The Legal Risks of False Advertising and Misleading Marketing Claims

Making a sale isn’t always easy, so it’s understandable when a Florida business pushes the envelope of what customers can expect from their products or services. While courts accept some amount of marketing “fluff” from most businesses, there comes a point where businesses can take things too far. Should this happen, the business puts itself at increased risk of legal trouble.

What Is False Advertising?

False advertising is the use of deceptive, misleading, or untrue marketing claims to give a false impression about a product or service to current or prospective customers. In plain English, this means a company lies about something it sells to trick someone into making a purchase. Common examples of misleading marketing claims that rise to the level of false advertising include:

• Bait-and-switch: A business might make a claim about a low price on a product to get people into their store. Once the customer arrives, the business claims it has “sold out” of that product and tries to sell the customer a slightly different product at a higher price.
• Hidden fees or costs: The business gives the impression that a product or service costs a certain price, but fails to mention fees or other hidden costs.
• False claims about the performance or benefits of a product or service: A business says their products or services can do certain things or perform a particular way without having evidence to support the claim.
• Misrepresenting where a product comes from: Claiming a product was made in one country when in reality, it was made in a different country.
• Fake or misleading endorsements: A person endorses a product they never used, or that person gets paid to endorse a product where the relationship between the person and the company selling the product isn’t disclosed in the advertisement.
• Deceptive imagery: A company might use camera tricks to make a product seem bigger (such as food) than what’s actually being sold.

What’s Not False Advertising?

A good way to understand false advertising is to understand what’s legal in terms of marketing claims. The most prominent is “puffery,” which is a statement that qualitatively exaggerates the benefits of a product or service. Statements that constitute puffery (which is legal in most industries, one exception being the legal profession) share certain characteristics, such as being:

• Subjective
• Unverifiable
• Vague

The key distinction between puffery and false advertising is that the latter is often measurable or verifiable. For example, a company that touts its product as being “the best in Florida” is most likely engaged in puffery. But if that same company says their product “is the number one selling brand in the state of Florida” (and it turns out this isn’t true), then that likely constitutes false advertising.

Federal Laws Against False and Deceptive Advertising

There are many federal statutes or regulations that prohibit false, deceptive, or misleading advertising. However, many of these laws only apply to a particular product, industry, or method of advertising. For example, the Federal Trade Commission has a Funeral Rule which outlines how funeral homes can market their services to consumers. There’s also the Telemarketing Sales Rule, which allows for the enforcement of the Telemarketing and Consumer Fraud and Abuse Prevention Act and applies to fraudulent acts by telemarketers. However, the primary federal law to stop false advertising is the Federal Trade Commission (FTC) Act. This is a broad law that doesn’t focus just on false advertising, but deceptive or unfair business practices in general. The FTC Act gives the FTC the authorization to enact regulations to prevent unfair or deceptive business practices, as well as enforce those regulations. If a business is found to have violated the FTC Act, the FTC can potentially impose civil monetary fines of more than $50,000 per violation. It should be noted that the FTC won’t impose this civil penalty unless it has first sent a Notice of Penalty Offenses to the business telling them to stop their deceptive or unfair business practices. If that business continues to engage in unlawful acts, then the FTC can impose fines. The FTC can also sue the offending business and recover legal remedies to compensate the victims of the false advertising or other unfair business practice. These remedies can include monetary damages, voiding of contracts, refunding of money, or the return of property.

The Florida Deceptive and Unfair Trade Practices Act

Florida has its own version of the FTC Act, also known as the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). While it largely mirrors the FTC Act in what business can’t do in terms of deceptive practices in advertising, it does more for consumers in that it makes it easier for them to sue the business directly for the unlawful conduct. For a consumer to successfully sue a business for false advertising under the FDUTPA, the consumer must show:

• An unfair or deceptive act;
• The unfair or deceptive act caused harm to the consumer; and
• The harm the consumer suffered resulted in recoverable damages, such as economic losses.

When proving this first element regarding the unfair or deceptive act, the consumer must typically prove not just that the defendant committed the alleged act, but that the defendant did so with the knowledge that their claim was misleading or false. If the Florida consumer wins their case, they can potentially recover actual damages plus attorney’s fees and court costs.

Jimerson Birr Can Help Defend Against False Advertising and Deceptive Marketing Claims

If someone accuses your business of unfair or misleading marketing methods, you could soon find yourself in legal trouble that could cost your business a significant amount of money. Besides the monetary damages, your business is also at risk of suffering a tarnished reputation. Jimerson Birr is ready to help determine your legal options, including what legal defenses may be available. Better yet, if you’re thinking about a new marketing or ad campaign, contact us to set up a consultation. One of our experienced business law attorneys can examine your proposed plans to ensure they comply with relevant Florida and federal false advertising laws and regulations.