Thursday, May 3, 2012

Whether or not a company must perform in accordance with the published advertisement.

According to the FEDERAL TRADE COMMISSION (FTC) marketing and point-of-sales practices that are likely to mislead consumers are outlawed as a “deceptive acts and practices”. Deceptive advertising claims are those likely to mislead reasonable consumers causing them to change their conduct(1).
In evaluating such disclosures, the Commission recognizes that in many circumstances, reasonable consumers do not read the entirety of an ad or are directed away from the importance of the qualifying phrase by the acts or statements of the seller(2).
Deception may also occur in other forms of conduct associated with a sales transaction(3). So, then when a company makes an offer that, if accepted, would bind the dealership in contract, because the entire advertisement, transaction or course of dealing will be considered to evaluate the deception. The issue is whether the act or practice is likely to mislead, rather than whether it causes actual deceptions.
The disclosure of which is necessary to prevent the claim, practice, or sale from being misleading. FTC considers that the Information may be omitted from written(4) or oral(5) representations or from the commercial transaction.
The nondisclosure of these material facts combined with the confusion arising from the advertising had the capacity to mislead buyers about the price, features and others.
However if is prove as a misleading the company does not have to bind the in contract, but they will probably face Civil penalties, consumer redress and other monetary remedies, Corrective advertising, disclosures and other informational remedies, or Cease and desist orders(6). 

In many jurisdictions, companies are legally required to do not sell a product that was advertised to their employers. Although the FTC(7) recommends that other companies advertising products available in limited quantity or only at some stores should make disclosures about the limited quantity to reduce the risk of deception.
            Therefore it's illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price(8).
Even knowing that the advertiser has a constitutional right(8) to tout its product’s attributes, and this is an additional reason that the challenger must be held to its burden of proving alleged implied claims. According to the Lanham Act it is prohibited false or misleading statements in advertisements. The statute provides that any person who uses “in connection with any goods or services . . . any false description or representation, including words or other symbols tending falsely to describe or represent the same . . . shall be liable in a civil action by any person . . . who believes that he is or is likely to be damaged by the use of such false description or representation (9).”
              A Lanham Act violation occurs when the implication goes beyond puffing and asserts a material statement about product attributes, capable of measurement as true or false.
            Under the Lanham Act the advertisement binds the advertiser, so advertisers should be aware of the implied claims that they are making and also know what implied claims are suggested to exist in their internal market research files. If internal documents discuss implied claims, these documents could be discovered and used in litigation to show not only the existence of the implied claims, but also the advertiser’s awareness and potential “intent to deceive” which can be used to establish liability. The Court(10) can also effectively require a tight fit between the actual words and images used in the ad copy and the proffered implied claim. 

In what extent an advertisement has to be true?
            Under the Federal Trade Commission Act: Advertising must be truthful and non-deceptive; Advertisers must have evidence to back up their claims; and Advertisements cannot be unfair. Otherwise the advertiser can face some penalties.
            Additionally the Lanham Act reaches all of those statements that are “affirmatively misleading, partially incorrect, or untrue as a result of failure to disclose a material fact.” Some implied claims often reflect an advertiser’s attempt to slightly exaggerate or broaden a claim beyond that which can be substantiated. For example, an advertiser implies “overall” superiority based on proof of superiority only on one narrow product attribute. Another type of implied claim involves telling a “half-truth” which is facially truthful, as far as it goes, but leaves out important information and makes the affirmative statement misleading.
            In case someone wants to advertising something else the advertiser should be able to prove that what was implied on the ad is truth. Although the advertiser does not have a liability for misunderstood or for not read all the information. However a company must have the product when the ad was published to be considered truthful and non-deceptive.


Halbert, T., & Ingulli, E. (2009). Law & ethics in the business environment: 2010 custom            edition (6th ed.). Mason, OH: South-Western Cengage Learning.(pg. 162)
Miller, Randall K. (2010). Advertiser Liability for “Implied” Claims in Lanham Act False           Advertising Cases. I P   L i t i g a t o r. SEPTEMBER/OCTOBER 2010.

15 U.S.C. § 1125(a)

FTC POLICY STATEMENT ON DECEPTION. Appended to Cliffdale Associates, Inc., 103             F.T.C. 110, 174 (1984). FEDERAL TRADE COMMISSION. WASHINGTON, D.C.          20580. October 14, 1983. Retrieved from:           decept.htm.

FTC. Advertising FAQ's: A Guide for Small Business. Retrieved from:

Porter & Dietsch, 90 F.T.C. 770, 873-74 (1977), aff'd. 605 F.2d 294 (7th Cir. 1979), cert.           denied, 445 U.S. 950 (1980); Simeon Management Corp., 87 F.T.C. 1184, 1230 (1976), aff'd, 579 F.2d 1137 (9th Cir. 1978).

Grolier, 91 F.T.C. 315,480 (1978), remanded on other grounds, 615 F.2d 1215 (9th Cir.            1980),modified on other grounds, 98 FM 882 (1981), reissued, 99 F.T.C. 379 (1982).

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