1-4-Puffery vs Deceptive Adv

Reasonable Basis Theory -Distinguishes between two types of advertising claims - those that contain ?? and those that simply claim that the product is ?? -When an establishment claim includes a particular level of substantiation (e.g., a claim that scientific studies support the claim), the advertiser must show that ??

(A company must have a reasonable basis to support a product claim prior to making the claim.) -those that contain express representations about the level of support for the claim **("establishment claims") and those that simply claim that the product is effective without indicating any particular basis for the claim ("non-establishment claims"). -*the advertiser must show that the claim is supported by that level of substantiation.

Campbell's Soup and the Federal Trade Commission

-(implied claims-omission) Claimed that the soup was low in cholesterol and lowered the risk of heart disease -FTC said the advertisements were misleading because they failed to disclose the high sodium content in the soup --False demonstrations and dramatizations: pictures can lie, they can create deception; Campbell's soup and marbles -The visuals of the ad are just as important, aka don't display the wrong product while making claims about another -The FTC defines what a consumer may or may not know -The FTC looks at the gestalt of the ad- all aspects of the case, how words and images are interacting, to see if it would give the wrong context to the consumer

False establishment claims=(____ or ____ message that "tests prove that X cleans better," "studies show that y lasts longer," or some similar msg indicating that ___ or ____ evidence supports claim; adv law subjects them to ___ scrutiny

-*Explicit or implicit* message that "tests prove that X cleans better," "studies show that y lasts longer," or some similar message indicating that scientific or experimental evidence supports the claim -Firestone tires stop 25% quicker, but *no tests were conducted* -adv law subjects them to special scrutiny

5 Characteristics of puffery

-Claim is general and vague; not specific -Claim is unverifiable or impossible to measure -Claim is a subjective statement -Claim contains hyperbole; Exaggeration that on which no reasonable consumer would rely =Nondeceptive

DECEPTIVE Implied claims

-Exaggerated significance (Carnation Instant Breakfast has as much mineral nourishment as two strips of bacon, but bacon is a poor source of nourishment) -Confusing presentation (language and/or photos) -Omissions (Campbell's chicken noodle soup is low in fat and cholesterol, which may reduce heart disease, but it is high in sodium, which increases heart disease)

False advertising laws prohibit only false statements of fact, not opinions= -Fact is "a specific and _______ claim, capable of being proved ____ or of being ________ interpreted as a statement of ______ fact."

-Fact is "a specific and measurable claim, capable of being proved false or of being reasonably interpreted as a statement of objective fact."

Federal Trade Commission (Wheeler-Lea Amend? # Commissioners appointed by President for # year terms?)

-Founded in 1914 for antitrust regulation -Wheeler-Lea Amendment (1938) added regulation of advertising ("unfair or *deceptive* acts or practices") to its mandate -Five Commissioners appointed by President for seven-year terms

FTC enforcement discretion is guided by: (3)

-High price and Low frequency of purchases: focus on expensive, durable products -deterrence of widespread deceptive conduct: focus on national advertising and explicit claims that are difficult for consumers to evaluate -risk of physical or economic injury: focus on health and safely claims

Procter & Gamble v. Kimberly-Clark -COURT'S CONCLUSION: PUFFERY (exaggerated or false praise)

-Neither party was able to identify a *"fixed set of criteria"* for what "fit more naturally" means. -Claim based on *subjective* preference is difficult to disprove = based on subjective preference —> acceptable puffery

PAPA JOHN'S TV AD CLAIMS -COURT'S CONCLUSION: ADS MISLEADING

-Statement must be considered in the *overall context* in which it appears. -Papa John gave definition to the word "better," so the *statements take on the characteristics of fact.* -Pizza Hut provided *evidence* that there are no "demonstrable" or "quantifiable" differences between the parties' sauces or doughs

If FTC finds that an advertisement is deceptive, it has several sanctions it can use= (5)

-advertiser sign a consent decree (adv stop running the sanctioned ad) -fine the advertiser -a cease-and-desist order= order the advertiser to stop running the ads -and/or= require the advertiser to run corrective ads that clearly correct the deceptive message -advertisers may also be asked to redress consumer injury; refund money or pay for damages (only if cease-and-desist violated)

The FTC goes to federal court in two cases=

-an enforcement proceeding -direct action against unfair and deceptive practices

-Falsity: the core of advertising regulation

-falsity and misleadingness are actionable, even if advertiser did not intend to deceive

If the Ad Is Misleading, Who Is Being Misled? (what is required for them to be deceived?)

-misleading is not same as confusing -if consumers do not understand msg, there is no deception -consumers do not need to accept the false message as true in order to qualify as deceived =all that is required is that they perceive it; they understand that the advertiser wants them to beleive it

The Target Consumer (actual deception?)

-no proof of actual deception is required; even an unsuccessful ad may be prohibited

Literally False Claims Also Known as Explicitly False Claims -Express claims

-violate the Lanhan Act without further proof of consumer deception: courts presume that consumers receive the false message -express claims are stated literally in an ad; verbal or visual --Tropicana= 'Only one can be the best'; 'pure juice as it comes from the orange'

FTC: Tripartite regulatory structure= who can enforce?

1. govt regulators at federal and state level, as enforcers of public interest 2. competitors, who pursue their own interests against unfair competition 3. consumers, often in class actions based on state consumer protection law, asserting they've been decieved or harmed by adv

FTC uses a 3-part test in evaluating deceptive/untruthful advertising=

1. there must be a representation, omission, or practice that is likely to mislead the consumer 2. The act or practice must be evaluated from perspective of a reasonable consumer 3. The representation, omission, or practice must be material- likely to affect a consumers choice or use of product/service (type of economic detriment; if mislead bc the individual suffered a monetary loss from the purchase)

Comparative Claims: -What Data Would you need to substantiate this claim?

900 women had tried Body on Tap shampoo and found it superior to Vidal Sassoon shampoo and other shampoos

ASA bans POM Wonderful 'Cheat Death' ad

A poster campaign for juice brand POM Wonderful has been banned by the Advertising Standards Authority for exaggerating the health benefits of the pomegranate juice brand. -juice contributes to a longer life?

Who can the ftc target?

Advertisers Advertising agencies (they knew or should have known) Endorsers

FTC- Structure = FTC and 3 divisions

Bureau of Competition (administers antitrust law) Bureau of Economics (research and economic analysis) Bureau of Consumer Protection (advertising)

FTC exercising its broad regulatory mandate=

Federal court litigation -Adversarial administrative proceedings require adv to cease and desist unfair/deceptive -Rulemaking and public statements of enforcement policies/guides -formal and informal advisory opinions

S.C. Johnson (Ziploc) v. Clorox (Glad-Lock)-Outside expert (retained by S.C. Johnson) conducts "torture" texts on Ziploc Slide-Loc bags: -Court's conclusion

Humorous ads can make believable claims that will be tested using the same standards as other claims.

Scientific Evidence Must be Competent and reliable

Tests, analyses, research, studies or other evidence based on the expertise of professionals that have been conducted and evaluated in an objective manner by qualified persons using procedures that yield reliable results. Must be sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence

FTC- Deceptiveness -false ad=

an advertisement, other than labeling, which is misleading in a material respect -made by statement, word design, device, sound & to extent that ad fails to reveal facts

So why would the FTC ever choose the administrative route?

bc the FTC does not get any special deference in federal court it must prove the facts as any plaintiff must

Once a specific target has been identified, the FTC may use administrative trials to obtain

cease-and-desist orders, which can then be enforced in federal court

False Implied Claims

claim that is literally true but still deceives or misleads consumers by its implications

Starting with federal court can be more ___, since injuctive and monetary relief are available together

efficient

False Demonstrations and Dramatizations

even if an advertiser possesses substantiation that product/service is capable of achieveing a certain result, it is false to advertise it by using a rigged demonstration -Colgate -Palmolive shaves sandpaper -Campbell's vegetable soup and marbles =Is the focus of the commercial related to the undisclosed prop?

the legal standard regarding the truthfulness of advertising in order to protect consumers from false ad is examined and sanctioned under the jurisdiction=

jurisdiction of the FTC

A global standard for deceptive adv?

no; definitions vary

advertisers are responsible for claims that are?

reasonably implied from their ads and claims that are expressly stated; all objective claims & those from consumer testimonials

FTC- Unfairness requires that=

the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition

advertising is deceptive when=

there is a representation in the ad or an omission in the ad that is likely to mislead reasonable consumers to their detriment (mostly economic)

only ad elements that convey factual claims can be false or misleading

true

FTC's consumer protection powers=

unfair or deceptive methods, acts, or practices in or affecting commerce are within the scope of the law