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Best Business PracticesFalse Advertising

“The Best Post About False Advertising You Will Ever Read!”: When is it False Advertising and When is it Actionable?

By February 18, 2016July 13th, 2021No Comments

Does this title sound a lot like advertisements you see every day? The answer is most likely — yes! Have you ever read an ad and thought “That sounds way too good to be true?”, or “How do they get away with saying that?”. In most cases it’s called “puffery” and it’s completely legal. “Puffery” means statements that are either not capable of being proven true or false ­— for example, “the best car on the road”— or exaggerated advertising, blustering and boasting upon which no reasonable buyer would rely. You should be aware of the differences between false advertising, deceit, and puffery to ensure that your business, or your competitors are not puffing too far, which could lead to a lawsuit.

FEDERAL LAW

The federal law against false advertising is known as the Lanham Act, which protects businesses against the unfair competition of misleading advertising or labeling. A plaintiff that prevails on a Lanham Act claim can obtain an injunction (a type of restraining order) against the false or misleading advertising, as well as damages and, in certain cases, attorneys’ fees. Importantly, only competitors have standing under the Lanham Act, not consumers.

The Lanham Act includes a two-part standard that asks: 1) whether or not the defendant has made a false or misleading representation of fact, and 2) whether the misrepresentation or fact is likely to confuse the general public. Moreover, the statements at issue must be measurable and capable of being proven false by good, old-fashioned science, and the plaintiff bears the burden of supplying this proof.

One famous example of “puffery” is Papa John’s motto: “Better Ingredients. Better Pizza.” In a case between Pizza Hut and Papa John’s, the court found that those two statements were so generic in that they did not identify any specific reasons for “better,” and did not provide any comparisons between themselves and Pizza Hut. That case, and many others, suggests that there must normally be a level of specificity in order to cross the line.

OHIO LAW

Each state also has its own set of consumer protection laws, which protect consumers against unfair competition and deceptive advertising practices. Ohio’s false advertising laws include many provisions similar to those of other states. In Ohio, the Attorney General and consumer protection laws go further than the Lanham Act provides, and put many other restrictions on advertising behavior, including:

  • Prizes offered must really be “prizes,” and not require the consumer to pay anything to receive it.
  • Exclusions and limitations of offers must be listed in the ad.
  • An ad can’t advertise a product as new if it is used or refurbished.
  • Bait-and-Switch tactics are illegal.
  • “Free” must really mean free.
  • Price comparisons must be truthful.
  • If sellers run out of an advertised product they must generally issue a “rain check”.

NAD

Please note that should your business face an issue of this nature, a potentially cheaper way of handling the dispute is to use the National Advertising Division of the Better Business Bureau (NAD). Another perk of using the NAD process, is that they adhere to a strict timetable, which provides written decisions within 60 business days.   However, NAD only reviews claims regarding national advertisements. In analyzing cases, NAD looks at the following factors to assess whether the ad contains false advertising:

  1. Whether the representations concern general matters that cannot be proven or disproved;
  2. Whether the statements are distinguishable from representations of specific characteristics that are measurable by research or test; and
  3. Whether the wording uses expressions of opinion that will be discounted by the buyer.

A few examples of where NAD found the advertisements to either be mere “puffery,” or not enough to meet the elements listed, were:

  • Vital Pharmaceutical’s use of “The World’s Most Effective Energy Drinks,”
  • Wrigley’s use of “For Whiter Teeth, no matter what,”
  • Pepper Seven Up, Inc.’s use of “it tastes so good, you can feel it in your bones,” and
  • ConAgra Food’s claim that “Better Tomatoes Make Better Ketchup.”

The NAD process provides a forum for voluntary self-regulation. If an advertiser does not want to participate in the process, that’s their decision, but the NAD can then refer the matter to the FTC or another appropriate agency should an advertiser refuse to participate or comply after a decision. However, such measures are rare because the NAD has a voluntary compliance rate upwards of 95%.

CONCLUSION

While it is completely reasonable for sellers to seek to distinguish their products from others in the market, and capture the attention of consumers, it is important for you to know where the line is, and be sure not to cross it. Generally, statements that are so exaggerated or generic, and unlikely to deceive the public, will constitute mere puffery. On the other hand, those statements that assert superiority as to specific ingredients or attributes of a product may constitute false advertising.

Ultimately, one tactic to avoid a Lanham Act violation is to stick with words that are opinions, not statements of fact, and don’t directly state that your product is superior to a competitor’s. To avoid violating Ohio and federal law, do not blatantly deceive consumers in advertisements. Be clever, be creative, boast, exaggerate, and puff away – just be aware of where the line is between puffery and deceit, and then stay away from it!

Max Julian is a partner at Gertsburg Licata in the litigation practice group.  He may be reached at (216) 573-6000 or at [email protected].

Gertsburg Licata is a full-service, strategic growth firm, specializing in business law, M&A advisory and executive talent solutions for entrepreneurs and executives of start-up and middle-market enterprises. Contact us today to discuss how we can help you secure your next competitive advantage. We are also home to CoverMySix®, our unique, anti-litigation audit service for middle-market companies.

This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.

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