Last month, the Federal Trade Commission warned hundreds of companies that any instance of false advertising could warrant a serious monetary penalty. While legal precedent might make it difficult for the FTC to obtain monetary relief, this shot across the bow could deter many advertisers from using deceptive practices in the first place.
Fighting False Claims in Advertising
The FTC’s notice spells out a number of practices that would qualify as false advertising and therefore be grounds for a penalty – which could be up to $50,120 per violation. Unsubstantiated claims and misrepresentation of endorsements could both call for a steep penalty per the FTC’s guidelines, so advertisers must be prudent to avoid a harsh notice from the Commission. It should also be noted that a “violation” could be interpreted as every individual occasion of a customer viewing a deceptive ad.
Specifically, the notice warns against failing to provide adequate support for objective claims about a product as well as misrepresenting that a claim is backed by scientific proof. Advertisers are also prohibited from misrepresenting a third-party endorsement, which can include a variety of practices like falsely suggesting an endorser actually uses the product advertised or faking a consumer review.
The Burden of Proof
Before the FTC can collect any monetary relief or even issue a cease and desist notice, it must prove that the claims in question are truly unsubstantiated. In March, former Commissioner Christine S. Wilson released a statement of dissent following the FTC’s vote to issue false-ad notices. In her statement, Wilson cautioned that following through with the FTC’s new notice would “consume significant resources” while a relatively small number of cases would actually lead to civil penalties.
The former commissioner had voiced support for previous false-ad notices, but warned that establishing whether or not an advertiser’s methods were sound “requires a complex, nuanced, fact-based evaluation.”
Limited by Precedent
The Commission’s ability to obtain court-ordered monetary relief was also limited several years ago in the case of AMG v. FTC, while it can still pursue monetary relief in an administrative setting. Before a monetary penalty can be levied, however, the FTC must allow the company in question a fair chance to cease and desist its false advertising.
Send a Clear Message with Sound Data
Of course, advertising efforts should always start with getting the facts straight. The next step is to send your message out to your audience, and you can count on us for every step of the process. At Strong Automotive Merchandising, we can provide you with a data-driven plan to identify your target audience and deliver your marking message directly to them. Whether you want your advertising to meet them in their mailbox or their inbox, we can craft a direct mail or email campaign tailored to your goals. Contact us today to see what Strong Automotive Merchandising can do for your dealership.
John Paul Strong
John Paul Strong combines his two decades of automotive marketing experience with a team of more than 140 professionals as owner and CEO of Strong Automotive.