False advertising: Wikis


Note: Many of our articles have direct quotes from sources you can cite, within the Wikipedia article! This article doesn't yet, but we're working on it! See more info or our list of citable articles.


From Wikipedia, the free encyclopedia

False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or misleading advertising. Truth in labeling refers to essentially the same concept, that customers have the right to know what they are buying, and that all necessary information should be on the label.


Pricing-based methods

Hidden fees and surcharges

Service providers often tack on fees and surcharges that are not disclosed to the customer in the advertised price. One of the most common is for activation of services such as mobile phones, but is also common in broadband, telephony and air travel. In most cases, the fees are hidden in fine print, though in a few cases they are so confused and obfuscated by ambiguous terminology that they are essentially undisclosed. Hidden fees are frequently used in airline and air travel advertising.[1]

This may also occur with the bait-and-switch tactic. BellSouth, for example, often advertised DSL service at low prices and with no installation charges, but in many of the same areas offered only FITL/FTTC service, which requires installation of separate Ethernet wiring into the home at significant cost.

Cable and telephone customers in the U.S. are often hit with a "regulatory cost recovery fee" (among other names), which sounds like it is mandated by the government, but which is actually the provider charging the customer for having to abide by the law. These are allegedly for local number portability and the Universal Service Fund, however consumer advocates allege that, because these fees are totally unregulated and are often well above what the companies are required to contribute, these fees are simply being used to skim extra profit from subscribers.

Mail-order companies often hit customers with "shipping and handling" charges not included in the stated price, and only show at the very end of a TV commercial. Often, this fine print is only on the screen for a fleeting instant, literally to the point where a viewer needs to record the commercial, go back and watch it, and pause it at the right second in order to be physically able to read it all.

Credit card processing companies often use a "monthly vs. annual" fee distinction to mislead customers about total recurring costs. For example, SecurePay advertises a $16 monthly maintenance fee but does not advertise their annual $150 "PCI compliance fee" which is directly taken from the customer's checking account only once a year, after the second year (after a relationship is built and the customer has invested in web scripting). The hidden fee effectively makes customers pay twice what they thought they would be paying on recurring charges.


Rebates were originally intended to pass savings directly from the manufacturer to the consumer. However they are also used as an additional "hidden" cost. Stores advertise a "sale" price and note only in the fine print that it is not the price at which it is actually sold for, but instead an "after rebate" price, which also fails to include sales tax. Many rebate fulfillment companies have been accused of intentionally reneging on obligations to return money to the customers.

Inflated price comparison

In comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low. The intent is obviously to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service. Another common problem is the comparison to old prices on technology, such as computer memory, hard drives, memory cards, USB drives, and other items which tend to fall in price quickly.

In the United Kingdom, under the Sale of Goods Act, any item in a sale must have been sold at the non-sale price for at least 28 consecutive days. Many companies sidestep this requirement by selling items at very high prices in a single store (often in expensive parts of London) for 28 days, before selling the items at the "sale" price in their other stores.

Perpetual "sales"

Another closely-related trick is the "sale" which becomes more or less permanent, though the actual price or percent off may fluctuate, or even briefly go back to the inflated regular price. In the U.S. this is often seen in craft and home décor stores such as Michaels and Jo-Ann, and to a lesser extent Hobby Lobby and Garden Ridge. Because these stores carry a high proportion of seasonal merchandise (Christmas, Halloween, summer, etc.), those products are constantly on "sale" from the time it is all stocked on the sales floor until the time it is all gone at closeout. This defies the definition of a sale event.

"Selected items"

Some stores, especially discount stores like variety stores, use the disclaimer that "selected items" are on sale. However, the items actually "selected" may be arbitrary.

Psychological pricing

Psychological pricing "lowers" the price of item, usually by one cent (or local equivalent), to fool customers into thinking the price is somehow "less" than the price point the seller has set. This works because people tend to pay attention only to the most significant digit in the price.

Another similar trick is to hide the cents in small print. Gas stations in the U.S. almost always tack-on nearly an extra cent per gallon, by advertising as $2.859 (two dollars and eighty five and nine-tenths cents), for example. This is also done by other retailers, such as $199.99 for an item that is, for all intents and purposes, 200 dollars, and actually more after sales tax.

Cost-plus pricing

Some U.S. stores advertise one price on the signs for each item throughout the store, but add the small print "plus 10% at register" at the bottom. This makes real-price comparisons more difficult. In addition, the "cost" to which the 10% is added is not the real wholesale cost as it implies, but also shipping and overhead, thus making it more like "cost plus more costs plus 10%". This is common at some lesser grocery stores such as Food Depot, which end up being nearly the price of regular stores, and often more compared to the other stores' sale prices.

Buy x, get y free

This type of false advertising concludes that more is better. By increasing the price of a firecracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line.

In other cases the free product is of lower quality than the originally-purchased item, or its value a greatly overstated.

Often, buy-one-get-one "deals" are simply an excuse to use the word "FREE" in advertising. The item may simply be "50% off" or "half price", or the shopper may actually be forced to buy at least two, or even in multiples of two. Because the shopper must buy something first, the "free" item is not truly gratis.

On the same note, usually, the cheapest item in the bundle is the one that is "free." For example, at a DVD store that is having a "buy one, get one free" sale, if you purchase one DVD worth $14.99 and another DVD worth $9.99, then the store will mandate the second DVD is the one that you get for free (if there is a tie for cheapest, then it doesn't matter which one is free). Of course, in the merchants' defense, they have been stating this term more clearly. For example, Pizza Hut, when having a deal, advertise something such as "Buy a one-topping large pizza at menu price and get another pizza of equal or lesser value for $0.99."

Some websites use the opposite tactic: a certain service or software is advertised as being free of charge when in truth only registered members are eligible for using the service or downloading the software - and registration isn't free. Sometimes this is taken even further: registration itself is advertised as having a "free trial" or "free tour" which truly means that the consumer's credential information must be entered so that they automatically start charging money after the trial period is over and automatically upgrading the expired trial account to a paying account instead of simply deleting it.

Bait and switch

A bait-and-switch is an offer of a service or product at a very low price (often a loss leader), with little or no intention to sell said service or product as advertised. If available at all, this low price is accomplished by lowering standards on the advertised product, such as guarantees, credit terms, or quality, thereby making it undesirable.

Another method is to offer a "limited quantity" deal, with only a few of the advertised product[s] per store. Once the consumer is in the store, sales personnel will try to coax him or her to purchase a different and more expensive product. This is more common, as it is often legal if there is a disclosure of the limited quantity available. This frequently happens on "Black Friday" newspaper ads published on Thanksgiving in the United States.

Introductory offers

An introductory offer or "free trial" is an offer for an ongoing service that is valid for a limited period. After this period, the price or terms of the agreement change, often without further notice to any consumers which have accepted the initial offer. This differs from bait and switch because the terms or "bait" are in fact actually delivered (making it only deceptive rather than inherently false), but the switch still occurs later on.

The most common form of this is credit cards, which offer low interest rates (0% APR) to start and then rise greatly afterward. Enormous increases in rates are often triggered by a single late or overdraft, in addition to the enormous fees for the late or overdraft. Credit card companies have been criticized in the U.S. for luring college and university students with these offers and then making huge profits from the fees and rates after the students get themselves into debt. Adjustable-rate mortgages are also like this when initial rates are low.

Introductory offers are also very common for cable TV, satellite TV, VoIP, and Internet services, especially those with bundling. The intent is to get the consumer used to receiving the service before the price goes up, so that they will continue on as customers with a much higher profit margin for the service provider. This may also be combined with a requirement that a credit card be automatically billed every month at the provider's convenience instead of the customer's.

"Going out of business" sales

In many cases, the liquidators which are hired to sell merchandise from a closing store will actually raise the prices on items that were already marked-down on clearance. For items already marked-down to 50% off, this means the liquidator is doubling the price (quadrupling it for a 75%-off price), and then "discounting" it from there. Also common is for the sale prices at a retail chain's other stores to be lower than the liquidator's prices at the closing stores. Both of these were proven to be the case in November 2008, with the same liquidator (Hilco) committing both offenses: the markups at Linens 'n Things, and the higher prices on around one-third of the items compared to other Circuit City stores remaining open. Additionally, liquidators refuse to accept returns, so if a customer does find he or she has been overcharged, there is no apparent recourse. [2]

Occasionally, stores will advertise such a sale with no intention of going out of business. By utilizing advertisement with titles such as "going out of business", "store closing", "liquidation sale" or "bankruptcy sale" a message of urgency and "dumped" prices is conveyed—when in reality the business has no plans on closing its store or going out of business. Some cities in the U.S. now require permits for these types of advertisements to combat the false advertising. A few stores have done a "going out for business" sale, perhaps hoping that the small word substitution will go unnoticed.

Units of sale and pricing

Another trick is to make the unit of pricing smaller than the mandatory unit of sale. One example is airlines, where a one-way price is quoted, even though it is impossible to get a one-way ticket for that price, and the flyer is instead forced to pay for a two-way ticket. Similarly, loudspeakers are often quoted as single units, even though the buyer is forced to buy a pair.

In telecom circles, this is known as bundling, where customers are forced to buy two or more of pay TV, landline telephony, mobile telephony, and Internet access in order to get the advertised price, and are otherwise charged more.

In grocery stores, a store may advertise a box of cookies for ten cents, using a giant fluorescent red-orange sticker. However, under the enormous "10¢", there is tiny fine print, less than the size of the large "1", which says "per cookie". This is further reinforced by the fact that the box is clear plastic, allowing the shopper to actually see all of the cookies.

The tactic is also used on infomercials, home shopping TV networks, and barker channels and promos for pay TV premium channels, by stating the amount of each payment instead of the total price, such as "three payments of 99.99" instead of the total 299.97 (essentially 300).

Rent-to-own stores also emphasize the "affordable" monthly payments while downplaying the enormous rental charges that make items far more expensive in the end than an outright purchase.

Memberships and "loyalty" programs

Many grocery stores have started a program where shoppers can get a special card for that store which may save a few cents per item at the checkout, but in turn allows the store to track every purchase the shopper makes. Aside from the often-undisclosed privacy problem, this allows the store to advertise lower prices (if the shopper has a member card), while non-members are charged a higher price that may only be listed in small print.

A slight variant on this approach that also includes the unit price approach is the technique used by Costco and Sam's Club where a person actually pays for a membership with the hope of saving money. However, the items are sold in bulk making it difficult to compare to other stores unless one calculated the unit price. It appears someone might be saving money because of buying more items, but it is hard to tell on the fly without calculating unit price. Then one would also have to consider how many times per year they would buy that bulk quantity, and the amount of waste for perishable items or unwanted excessive quantities, to determine if the membership fee is worth it.

Non-sale advertisements

Some stores will use ads which show products that are not even on sale at all. Since the great majority of advertising is for sales, this often misleads the consumer into thinking that the items are at a special price, when in fact they are not. Wal-Mart and others with "everyday low prices" (meaning no weekly sales ads) are known for engaging in this, especially during the Christmas rush.

Other deceptive methods

Disclaimers and fine print

Companies often use disclaimers to try to absolve themselves of legal responsibility for their own actions. Along with unreasonable conditions, these are usually hidden in fine print, in hopes that consumers will commit themselves without reading them. Some courts of law have struck these "agreements" down as unconscionable and therefore unenforceable.


Originally designed as a guarantee on a product's quality and durability, warranties have since become loaded with fine print, including, but not limited to, the following:

  • Wear and tear is excluded, even though most consumers only use it for that exact purpose (as opposed to simply destroying it).
  • Lack of receipt, meaning that the consumer must keep the receipt from the store for the duration of the entire warranty, which is not convenient.
  • Registration of the product on the company's website is necessary to obtain warranty coverage. Such registration may be long and tedious.
  • Acts of God (such as power surges for electronic equipment) are not covered.

Photo manipulation

Up until very recently, photographs have been accepted as fact in many aspects. However, as photo manipulation technology has improved greatly, this problem is becoming more and more prevalent. HP have used this technique in advertising its photo printers, and it is commonly used now for cosmetics, anti-aging, and weight loss advertisements. There is also the same issue with advertising of TV sets and their "simulated pictures". Additionally, some advertisers use photo images to falsely imply certain product or service characteristics. For example, websites of some completely or predominately online universities include scenes connoting physical classroom or campus activity as a staple of university life when, in reality, the universities maintain few or no physical classrooms or campuses.

Manipulation of standards

Sellers may manipulate standards to mean something different than their widely-understood meaning. One example is with personal computer hard drives. While a megabyte has always meant 220 (1,048,576) bytes in computer science, disk manufacturers began using the irrelevant metric system (SI) prefix meaning of 106 (1,000,000) bytes, thereby overstating capacity by nearly 5%. With gigabytes, the error increases to over 7% (1,073,741,824 instead of 1,000,000,000), and nearly 10% for the newer terabyte. Seagate Technology and Western Digital, were sued in a class-action suit for this. Both companies agreed to settle the suit and reimburse customers in-kind, yet they still continue to advertise this way.[3][4]

Another commonly-exploited manipulation of standards in computers regards the difference between bits and bytes. Simply put, a bit (lower case b) is one-eighth the size of a byte (capital B). When shopping around for speeds of things like Internet service, customers will see advertisements that say things like "1.5Mb/s," thinking that they will get 1.5 Megabytes per second, when they only get around 190 to 200 Kilobytes per second (and the later speed is that displayed as a download speed by most software like Firefox and uTorrent).

Also common in the U.S. is the manipulation of television set and computer monitor sizes. While TV sets have always had to list their actual diagonal size, CRT computer monitors are still a loophole, and are usually sold by the size of the picture tube, not all of which is visible even on the front. The viewable image size (VIS) is actually about one inch or 25mm smaller in diagonal measurement. The advent of LCD screens and plasma displays appeared to have eliminated this problem, but in 2008 many stores again began misrepresenting the size of monitors by using the word "class" after the false statement of size, as in "32-inch class" for a screen with only 31.5 inches diagonal measurement (an overstatement of 3.2% of screen area).

Furthermore, the diagonal measurements of widescreen displays are inherently misleading, as the viewing area is less than that of a fullscreen display with the same diagonal dimension. For the same diagonal, consumers are actually being cheated out of nearly 7% of the screen area for a 16:10 computer display, and over 12% for 16:9 HDTV television sets. This explains why manufacturers so quickly pushed widescreen and eliminated fullscreen, even without any great demand from consumers, and despite the fact it makes viewing most webpages (which are oriented vertically instead of horizontally, like the scroll wheel) more difficult.

Another such issue is with antennas, where dBi is used instead of dBd. In this instance, dBd refers to the gain (and therefore the ability to receive radio waves) an antenna has compared to a standard dipole antenna. However, dBi refers to an imaginary isotropic antenna that radiates equally in every direction, which could never be built. This makes the labeled antenna appear to have more gain than it actually does.

A different use of this tactic is in refinancing of mortgages, where a U.S. radio ad in June 2006 advertised an "apparent" interest rate of just "1¼%" several times, but slipped-in the real rate of over 6% just once in the ad. (See interest-only mortgage.)

Fillers and oversized packaging

Some products are sold with fillers, which increase the legal weight of the product with something that costs the producer very little compared to what the consumer thinks that he or she is buying. Food is an example of this, where chicken meat is injected with broth or even brine (up to 15%), or TV dinners are filled with gravy or other sauce instead of meat. Both malt and ham have been used as a color filler in peanut butter.[5] Canned tuna may also be labeled with a weight that includes the water or vegetable oil, though these are almost always drained off and are therefore useless.

In other cases, packages are under-filled, simply leaving empty space at the top, in products such as coffee cans which cannot be seen into until being purchased and opened at home. Particularly deceptive is when the same size of packaging is used for less product than it used to be. This deceives consumers into continuing to buy the product, which they expect to have the same amount it always has. To evade legal problems, the label is changed to reflect the actual new amount, but this is essentially fine print which anyone is unlikely to notice. The package may also be reduced in size — Hershey's and Coca-Cola have engaged in this practice, among others. This may be imperceptible, such as changing the bottom of a jar of mayonnaise to have a very deep indentation.

A similar problem in Christmas lights and other light strings is that the length of each set has gotten shorter since the 1990s, despite containing the same number of lights. Originally 8 inches (20 cm) for most sets of 35 or more, it became 6 inches (15 cm) by the 1990s, 4 inches (10 cm) in 1998 when new UL rules took effect, and now even less than that in most cases, to as little as 2 inches (5 cm). This not only forces consumers to buy more sets to cover the same length or area, but it is also detrimental to energy use. The reduced length of the set is given in small print while the number of lights is in large and bold print. Some also fail to list the lighted length, instead including the lead-in cord which has no lights.

Misrepresentation of endorsements

Ads and labels often use descriptive terms or locations to increase the perceived value of a product.

An example would be advertising white sparkling wine as "Champagne" when it is from Burgundy instead of Champagne, or Vidalia onions which are from Texas instead of near Vidalia, Georgia. These can also be considered infringement of trademarks in many cases.

Another example is the celebrity endorsement, when the celebrity does not even use the product. Companies may also claim non-celebrity endorsements, such as by "four out of five" doctors (usually "in a recent survey"), or use actors to pretend to be experts on or users of the product.

Meaningless awards

Often, awards and accolades are mentioned for a particular product. Sometimes this can be deceptive when the award is not from any important or critical endorsement body. Similarly rating statements can be made using words that are meaningless. A common example are the auto advertisements that say, "Best in Class". The word "class" is meaningless and can be defined however someone desires - for example, the class could be defined as only four-door minivans made by Nissan whose model name starts with NV2. In this case, the NV200 would be "best in class".

Advertising the maximum

Internet service providers may advertise their service as offering "up to 8 Mbit/s", whereas on average use it could be just 1 Mbit/s. The use of "up to" in the description protects them legally, while raising false hopes in the customers. Further, in the fine print it is mentioned that this includes both the download and upload speeds, deteriorating the customer's usage experience even more.

Sale signs within stores may state "up to 75% off" for example, when there may be little or nothing on the marked rack or shelf that is that deeply discounted.

There is also the related practice of advertising the minimum, raising false hopes that the customer may somehow get more than this. This is the case where a very low price is advertised, along with an extremely limited availability such as "minimum 3 per store".

Usage limits

Broadband Internet access may be capped by cable modem and DSL ISPs, incurring huge "overage" charges much like mobile phones. On cable this is also an anti-competitive practice, effectively preventing customers from watching IPTV channels that are not provided by the cable company. Such limits are usually only disclosed in the contract the customer must sign, and not in the advertising. Some have actually stated "unlimited" use when that is blatantly false. Some use bandwidth throttling to effectively choke the user's connection, while some will cut users off entirely either temporarily or even permanently.

Meaningless terms

Manufacturers and sellers often use terms that sound advanced or deluxe to the average consumer, but really mean nothing at all. Most generically, this includes words like "deluxe", "advanced", "super", "ultra", "premium", "heavy duty", "hi-tech", "space age", and others.

A frequently abused term of the 2000s is "digital", often applied to things which are not digital in any way. Headphones are often labeled as "digital" or "digital ready", when in fact they are inherently and entirely analog. The term has also been applied to amplified radio antennas used to receive over-the-air television, even though digital TV signals are radio waves just as with analog television.

Undefined terms

Many terms do have some meaning, but the specific extent is not legally defined, leading to their abuse. A frequent example (until the term gained a legal definition) was "organic" food. "Light" food also is an even more common manipulation. The term has been variously used to mean low in calories, sugars, carbs, salt, texture, thickness (viscosity), or even light in color. Tobacco companies, for many years, used terms like "low tar", "light", "ultra-light", "mild" or "natural", but in recent years it was proved that those terms were considered misleading.

Another example is the United Egg Producers' "Animal Care Certified"[6] logo on egg cartons which misled consumers by conveying a higher level of animal care than was actually the case. Both the Better Business Bureau and the Federal Trade Commission found the logo to be deceptive and the original logo can no longer be used.

Failure to inform

It is mandatory in most countries to have a date of expiry in products. Many countries enforce that a 'normal' food and beverage 'must' expire within six months or one year. However, some products, intentionally code the manufactured date and not the expiry date or the reverse (where the expiry date is printed but not the date of production).

The other form of information required is the net weight (which means, the actual weight of the product without the weight or size of packaging) of the product.

Many products also lack the country of manufacture and instead have the country forwarding the product. Some products have a list of countries permitted to sell the product but have no information of the country of origin.

Other offenses include failing to notify consumers of something they have the right to know, such as whether the food is genetically engineered, or whether meats have been treated with carbon monoxide (which displaces the oxygen that causes browning of raw beef).

False privacy or security claims

Companies have been found to be in violation of their privacy and terms of service policies - such as claiming to follow good security practices while failing to remedy a known, serious security problem for years. ISPs have violated privacy policies that barred disclosure of customer information with limited exceptions. Consumers who make decisions based on such false advertising have been deceived.[7]

Label tampering

Product labels may initially contain truthful information which is later removed or obscured.

For foods, the expiry date may be changed, which in meats can cause dangerous levels of salmonella or other bacteria to grow. For other foods, they may simply become stale while still being safe to eat. Canned foods may have their labels removed.

Another method of false labelling is hiding or destroying a label indicating the product's origin (e.g. "Made in India" or "Made in Botswana").

Prices may also be raised by liquidators and then "discounted".


Many well-known companies simply rent their names out to other lesser-known companies. This misleads the consumer to believe that he or she is getting a quality product, which will be backed-up by the company, when in reality this may not be the case. General Electric, for example, no longer makes its own Christmas lights, and never made USB hubs at all, though its logo appears on both. (These are actually marketed by Santa's Best Craft and Jasco, respectively.) Another example is the Virgin Group's rebranding of financial services.

Ad placement

Many newspaper ads show a price which does not include everything pictured. The most common offense is to show the price for a personal computer within the computer monitor, when that price does not even include the monitor on which it is printed.

This is also seen in stores, where a sign is placed around merchandise which is not on sale.

Fitness for use

Some products are labeled as not being for a particular use, even though that is clearly the function for which a person would purchase it. This labeling is intended to protect the company from any legal responsibility. For example, parachutes will often have on their packaging "this device is not intended to be used for skydiving" to protect the manufacturer from wrongful death strict liability. Likewise, cotton swabs are often labeled that they should not be inserted into the ear canal, even if this is one of the most common uses.

In a different type of case, LED Christmas lights are rated and labeled for outdoor use, however this is only for safety purposes. On generic (unbranded) sets, the cheap steel used for the leads on each light will rust if left in the rain, which also negates claims of long life, forcing people to keep buying light sets just as they have with incandescent sets.

Warning labels

Some items may present a danger to the public, but may not state that danger clearly on the product. This is much less of a problem now, due to consumer protection legislation and litigation. (There have been recent cases of lead, melamine, and other dangerous chemicals in the late 2000s, however these should not be in products to begin with, thus their labelling is not the issue.)

The opposite of this is excessive labelling, where products that are not dangerous are labelled as being so, because it is inconvenient for manufacturers to sort or label products according to their actual potential for harm. Much of this has occurred in the U.S. as a result of California Proposition 65 (1986). While this did bring to several issues to consumer attention, such as the use of lead in PVC electrical insulation, some items are stuck with the label just so the manufacturer can avoid responsibility "just in case", which amounts to a wolf cry which consumers eventually ignore, even on items which actually do pose a risk. Other excessive warnings include only connecting three sets of Christmas lights from end to end, even though 18 mini incandescent sets of 50 lights each will run on a three-ampere fuse (a UL rule). In 2008 (several years later than their introduction) this was increased to 43 for LED sets, though it can handle 150 circuits (50 to 150 sets of one to three each) of 2.4 watts (25 to 60 LEDs, depending on color) each.

Scare tactics

Some advertising uses scare tactics, to instill a sense of fear, uncertainty, and doubt which will then cause consumers to act. For example, a duct cleaning company may show a picture of an extremely dirty air-conditioning duct with years of accumulated dust, and a list or graphics of various bacteria and fungi, in order to make potential customers think that is what their own ducts look like and have, when in fact what is shown is a worst-case scenario . Another TV commercial showed bubbling mud superimposed on a bed, in order to encourage the use of Clorox bleach. Direct marketing and telemarketing, as well as door-to-door sales are more likely to engage in this tactic, which sometimes is used on the elderly as an outright scam.

Unethical software companies place adverts that appear as popups on users' computers, falsely claiming that their computer has been scanned and found to be infected with virues before recommending the purchase of scareware.

Best case scenario

The opposite of the above, some customers will give genuine success stories (as opposed to paid testimonials, see below), but the company cherry-picks those that are the most successful, such as acquiring a multi-million dollar net worth via a wealth product, while censoring or outright not publishing the less attractive success stories. In infomercials, they would state in fine print in the bottom of the screen: "results not typical."

Paid testimonials

Often, companies (particularly infomercials) will have "common" people who, allegedly, have used the product and were satisfied with it, saying good things about the product. The commercials, however, actually paid these people to say these things in the hopes that it would substitute for word of mouth. The people were not truly sincere in their praises and, often, had never even touched the product before.

Similar issues

Creative financing

The subprime mortgage crisis of 2008 was caused mainly by banks misrepresenting the cost of homes which customers could afford. This came back to haunt both sides when interest rates increased and monthly mortgage payments soared, effectively also making it an introductory offer. Other forms of creative financing were invented and sold without full disclosure.

Political advertising

Political advertising usually consists of attack ads in American politics, amounting to a smear campaign the candidates wage against each other. These ads often manipulate certain votes in the candidate's record of political office, and other statements he or she has made, twisting them and taking them out of context so that the sound far worse than they are. These ads often make patently ridiculous statements, such as that the other candidate is "against families" or "voted against children".

Legislation and lobbying

Lobbyists often exaggerate or even falsify the alleged effects of passing or not passing certain legislation, often trying to create fear, uncertainty, and doubt in the minds of legislators. In one case, the National Association of Broadcasters gave artificial and unrealistic recordings of supposed "interference" to the U.S. Congress, in an effort to get them to ban new low-power FM radio stations, while still allowing their own members' LPFM broadcast translators, and interference caused by members' HD Radio signals.

Another tactic is to name a bill something different than its actual intent, making it a "caption bill". Similarly, lawmakers may try to sneak unpopular legislation through by attaching it as a rider, under the guise of something unrelated which is more likely to pass.

Regulation and enforcement

United Kingdom

In the UK, most price based methods of false advertising are prohibited and strictly regulated by the Advertising Standards Agency. Hence, the methods detailed in the pricing section are rarely encountered and used only by the most disreputable operators, who are likely breaking the law by doing so.

United States

Advertising is regulated by the authority of the Federal Trade Commission, a United States administrative agency, to prohibit "unfair and deceptive acts or practices in commerce."[8] While it makes laymen's sense to assume that being deceptive is being unfair, deceptiveness in practice has been treated separately by the FTC, leaving unfairness to refer only to other types.[9] All commercial acts may be deceptive, not just advertising, but noncommercial activity such as advertising for political candidates is not subject to prosecution under the FTC Act. The 50 states have similar statutes, which generally are very similar to that of the FTC and in many cases copied so closely that they are known as "Little FTC Acts." While the terms "false" and "deceptive" are essentially the same for most, being deceptive is not the same as producing deception. What is illegal is the potential to deceive, which is interpreted to occur when consumers see the advertising to be stating to them, explicitly or implicitly, a claim that they may not realize is false and material. The latter means that the claim, if relied on for making a purchasing decision, is likely to be harmful by adversely affecting that decision. If an ad is implicitly false, evidence must be obtained for what consumers saw the ad saying, and for the materiality of that, and for the true facts about the advertised item, but no evidence is required that actual deception occurred, or that reliance occurred, or that the advertiser intended to deceive or knew that the claim was false.

The goal is prevention rather than punishment, reflecting the purpose of civil law in setting things right rather than that of criminal law. The typical sanction is to order the advertiser to stop its illegal acts, or to include disclosure of additional information that serves to avoid the chance of deception. Corrective advertising may be mandated,[10][11]. But there are no fines or prison time except for the infrequent instances when an advertiser refuses to stop despite being ordered to do so.[12]

The actual statute defines false advertising as a "means of advertisement other than labeling, which is misleading in a material respect; and in determining whether an advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual." [13]


  1. ^ McArthur D. How does a $224 flight end up costing $826? [Internet]. Globe and Mail (Toronto). 2008 Apr 30. [1]
  2. ^ "MercedSun-Star.com Forums". Sunspot.mercedsunstar.com. http://sunspot.mercedsunstar.com/?q=node/5621. Retrieved 2009-11-03. 
  3. ^ "Seagate settles suit over disk capacity". Neowin.net. 2007-11-03. http://www.neowin.net/news/main/07/11/03/seagate-settles-suit-over-disk-capacity. Retrieved 2009-11-03. 
  4. ^ "Western Digital pays up in class action lawsuit". Neowin.net. 2006-07-18. http://www.neowin.net/news/main/06/07/18/western-digital-pays-up-in-class-action-lawsuit. Retrieved 2009-11-03. 
  5. ^ Wallechinsky, David (1975). The People's Almanac. Garden City: Doubleday. p. 1010. ISBN 0385040601. 
  6. ^ http://www.nytimes.com/2005/10/04/business/media/04adco.html?_r=1&adxnnl=1&adxnnlx=1242150761-9z8f6PubObZckQVDztsWUQ
  7. ^ Examples: TD Ameritrade and AOL/Timothy McVeigh incidents.
  8. ^ 15 U.S.C. § 45.
  9. ^ Richards, Jef I., Deceptive Advertising, Erlbaum (1990), at p. 20.
  10. ^ Johar, Gita, "Intended and Unintended Effects of Corrective Advertising on Beliefs and Evaluations: An Exploratory Analysis", Journal of Consumer Psychology, 1996, 5(3), 209-230.
  11. ^ Johar, Gita Venkataramani and Carolyn J. Simmons, “The Use of Concurrent Disclosures to Correct Invalid Inferences,” Journal of Consumer Research, 2000, 26(4), 307-322.
  12. ^ Richards, id; Policy Statement on Deception, 103 FTC Decisions 110 (1984), appendix to Cliffdale Associates; originally a letter from FTC Chairman James C. Miller to Rep. John D. Dingell (Oct. 14, 1983). For the history of changing from deception to deceptiveness as the standard, see Preston, Ivan L., The Great American Blow-Up: Puffery in Advertising and Selling, University of Wisconsin Press, revised ed. (1996), at Ch. 8.
  13. ^ Wilson, Lee. "The Advertising Law Guide: A Friendly Desktop Reference for Advertising Professionals." Allworth Press, NY, NY. 2000. 25.

Got something to say? Make a comment.
Your name
Your email address