything else that makes it appealing.
Advertising laws exist to make advertisers be honest about their products and
have information and data to back their claims and therefore insure costumers are buying
what they are paying for. All companies are regulated through advertising and marketing
laws, and costly lawsuits and civil penalties are just some of the consequences for not
following them. (marketingresearch.org, 2015) Even with all the information available
and different ways to get it, there are people still struggle to understand how advertising
works and manipulates them. They do not pay attention when a products price says
$29.90 instead of $30.00. The first price sounds better and less expensive, even though
that is not the case. Even though there are laws and agencies such as the FTC and the
Lanham Act, the companies and advertisers always manage to find the ways around
them. People realize that there are laws that regulate false advertising and prevent
advertisers from putting out false information even though they are uncertain of the
details. This seems to give them a false sense of security and they may feel that whatever
information is put out there it must be true or otherwise it would not be released.
Unfortunately, this is not the case and many advertisers and companies use this trust to
benefit themselves. (Jacoby&Meyers, n.d.) Those who have experienced financial or
other losses may recover financially by taking a lawsuit action. Their original loss might
have not been as significant but if they have been damaged in any way they should take
advantage and recover their losses. (FTC, n.d.) If the companies put effort into deceiving

and harming its customers, why would not the customers stand up for themselves and put
effort into making them stop?

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