Media Law

Final
False Advertising

Maria Ruiz
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False Advertising

Background:

False advertising has been around for as long as products have been sold. Before the

Federal Trade Commission established regulations on advertisements, anybody could market

their products with false claims in order to make a profit. For example, cigarette companies

would deceive consumers by claiming that their products had health benefits, but in actuality

smoking tobacco has harmful effects on the human body. Overall, throughout a large part of

history, advertisements would go uncontrolled. In more recent times these deceptive practices

could lead to lawsuits or fines against companies.

One modern example of a false advertisement scandal occurred in 2016 against

Volkswagen. The FTC filed the lawsuit claiming “the car company had deceived customers

with the advertising campaign it used to promote its supposedly "Clean Diesel" vehicles”

(Rath, 2017). According to the FTC, Volkswagen had been selling or leasing around 550,000

diesel vehicles that were supposed to be environmentally-friendly. In reality, the vehicles

were using systems to better their emissions testing results. Overall, this would lead to a hefty

amount of fines that Volkswagen would have to pay. Wired Magazine estimates that

Volkswagen could face fines of up to $61 billion (McGoogan, 2016).

One other recent case that also occurred in 2016 was against the fantasy sports

companies, DraftKings and FanDuel. According to Fortune, these companies were

advertising that a higher percentage of players were winning money, but in reality only ten

percent were winning (Shen, 2016). According to the article, the companies’ ads led people

to believe that everyone had the same chance at winning, regardless of experience. In the end

both companies were required to pay fines of $6 million for producing false advertisements

and also agreed to display more realistic expected winnings in their advertisements.
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Rationale:

The issue of false advertisements should matter to broader society for many reasons

because consumers end up wasting time and money along with risking hidden negative side

effects. False advertisements also effect business’ reputations for being deceitful. For

example, the FTC sent out a “Gut Check” reference guide to media outlets on false weight-

loss claims (U.S. Congress, 2015). The FTC is looking out to protect consumers and the

reputation of businesses by serving as gatekeeper to stop false claims before they advertised.

They are also protecting consumers from wasting money and risking their health on

mislabeled or falsely advertised products.

Laws and regulations against false advertising are necessary in order to protect

members of society from falling victim to deceiving advertisements. On top of this,

businesses should be held responsible for ethical advertising and business practices. For

example the FTC once fined an online ad firm for deceptive ads, but the company claimed

they were glad that the FTC was clarifying the regulations, which led to the business into

complying with them (“FTC Slaps…” 2008).

Legal Context:

In the modern age, false advertisements are seen in use by many different businesses

and corporations. Sometimes this is meant to deceive consumers and in other instances this is

not done on purpose, but the information in the advertisements is still incorrect. There are

rules and laws that have been created to keep companies in check when it comes to their

adverts, and along with this, there have been many large court cases due to misrepresentation

of information. Many of these cases contain similarities to one another and provide insight

about the laws that they are disputing. For example, the Coca-Cola Company has been

involved in some notable false advertising cases.

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In the two cases, POM Wonderful LLC v. The Coca-Cola Company and Ackerman et

al. v. the Coca-Cola Company et al., the Coca-Cola Company was sued for false

advertisement. In POM Wonderful LLC v. The Coca-Cola Company, POM claimed that

Coca-Cola had mislabeled their pomegranate-blueberry juice, but in actuality the juice

contained apple and grape juices. POM sold a similar pomegranate-blueberry juice and

claimed that the name, label, marketing and advertising of Coca-Cola’s juice blend was

deceiving to consumers and caused confusion which led to POM having a loss in profits. In

Ackerman et al. v. The Coca-Cola Company et al., the plaintiffs claimed that the Coca-Cola

subsidiary, Glaceau deceivingly mislabeled and marketed “vitaminwater.” The defendant

promoted the drink as a “nutrient-enhanced water beverage,” but actually contained

significant portions of sugar. These two cases involved deceptive labeling of Coca-Cola

products.

There are many similarities involving the two cases, but the main theme they share is

false advertising. A connection that can be seen between these two cases is the mislabeling of

products, which leads to deceiving consumers and misleads them into buying products that

could be unhealthy or used improperly. Companies that implement such deceiving strategies

are at risk of being taken to court for false advertising.

In other cases, a company can sue or countersue claiming false advertising. In the case

of Lexmark International, Inc. v. Static Control Components, Inc., Static Control countersued

Lexmark claiming false advertising by misleading users into believing that used Lexmark ink

cartridges should be returned to Lexmark after using it. Static Control claimed that this

practice was unfair and it deceived consumers into believing that Static Control was engaging

in illegal activity. This case was the first of its kind as it had failed all the legal tests being

used at the time. Thus, this case established a common legal standard over standing in false

advertising.
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Many companies who claim false advertising against other companies seem to sue out

of spite to protect their own reputation and profits rather than for the interests of broader

society. For example, in the case of Obesity Research Institute, LLC v. Fiber Research

International, LLC, Fiber Research International intended to file a lawsuit against the Obesity

Research Institute claiming unfair competition from false and misleading production

descriptions and advertisements. Although it seems like companies are trying to reap the

benefits of false advertising for themselves, they may also be looking out for the best interests

of the consumers. Overall, these cases correlate with one another due to the fact that they all

are looking out for the best interests for themselves and consumers.

Predictions

In the past, the FTC has taken care of the majority of false advertising claims, but

after Lexmark International, Inc. v. Static Control Components, Inc. established a common

legal standard over standing in false advertising claims, there is potential for more courts to

look into future false advertising cases. In the next few years, false advertising claims could

grow due to the rise of advertising on social media. Nicco Mele, director of the Shorenstein

Center, believes that the so-called ads on Facebook are actually a range in variety of content

types such as links, posts and images. With Facebook’s vast amounts of information on users,

they can easily target specific audiences with content (Deaderick, 2017). With the increase in

the amount of ads being targeted to specific audiences, there will be a greater risk of falsely

advertised content. Overall, there can be both positive and negative aspects from a situation

like this happening. The negative aspect would be that more consumers will be at risk at

encountering falsely advertised content. On the other hand, a positive aspect that may arise

from this would be more legal standards being established in courts. From here on, only time

shall tell how future court cases may affect the issue of falsely advertised content.
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Works Cited

Deaderick, Jen. “In an Era of 'Fake News,' What Is the Future of Advertising and
Publishing?” Harvard Business School Working Knowledge, 26 Oct. 2017,
hbswk.hbs.edu/item/in-an-era-of-fake-news-what-is-the-future-of-advertising-and-
publishing.

"FTC slaps online ad firm with $200K fine; FTC calls company's ad claims 'deceptive'."
Network World, 30 Jan. 2008. Academic OneFile,
http://link.galegroup.com/apps/doc/A214543039/AONE?
u=iastu_main&sid=AONE&xid=1cb52c48.

McGoogan, Cara. “US Files £61bn Civil Lawsuit against Volkswagen.” WIRED, WIRED
UK, 5 Jan. 2016, www.wired.co.uk/article/vw-emissions-scandal-61-billion-pound-
fine.

Rath, Julien. “18 False Advertising Scandals That Cost Some Brands Millions.” Business
Insider, Business Insider, 27 Feb. 2017, www.businessinsider.com/false-advertising-
scandals-2017-2#draftkings-and-fanduel-exaggerated-novice-users-chances-of-
winning-3.

Shen, Lucinda. “DraftKings and FanDuel Settle New York Lawsuit for $12 Million.”
Fortune, Fortune, 26 Oct. 2016, fortune.com/2016/10/26/draftkings-fanduel-
settlement/.

Supreme Court of the United States. Lexmark International, Inc., v. Static Control
Components, Inc. 25 March 2014.

Supreme Court of the United States. POM Wonderful LLC v. The Coca-Cola Company. 12
June 2014.

United States. Congress. Senate. Committee on Commerce, Science, Transportation.

Subcommittee on Consumer Protection, Product Safety, Insurance, author. Protecting
Consumers from False and Deceptive Advertising of Weight-Loss Products: Hearing
before the Subcommittee on Consumer Protection, Product Safety, and Insurance of
the Committee on Commerce, Science, and Transportation, United States Senate, One
Hundred Thirteenth Congress, Second Session, June 17, 2014. 2015.

United States District Court Eastern District Of New York. Ackerman et al. v. The Coca-
Cola Company et al. 18 July 2013.

United States District Court, S.D. California. Obesity Research Institute, LLC v. Fiber
Research International, LLC. 25 Feb. 2016.