proof for false advertising



To establish that an advertisement is false, a plaintiff must prove five things: (1) a false statement of fact has been made about the advertiser's own or another person's goods, services, or commercial activity; (2) the statement either deceives or has the potential to deceive a substantial portion of its targeted audience; (3) the deception is also likely to affect the purchasing decisions of its audience; (4) the advertising involves goods or services in interstate commerce; and (5) the deception has either resulted in or is likely to result in injury to the plaintiff. The most heavily weighed factor is the advertisement's potential to injure a customer. The injury is usually attributed to money the consumer lost through a purchase that would not have been made had the advertisement not been misleading. False statements can be defined in two ways: those that are false on their face and those that are implicitly false.

Types of False Advertising

Today's regulations define three main acts that constitute false advertising: failure to disclose, flawed and insignificant research, and product disparagement.
Failure to Disclose It is considered false advertising under the Lanham Act if a representation is "untrue as a result of the failure to disclose a material fact." Therefore, false advertising can come from both misstatements and partially correct statements that are misleading because they do not disclose something the consumer should know. 
Flawed and Insignificant Research Advertisements based on flawed and insignificant research
Alpo Pet Foods v. Ralston Purina Co., 913 F.2d 958 (D.C. Cir. 1990), shows how basing advertising claims on statistically insignificant test results provides sufficient grounds for a false advertising claim. In this case, the Ralston Purina Company claimed that its dog food was beneficial for dogs with canine hip dysplasia, demonstrating the claims with studies and tests. Alpo Pet Foods brought a claim of false advertising against Purina, saying that the test results could not support the claims made in the advertisements. Upon looking at the evidence and the way the tests were conducted by Purina, the court ruled not only that the test results were insignificant but also that the methods used to conduct the tests were inadequate and the results could therefore not support Purina's claims.
Product Disparagement Product disparagement involves discrediting a competitor's product.

Creating a false or misleading impression

Businesses are not allowed to make statements that are incorrect or likely to create a false impression.
This rule applies to their advertising, their product packaging, and any information provided to you by their staff or online shopping services.It also applies to any statements made by businesses in the media or online, such as testimonials on their websites or social media pages.
For example, businesses cannot make false claims about:
  • the quality, style, model or history of a product or service
  • whether the goods are new
  • the sponsorship, performance characteristics, accessories, benefits or use of products and services
  • the availability of repair facilities or spare parts
  • the need for the goods or services
  • any exclusions on the goods and services.
It makes no difference whether the business intended to mislead you or not. If the overall impression left by a business’s advertisement, promotion, quotation, statement or other representation creates a misleading impression in your mind—such as to the price, value or the quality of any goods and services—then the behaviour is likely to breach the law.

There is one exception to this rule. Sometimes businesses may use wildly exaggerated or vague claims about a product or service that no one could possibly treat seriously or find misleading. For example, a restaurant claims they have the ‘best steaks on earth’. These types of claims are known as ‘puffery’ and are not considered misleading.

Examples of false or misleading claims

Some examples of business behaviour that might be misleading are:
  • a mobile phone provider signs you up to a contract without telling you that there is no coverage in your region
  • a real estate agent misinforms you about the characteristics of a property by advertising 'beachfront lots' that are not on the beach
  • a jewellery store advertises that a watch 'was' $200 and is 'now' $100 when the store never sold the watch for $200
  • a business predicts the health benefits of a therapeutic device or health product but has no evidence that such benefits can be attained
  • a transport company uses a picture of aeroplanes to give you the impression that it takes freight by air, when it actually sends it by road
  • a company misrepresents the possible profits of a work-at-home scheme, or other business opportunity.

False or misleading advertising

These are some of the most common types of false or misleading advertising reported to the ACCC.

Fine print and qualifications

It is common practice for advertisements to include some information in fine print. This information must not contradict the overall message of the advertisement. For example, if an advertisement states that a product is ‘free’ but the fine print indicates some payment must be made, the advertisement is likely to be misleading.

Comparative advertising

Some advertisements or sales material may compare products or services to others on the market. These comparisons may relate to factors such as price, quality, range or volume.
Comparative advertising can be misleading if the comparison is inaccurate or does not appropriately compare products.

Bait advertising

Bait advertising takes place when an advertisement promotes certain (usually ‘sale’ prices) on products that are not available or available only in very limited quantities. It is not misleading if the business is upfront in a highly visible, clear and specific manner about the particular product ‘on sale’ being in short supply or on sale for a limited time.

Environmental (‘green’) claims

Environmental claims may appear on small household products such as nappies, toilet paper, cleaners and detergents through to major white goods and appliances. They may include statements about environmental sustainability, recycling, energy and water efficiency or impact on animals and the natural environment, for example 'green', 'environmentally safe' or 'fully recycled'.
Businesses making these claims must be able to substantiate them.

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