False Advertising Laws: How Long Do They Last?

False advertising is the act of promoting false or misleading statements about a product or service to influence consumers' purchasing decisions. It can take the form of factual inaccuracies or intentional deception, often with the goal of increasing profits. Various regulations and laws exist to limit false advertising, such as the Lanham Act in the United States, which allows civil lawsuits for false advertising. State governments in the US also have their own laws, like California's prohibition on untrue or misleading information in advertising. The Federal Trade Commission (FTC) enforces truth-in-advertising laws and takes action to stop scams and compensate victims. Other countries, like Australia and the United Kingdom, have their own regulations and laws to address false advertising and protect consumers.

False advertising laws in the US

False advertising is prohibited under federal law and by various state statutes in the US. The Federal Trade Commission (FTC) enforces truth-in-advertising laws, which apply to any medium, including online, in print, on the radio, or on billboards or buses. The FTC pays particular attention to advertising claims that can affect consumers' health or finances, such as those about food, drugs, dietary supplements, alcohol, and tobacco.

The FTC Act prohibits unfair or deceptive advertising, meaning that advertising must tell the truth and not mislead consumers. Claims must be substantiated, especially when they concern health, safety, or performance. Sellers are responsible for claims they make about their products and services, and third parties, such as advertising agencies, may also be liable for making or disseminating deceptive representations.

The Lanham Act is a federal law that allows competitors to bring civil lawsuits for false advertising that "misrepresents the nature, characteristics, qualities, or geographic origin" of goods or services. In addition to the FTC and state agencies, consumers and competitors may bring private lawsuits against false advertisers.

Some common forms of false advertising include:

• Deceptive or misleading product descriptions, such as claiming a product has certain features or benefits that it does not.
• Misleading illustrations or photographs.
• Use of colouring or other modifications to make a product appear to be of a different quality.
• False claims of scientific support or endorsement.
• Hidden fees or surcharges that cause the final price to be higher than the advertised price.
• Deceptive measurements or quantities, such as using a different standard of measurement to make a product seem larger or smaller than it is.
• Deceptive comparisons with competitors' products.
• Deceptive guarantees or warranties that do not specify a remedy.

False advertising laws in the UK

The Consumer Protection from Unfair Trading Regulations 2008 (CPUTR or CPRs) is a key piece of legislation that addresses false advertising in the UK. It prohibits unfair commercial practices, including misleading actions, omissions, and aggressive tactics, which prevent consumers from making informed decisions. The CPUTR applies to both business-to-consumer and business-to-business marketing.

The UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code) and the UK Code of Broadcast Advertising (BCAP Code) are the two advertising codes that outline the standards expected of advertisers. The CAP Code regulates non-broadcast advertising, including press ads, online ads, social media, company websites, and marketing sent by post, email, or posters. The BCAP Code regulates advertising on television and radio.

To comply with the advertising codes, marketers must ensure that their ads do not materially mislead consumers. This includes providing material information and substantiating objective claims. Subjective claims and puffery are allowed as long as they do not mislead consumers materially. Marketers must also be careful not to make misleading comparisons with competitors or misleading price claims.

The consequences of non-compliance with the advertising codes and consumer protection legislation can be severe. In addition to the ASA's sanctions, businesses may face fines, legal action, and reputational damage. With the upcoming Digital Markets, Competition and Consumer Bill, the Competition and Markets Authority (CMA) is expected to be granted greater powers to impose penalties for breaches of consumer protection law.

False advertising laws in Australia

False advertising is a serious issue in Australia, with laws in place to protect consumers from deceptive claims and conduct. The Australian Consumer Law prohibits businesses from making false or misleading representations about various aspects of their goods or services, including:

• The quality, value, or grade of goods or services
• The performance characteristics, accessories, benefits, and uses of goods or services
• The place of origin of a product (where it was made or assembled)
• The price of goods or services
• A buyer's need for the goods or services
• Testimonials relating to goods or services
• Any guarantee, warranty, or condition on the goods and services

The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing these laws and has taken action against businesses found to be in breach, such as imposing a $44.7 million fine on the travel group Trivago for misleading customers.

Businesses can break the law not only by making false statements but also by failing to provide relevant information or facts. This includes situations where a person fails to alert another to facts known only to them, and those facts are relevant to a decision. Additionally, silence can be considered false and misleading if a person is not given important information or if a change in circumstances makes previously provided information incorrect.

It is important to note that businesses can mislead consumers without intending to. The court will decide if a reasonable person would believe the statement, and the actions and statements of the business, not its intentions, are what matter.

Exaggerated claims, also known as 'puffery', are allowed, but there is a fine line between puffery and false or misleading conduct. A business must ensure that its advertising is not misleading and seek legal advice if necessary.

False advertising laws in New Zealand

False advertising is covered by the Fair Trading Act (FTA) in New Zealand. The FTA is a law that protects consumers from unfair business practices, including false advertising, misleading information, unfair practices, and unsafe products. It applies to all commercial activities, trades, professions, and businesses, as well as overseas businesses supplying goods or services within New Zealand.

The FTA makes it illegal for businesses to mislead or deceive consumers with false claims or by withholding important information. This includes any impressions from images, as well as information that is left out, which may create a false impression. It is important to consider what the average consumer would take away from the advertising to ensure they are not misled. Exaggerations that are unlikely to mislead anyone are known as 'puffery', but businesses still need to ensure consumers are not misled by these.

The FTA also covers unfair sales practices such as bait advertising, harassment and coercion, unconscionable conduct, pyramid selling, referral selling, and pro-forma invoicing. It gives consumers special rights if they buy products or services on layby, by uninvited direct sales, or if they purchase extended warranties that fall within the FTA's definitions.

The FTA applies to all aspects of the promotion and sale of goods and services, including advertising, pricing, sales techniques, and financing. It also applies to certain activities, such as employment advertising, whether or not the parties are 'in trade'.

Penalties for false advertising

United States

In the United States, false advertising is regulated by the Federal Trade Commission (FTC) under the Federal Trade Commission Act. The FTC enforces truth-in-advertising laws and can take legal action against businesses that engage in false or misleading advertising. The penalties for violations include:

• Cease and desist orders: The FTC can issue orders requiring businesses to stop engaging in false advertising practices.
• Fines: The FTC can impose fines of up to $51,744 per violation.
• Injunctions: Federal district courts can issue injunctions to prevent businesses from continuing to engage in false advertising.
• Civil penalties: Violations of some FTC rules can result in civil penalties of up to $40,654 per violation.
• Criminal penalties: In some cases, false advertising can lead to criminal charges, including fines and imprisonment.
• Refunds: Businesses may be required to provide refunds to consumers who were harmed by the false advertising.

Australia

In Australia, false advertising is regulated by the Australian Consumer Law (ACL) and the Competition and Consumer Act 2010. The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing these laws. The penalties for breaches of these laws include:

• Monetary penalties: The ACCC can issue infringement notices with penalties of up to $18,780 for corporations and $3,756 for individuals. The maximum pecuniary penalties for civil contraventions are $2,500,000 for individuals and $50 million for corporations.
• Criminal penalties: In some cases, false advertising can result in criminal charges, including fines and/or jail time. Individuals found guilty of criminal cartel conduct could face up to 10 years in jail and fines of up to $626,000 per offence.

Other Jurisdictions

Other countries and regions have their own laws and regulations regarding false advertising, with varying penalties. For example, in Queensland, Australia, the maximum penalties for false or misleading conduct are $50 million for corporations and $2.5 million for individuals.

It is important to note that the specific penalties for false advertising can vary depending on the specific circumstances of each case, the jurisdiction, and the laws in place at the time of the violation.

Frequently asked questions