COM LAW CHAP 39-NOT TESTED

3.

Advertisements cannot be unfair, which means that they cannot cause substantial consumer injury that cannot be reasonably avoidable, and they cannot cause substantial consumer injury that outweighs the benefit to consumers or competition.

4.

Advertisements have to disclose relevant limitations and qualifying information underlying the claims.Required disclosures have to be clear and conspicuous. Online disclosures have to be placed as close as possible to the claim being qualified because consumers may not read an entire Web page.

Bait and Switch Advertising

Advertising a product at an attractive price and then telling the consumer that the advertised product is not available or is of poor quality and encouraging her or him to purchase a more expensive item.

1. When will advertising be deemed deceptive?

Advertising is deemed deceptive when a claim is made that would mislead a reasonable person. However, examples of puffery like obvious exaggerations and vague generalities, or things that a reasonable person would not believe to be true, are not considered to be deceptive. Examples of deceptive advertising are: ads that appear to be based on factual evidence but cannot be scientifically supported and ads that include half-truths, which include statements that are true but incomplete. The Federal Trade Commission (FTC) outlines several advertisement guidelines to ensure that they are not deceptive. The guidelines are:

deceptive advertising

Advertising that misleads consumers, either by making unjustified claims regarding a product's composition, qualities, sponsorship, or performance or by omitting a material fact concerning the product's composition, qualities, sponsorship, or performance.

1.

All advertisements, both online and offline, have to be truthful and not misleading.

cease and desist order

An administrative or judicial order prohibiting a person or business firm from conducting activities that an agency or court has deemed illegal.

Lexmark International, Inc. v. Static Control Components, Inc.

Background and facts: Lexmark International, Inc., sells the only style of toner cartridges that work with company's laser printers. Other businesses-known as remanufacturers- acquire and refurbish used Lexmark cartridges to sell in competition with the cartridges sold by Lexmark. To determine remanufacturing, Lexmark introduced a program that gave customers a 20-percent discount on new toner cartridges if they agreed to return the empty cartridges to Lexmark. Static Control Components, Inc., makes and sells components for the remanufactured cartridges, including microchips that mimic the chips in Lexmark's cartridges. Lexmark released ads that claimed Static Control's microchips illegally infringed Lexmark's patents. Lexmark then filed a suit in a federal district court against Static Control, alleging violations of intellectual property law. Static Control counterclaimed, alleging that Lexmark engaged in false advertising in violation of the Lanham Act. The court dismissed the counterclaim. On Static Control's appeal, the US court of Appeals for the Sixth Circuit reversed the dismissal. Lexmark appealed to the US Supreme Court. Decision and remedy: The US Supreme Court affirmed the lower court's ruling. Static Control had adequately pleaded the elements of a cause of action under the Lanham Act for false advertising. The Court's decision clarified that businesses do not need to be direct competitors to bring an action for false advertising under the act.

POM Wonderful, LLC v. Federal Trade Commission

Background and facts: POM Wonderful, LLC makes and sells pomegranate based products. When advertising POM promoted medical studies claiming to show that daily consumption of its products could treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction. These advertisements mischaracterized the scientific evidence. The Federal Trade Commission charged POM with making false, misleading, and unsubstantiated representations in violation of the FTC. POM was not allowed to run future ads asserting that its products treat or prevent any disease unless "randomized, controlled, human clinical trials" demonstrated statistically significant results. POM petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review this injunctive order. Decision and remedy: The U.S. Court of Appeals for the District of Columbia Circuit enforced the FTC's order with respect to POM's ads. The court pointed out "An advertiser who makes express representations about the level of support for a particular claim must possess the level of proof claimed in the ad and must convey that information to consumers in a non-misleading way."

cooling-off laws

Laws that allow buyers to cancel door-to-door sales contracts within a certain period of time, such as three business days.

Counteradvertising

New advertising that is undertaken to correct earlier false claims that were made about a product

2. What law protects consumers against contaminated and misbranded foods and drugs?

The Federal Food, Drug, and Cosmetic Act (FDCA) regulates food and drugs by protecting consumers against contaminated and misbranded foods and drugs. The FDCA establishes food standards, specifics safe levels of potentially hazardous food additives, and provides guidelines for advertising and labeling food products. The FDCA also creates a reportable food registry, establishes record-keeping requirements, requires the registration of all food facilities, and provides for inspections.

2.

The claims made in an advertisement must be substantiated, meaning that advertisers have to have evidence to back up their claims.