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False advertising

Marketing communications are considered to be misleading if an advertiser knowingly makes false claims or otherwise falsifies advertising. They can face financial and legal repercussions, in addition to losing loyalty from previous customers. 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" 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.

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" 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

  1. Hidden fees and surcharges
  2. "Going out of business" sales
  3. Misuse of the word "free"


Other deceptive methods

Polls
  1. Manipulation of measurement units and standards

  2. Fillers and oversized packaging

  3. Manipulation of 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, carbohydrates, salt, texture, thickness (viscosity), or even light in color.
  4. Incomplete comparison

  5. Inconsistent comparison

  6. Misleading illustrations

  7. False coloring

  8. Angel dusting

    : Angel dusting is a process where an ingredient which would be beneficial, in a reasonable quantity, is instead added in an insignificant quantity which will have no consumer benefit, so they can make the claim that it contains that ingredient, and mislead the consumer into expecting that they will gain the benefit. For example, a cereal may claim it contains "12 essential vitamins and minerals," but the amounts of each may be only 1% or less of the Reference Daily Intake, providing virtually no benefit to nutrition.
  9. Bait-and-switch

    : Bait-and-switch is a technique where advertisers advertise an item which is unavailable when the consumer arrives at the store, who is then sold a similar product at higher price. Bait-and-switch is legal in the United States, provided that ads state that there is a limited supply (sometimes they must list the quantity) and that no rain checks will be offered.
  10. Guarantee without a remedy specified

  11. "No risk"

  12. Acceptance by default

  13. Undisclosed dishonest business practices


Negative effects

  1. Investigation


    If a marketing campaign is suspected of being false advertising, the FTC (Federal Trade Commission) may investigate further to determine if the company violates any laws. The FTC reviews the content of the ad from the standpoint of a consumer to determine if the actual or implied claims constitute falsification. The FTC also evaluates information that is left out, such as failing to report side effects of a new medication.
  2. Cease-and-desist orders


    In some cases, the company may receive a cease-and-desist order to stop the falsified advertisement from running. The advertisements must be brought up to FTC standards before they are allowed to run again. This may include correcting any false information and adding in the information omitted from the advertisements. In addition, the company may have to include additional disclaimers in future advertisements or let anyone who purchased the item that the company used deceptive practices.
  3. Financial loss


    False advertising ends up costing the company a significant amount of money if caught. If the ads are pulled, the company loses out on the money it spent to develop those ads. The company is sometimes charged a fine for both current false advertising and any future incidents of deceptive advertising. If the company is sued, additional expenses come in the form of legal fees and money that must be paid to consumers who filed the suit.
  4. Broken trust


    A company that engages in false advertising gives the impression that it isn't a trustworthy business. Both existing and new customers may feel betrayed and are more likely to go somewhere else for the same products or services. The lost loyalty from existing customers cuts into business. The company may also get a bad reputation as a deceptive organization, which means decreased business in the future.

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