Deceptive/False/Unfair Advertising - PowerPoint PPT Presentation

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Deceptive/False/Unfair Advertising

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  1. Deceptive/False/Unfair Advertising Emma Kazaryan Street Law

  2. Introduction to Consumer Law • Consumers are people who buy or use goods or services • In the US federal and state laws exist to protect consumers from businesses that want to trick or take advantage of them

  3. Deceptive Advertising - Federal Law • The Federal Trade Commission (FTC) is responsible for consumer protection at the federal level • The FTC has rules for “truth-in-advertising” that require that advertising: -must be truthful and non-deceptive -must have evidence to back up its claim -cannot be unfair

  4. What Makes Advertising Deceptive? An advertisement is deceptive if it contains a statement (or omits information) that: • is likely to mislead consumers acting reasonably under the circumstances • is material, which means its important to the consumer’s decision to buy or use the product

  5. What Makes Advertisement Unfair? An ad or business practice is unfair if: • is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and • it is notoutweighed by the benefit to consumers

  6. What Kind of Evidence Must a Company Have to Support an Advertisement Claim? • Before a company runs an ad, it has to have a "reasonable basis" for the claims; this means objective evidence that supports the claim • The kind of evidence depends on the claim • At a minimum, an advertiser must have the level of evidence that it says it has • Customer testimonials are usually not enough to support a claim

  7. Ads the FTC Is Most Skeptical Of • Ads that make claims about health or safety; for example:-ABC Sunscreen reduces the risk of cancer -ABC Water Filters remove harmful toxins from water -ABC Chainsaw’s safety latch reduces the risk of injury • Ads that make claims that consumers would have trouble evaluating for themselves; for example: - ABC Gasoline decreases engine wear -ABC Hairspray is safe for the ozone

  8. Penalties for False/Deceptive Ads • Cease and desist orders • Civil penalties, consumer redress and other monetary remedies • Corrective advertising, disclosures and other informational remedies

  9. Steps FTC Takes to Determine Whether an Ad is Deceptive • How would a reasonable consumer view this ad? • What are the express and implied claims made in the ad? • Is/are the claim(s) material? • Is there sufficient evidence to support the claim(s)?

  10. Note on Washington State Law • The Washington Legislature enacted the Consumer Protection Act (CPA) which is modeled after the FTC Act • The law says: "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." • The Attorney General is authorized to enforce the Act

  11. Deceptive Advertising in Action, in Washington http://www.king5.com/news/get-jesse/WA-attorney-general-T-Mobile-contract-free-204765901.html

  12. RCW 9.04.050False, Misleading, Deceptive Advertising “It shall be unlawful for any person to publish, disseminate or display, or cause directly or indirectly, to be published, disseminated or displayed in any manner or by any means, including solicitation or dissemination by mail, telephone, electronic communication, or door-to-door contacts, any false, deceptive or misleading advertising, with knowledge of the facts which render the advertising false, deceptive or misleading, for any business, trade or commercial purpose or for the purpose of inducing, or which is likely to induce, directly or indirectly, the public to purchase, consume, lease, dispose of, utilize or sell any property or service, or to enter into any obligation or transaction”

  13. RCW 9.04.050: Read Between the Lines “It shall be unlawful for any person to publish, disseminate or display, or cause directly or indirectly, to be published, disseminated or displayed in any manner or by any means, including solicitation or dissemination by mail, telephone, electronic communication, or door-to-door contacts, any false, deceptive or misleading advertising, with knowledge of the facts which render the advertising false, deceptive or misleading, for any business, trade or commercial purpose or for the purpose of inducing, or which is likely to induce, directly or indirectly, the public to purchase, consume, lease, dispose of, utilize or sell any property or service, or to enter into any obligation or transaction”

  14. RCW 9.04.050 Decoded “It shall be unlawful to publish any false, deceptive or misleading advertising, with knowledgeof the facts which render the advertising false, deceptive or misleading for the purpose of inducing the public to purchase property or service”

  15. T-Mobile Commercial • http://www.youtube.com/watch?v=ZuJPXdj7cDI

  16. Applying the Statute • Did T-Mobile publish or display an advertisement? • Was the advertisement false, deceptive or misleading? [Remember FTC guidelines] • Did T-Mobile know that the advertisement was deceptive? • Did T-Mobile intendto induce people to buy something?

  17. Filing a Complaint - FTC Federal Trade Commissionhttp://www.ftc.gov/faq/consumer-protection/submit-consumer-complaint-ftc Note: the FTC does not resolve individual complaints. • Your contact information: name, address, phone number, email • The type of product or service involved • Information about the company or seller: business name, address, phone number, website, email address, representative’s name • Details about the transaction: the amount you paid, how you paid, the date

  18. Filing a Complaint – WA State AG WA State Attorney Generalhttp://www.atg.wa.gov/fileacomplaint.aspx#.UwROhoXj7X5 • Your name, address, phone number, email • The type of product or service involved • Information about the company or seller: business name, address, phone number, website, email address, representative’s name • Details about the transaction: the amount you paid, how you paid, the date • Declaration and signature