September 23, 2014
In the advertising law world, general impressions matter – a lot. In Canada, the federal Competition Act even includes specific sections that provide that the general impression of a claim (i.e., not merely the literal meaning of an advertising claim or what may be included in disclaimers or contracts) is to be taken into account by a court or the Competition Tribunal in determining whether or not a claim is false or misleading.
In two cases earlier today that illustrate this key advertising law principle, the U.S. FTC and Australian ACCC both announced the results of enforcement against advertisers in a variety of industries relating to allegedly false “headline” claims (see: Federal Court orders $300,000 penalty after finding ‘free range’ egg claims to be misleading and Operation ‘Full Disclosure’ Targets More Than 60 National Advertisers).
In the Australian case, the Australian Federal Court declared (by consent) that a chicken producer made misleading “free range” claims in relation to its eggs and ordered the company to pay $300,000. The ACCC commenced this case late last fall taking the position that the egg producer’s images and wording on egg cartons and websites gave the impression of free range cultivation. The Court agreed, finding that the company’s “free range” claims suggested that its chickens moved about freely most of the time when, apparently, they were largely cooped up.
In the American matter, the U.S. FTC announced that it has sent warning letters to more than 60 national advertisers based on general impression type issues in their television and print advertising. In particular, the FTC has taken issue with inadequate disclosures in its view:
“Operation Full Disclosure focused on disclosures that were in fine print or were otherwise easy to miss or hard to read, yet contained important information needed to avoid misleading consumers. In the warning letters, staff identified problematic ads, recommended that advertisers review all of their advertising to ensure that any necessary disclosures are truly ‘clear and conspicuous,’ and asked them to notify the staff of the actions they intended to take with respect to their advertising.”
Like the Australian case, this FTC enforcement effort highlights the importance of both clear and precise headline claims, as well as the importance of effectively providing any material qualifications for consumers.
Some practical tips for advertisers and agencies to reduce the likelihood that advertising is false or misleading, some of which are also highlighted by the FTC in its announcement, include:
1. Ensure that “headline claims” can stand on their own.
2. If necessary to qualify a headline claim, include all key qualifications in the disclaimer.
3. Ensure that any disclaimers/qualifications used are clear, unambiguous and in close proximity to the headline claim.
4. If using disclaimers in television, radio or other non-print media, ensure that they can be seen and understood by viewers, listeners, etc.
5. If necessary to use a hyperlink for additional details, endeavor to label the hyperlink to disclose the nature of any additional qualifications.
6. Do not include any contradictory information in disclaimers – generally disclaimers can add to or qualify a headline claim, but disclaimers that contradict a primary claim can raise issues.
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