False Advertising: How Not to Promote Your Business
Ever seen those commercials for shoes that are supposed to tone your legs and butt? Several companies sell them, including Skechers, New Balance, and Reebok. If a shoe that can make you burn more calories or work your muscles better seems a bit fishy to you, then you might be on to something: all three companies have recently been investigated for false advertising. Reebok, for example, based some of its health claims for EasyTone and RunTone shoes on a trial conducted with only five subjects. Ultimately, the Federal Trade Commission (FTC) ordered the shoe company to pay a $25 million settlement and to refund customers who bought the toning shoes.
We’ve all seen the late-night infomercials peddling suspicious miracle products (yours for five easy payments of $49.99!), but one would hope that well-known brands like Reebok, Skechers, and New Balance would be less likely to mislead their customers. Unfortunately, they’re not the only large companies who have been investigated or hit with lawsuits over deceptive ad practices. Here are a few other examples:
- Dannon settled a false advertising lawsuit in 2009 for $35 million. The reason? Its Activia and DanActive yogurts and the allegedly nonexistent health benefits ascribed to them. The settlement money was used to reimburse customers up to $100 each, depending on how much yogurt they had purchased. Dannon also had to alter the wording on its packaging to make the scientific names of the yogurts’ cultures more noticeable, among other things. But don’t despair—despite all this, Jamie Lee Curtis is still doing commercials for them.
- LifeLock, the company that advertised its identity protection services by displaying its CEO’s social security number on commercials and billboards, paid $12 million in 2010 after the FTC determined that the company did not provide nearly as much protection to customers as it promised. The FTC also said that LifeLock collected personal information without encrypting it and that employees did not have antivirus or strong passwords on their computers. Not to mention, LifeLock’s CEO has had his identity stolen 13 times—heavily implying that the company’s services are not what they’re cracked up to be.
Listerine: It’s mouthwash, not cough syrup.
Listerine has a history of leading its customers astray. The company first got in trouble with the FTC in 1976, because for more than fifty years Listerine had been claiming that its mouthwash could help prevent sore throats and colds. When these claims proved false, the FTC ordered the mouthwash company to mention in about $10 million worth of advertising that the mouthwash couldn’t help with cold or sore throat symptoms. More recently, in 2005, Listerine advertised that its mouthwash could replace flossing. But a judge ruled that Listerine’s claim was “false and misleading and [posed] a public health risk,” forcing Listerine to halt that advertising campaign, too.
- Dell, in a ruling by the New York State Supreme Court, was found to have engaged in not just false advertising, but also fraud and deceptive business practices in 2008. Dell had been advertising financing options with no interest and no payments, but most credit-approved customers did not qualify for these promotions and were instead offered very high rates—a practice that the judge deemed bait-and-switch advertising. Dell also got in trouble for denying rebate requests, even when all the paperwork was correct, and for various issues with customer service. The computer company ended up paying $4 million and was told to make changes to its promotional and financial practices.
So what can we learn from these examples? Companies: don’t deceive your customers! And consumers: take everything a company tells you with a grain of salt, read the fine print, and research a business before you buy—especially if you are handing over your personal information.
Did any of these instances of deceptive advertising surprise you? Have you heard of any other false advertising cases recently? What personal experiences have you had with companies being misleading?