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Understanding Deceptive Advertising: Key Concepts and Consumer Impact

Deceptive advertising occurs when a statement or omission misleads reasonable consumers regarding a material fact, potentially influencing their choices. The FTC assesses claims based on evidence, including significant health assertions, cost comparisons, and reliable consumer surveys. Misleading examples include exaggerated product benefits like "world's best pizza" or unsupported endorsements like "3 out of 4 doctors recommend." The analysis of AT&T vs. Verizon underscores the challenge in defining reasonable consumer interpretation and the nuanced evidence that supports or disputes advertising claims.

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Understanding Deceptive Advertising: Key Concepts and Consumer Impact

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Presentation Transcript

  1. Literally True Deception

  2. Deceptive Ads • A statement (or omission) that is • Likely to mislead • A reasonable consumer • About a material fact.

  3. What’s material? • FTC Analysis • Likely to affect consumer choice • If false, injury is likely • All significant health and safety claims • Other evidence • Cost compared to competing product • Reliable consumer survey data • Credible testimony

  4. Who’s the reasonable consumer? • General populace • Target audience • Children • Elderly • Terminally ill • Evidence • Expert testimony • Consumer data

  5. What’s misleading? • “The world’s best pizza” • Sunscreen “Contains Aloe Vera” • “3 out of 4 doctors recommend” • “Approved by the American Institute of Science”

  6. Gainesburger Dog Food, 1960s FTC found that this ad misled consumers . . . Why?

  7. AT&T vs. Verizon Wireless U.S. District Court for the Northern District of Georgia, Atlanta Div. AT&T requests a TRO against use of the “maps”

  8. AT&T Claims • Consumers interpret the maps as “no service” • 3G is not a different kind of service, it’s just faster • The total experience of the ad leaves the impression that AT&T service is “out of touch” • Mall intercept study • 53% said AT&T has no coverage in blank space • 30% in “control” agreed

  9. Verizon’s Responses • The ads are literally true. • The ads are not misleading. • AT&T’s “evidence” only addresses one ad. • AT&T’s “evidence” is not valid. • Survey not limited to Smartphone users • Questions poorly designed • Control ad inconsistently designed

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