Several agencies established by the US government safeguard consumers. The Federal Trade Commission (FTC) is responsible nationwide for enforcing consumer laws. These laws are about advertising and other general business practices. The Consumer Financial Protection Bureau safeguards consumers from financial malpractices, and banks or other financial institutions that perform this type of malpractice. The Food and Drug Administration (FDA) is in charge of labeling products, and FDA looks after the labeling of pharmaceutical and nutritional products.
The FTC protects the interest of all consumers against unfair trade practices. Section 5 of the Federal Trade Commission Act defines deception. It identifies deception as an attempt to mislead consumers and influence their buying decisions. Omitting vital information can also be misleading. Sellers are liable to provide correct information to buyers. Sometimes, third parties are also liable for aiding in advertising false claims. These third parties include advertising agencies, website designers, and catalog makers.
Firms or sellers provide false advertisements of their products to influence buyers. False advertising includes providing wrong information or omitting vital information about products.
To rule the advertisement as false, the consumer has to present proof before the court. The buyer has to prove that he saw the advertisement and that it influenced him. The buyer also has to prove that the advertisement is misleading and untrue. The lie must be about something important. The proof must also show that the buyer bought the goods only based on the advertisement.
There are several different kinds of deceptive advertising. They are as follows:
Deceptive pricing: In some cases, firms hide several taxes and surcharges from buyers. For instance- An online food delivery app that claims to deliver food for only $20. A buyer viewing the advertisement decides to buy food from there. Due to certain illegal charges put on it, the final page of the payment bill due is $40. Buyers have the right to file suit against such hidden costs.
Deceptive quantities- In some cases, firms provide fake measurements to buyers, and the quantity given is less or more than the stated quantity. These firms are accountable for deceptive quantities.
Deceptive comparisons: There is always competition between companies in the market. However, this competition is healthy only when they promote their features in advertisements, and the advertisements become misleading if the companies start comparing their products with others.
Deceptive Warranty: Firms provide warranties to buyers to increase their brand value. However, firms may deny assisting clients or misleading them with these warranties in some cases. The Buyers can then file a suit.
Bait and switch: The firm uses this technique to market a high-end product before offering a cheap one. The company first advertises a cheap product with that they do not intend to sell. When the buyer approaches the company, they persuade him to buy the high-end one.
Misleading depictions: In some cases, firms provide appealing images on the packaging, which mislead buyers into buying products.
Omitting vital information: In some cases, companies leave necessary information to persuade buyers, and such information could influence the customer’s buying decision.
Laws Enforced by FTC
The FTC has laid down laws for the promotion of products from various industries. They are as follows:
Business prospects: The Franchise and Business Opportunity Rule lays several rules. These rules mandate the business ideas of sellers to provide a disclosure document. This document needs to reach the buyer ten days before making the payment, and it must include all details of the sale, cost of business, and duties of the seller after the sale.
Buy one get one free: The FTC lays down specific guidelines for buy one get one sale. Companies must mention all the terms and conditions of the deal beforehand.
Jewelry: The FTC’s jewelry guide mentions several guidelines for different kinds of jewelry. The guide mentions certain aspects necessary for a diamond to be flawless or jewelry to be gold plated.
Environment friendly claims: A firm cannot falsely classify a product as environmentally friendly. For instance, false labeling any product as recyclable is wrong.
Made in the USA: A product cannot be falsely tagged as made in the USA.
The FTC, from time to time, tracks various mediums for false advertisements. The FTC can file a civil lawsuit against any firm not following the guidelines. The District Court can order to stop the advertisement. Courts can also impose fines of up to $43792 for not following orders. If buyers have incurred losses, the court can direct the firm to provide damages in some instances. Courts have ruled several companies guilty of false advertising. Hyundai and KIA, Kashi, and Definity eye cream are some of these companies.
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