This document summarizes a student paper on false advertising. The paper examines what constitutes false advertising, tactics used like bait-and-switch and artificially inflated prices. It discusses regulators like the FTC and FCC that police false ads. As an example, it outlines a case where Lord & Taylor paid Instagram influencers without disclosing it was an ad. The conclusion is that as advertising becomes more competitive, it's important for consumers and regulators to be aware of deceptive practices.

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False Advertising
By: Deanna Nanni

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Outline:
1. Abstract
a. Describing the paper
2. Body of the Paper
a. What is False Advertising?
i. Why false advertising occurs.
ii. What the Federal Trade Commission does verse what Federal
Communications Commission does.
iii. Why false advertising can be considered deceptive advertising.
iv. Advertising law verse consumer law.
b. The Types of False and Misleading Advertising
i. Five different business tactics that consumers need to watch
out for.
ii. Bait and Switch
iii. High Pressure
iv. Deceptive form Contracts
v. Artificially Inflating Prices
vi. Failure to disclosure
c. A Case Exemplifying False Advertising
i. Lord and Taylor
1. FTC Charges It Deceived Consumers Through Paid Article
in an Online Fashion Magazine and Paid Instagram Posts
by 50 “Fashion Influencers”.

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d. Example of False Advertising
i. Lane Bryant Ad
ii. Exemplifying the five tactics discussed earlier.
3. Conclusion
i. False advertising and how it surrounds us.
Abstract:
This paper examines what false advertising is, what to look for in an
advertisement if you believe it is false, and how you can sue if you are harmed by the
false advertisement. This is an important issue to address in todays world because
people are trying to save money, and advertisers are getting good at convincing
people to buy items they do not need. I focus on the consumer and how he/she can
look out for false advertisements. It is possible to bring a false advertisement case to
court if you are directly affected by the ad. I also share an example of an ad used by
“Lane Bryant” promoting one of their sales. The theory of this paper is supported by
primary sources such as recent cases, the FCC, and the FTC. I also include secondary
sources from articles and Truth in Advertising. This paper portrays the importance
of false advertising and how it surrounds consumer’s everyday.
Research Question:
What is false advertising and do you know when you are being exposed to false
advertisements?
Text of Paper:
What is false advertising?

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Advertisements surround us everyday. When driving, billboards are on
major highways, when taking public transportations advertisements surround the
walls of the bus or trains, and when waiting for a bus the bus stops even have ads.
Those ads are supposed to give people truthful information and inform customers
on new products. But some ads are not always truthful and that is why false
advertising is such an important issue. Companies are desperate for sales, which is
why they will try extra hard for their ad to attract the right audience. “Today,
companies are even more desperate for sales, as families cling a little tighter to their
dollars”.1 Since families are always trying to save money, companies will do
whatever they can to appeal a consumer if it even means putting out a false ad. “By
federal law all ads must be true and when The Federal Trade Commission has full
control over that. “The FTC looks especially closely at advertising claims that can
affect consumers’ health or their pocketbooks – claims about food, over-the-counter
drugs, dietary supplements, alcohol, and tobacco and on conduct related to high-
tech products and the Internet. The FTC also monitors and writes reports about ad
industry practices regarding the marketing of alcohol and tobacco”.2
The Federal Communications Commission works hand in hand with the
Federal Trade Commission. “Broadcasters are responsible for selecting the
broadcast material that airs on their stations, including advertisements”.3 The FCC
expects the broadcasters not to air any misleading or false advertisements. The FTC
is responsible for determining if an ad is false.
False advertising can be known as deceptive advertising or misleading
advertising. Deceptive advertising “refers to a manufacturer’s use of confusing,

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misleading, or blatantly untrue statements when promoting a product. Advertising
law will protect consumers from deceptive advertising through the enforcement of
specific legislation. Advertising law and consumer law has basically the same
function: to promote truth in labeling”.4 Consumer law is “A state or federal law
designed to protect consumers against improperly described, damaged, faulty, and
dangerous goods and services as well as from unfair trade and credit practices”.5
“Advertising generally refers to paid forms of communication that are distributed at
the initiative of economic operators (radio & television) as part of an intentional and
systematic effort to affect individual attitudes and choices in relation to the
consumption of goods and services.6 “Misleading advertising is any published claim
that gives a consumer an incorrect understanding of the product they are interested
in purchasing or using”.7 When businesses advertise they must be truthful. “No
business may make false, misleading, or deceptive claims about a product regarding
its: price, quality, and purpose”.8 If a customer suffers a financial loss, or any other
kind of damage due to misleading advertising can participate in a class action
lawsuit to recover compensation.9
The Types of False and Misleading Advertising Tactics
Companies use tactics to lure customers into buying a product. There are
quite a few tactics that companies use but here are five of them. One is called “Bait &
Switch Advertising”.10This is commonly seen in a circular or magazine where the
company advertises a product that it does not have. It usually is on sale, so the
customer is more inclined to buy. But once the customer enters the store, the store

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normally does not have it, so they offer the customer a substitute brand, which is
more expensive than the original item they advertised before. A more commonly
seen “Bait and Switch” tactic is when a car dealership runs an ad that a luxury car
has dropped from $40,000 to $25,000. They post that ad so they can lure customers
to come in to the dealership and check out the different cars they have. Once a
customer walks in an inquires about the ad he/she will ask about the deal and the
sales person will make it sounds like the dealership only had one or two models
listed at that price and they already sold them. What can a consumer do to protect
him/herself in event this happens? One, if you are already at the dealership you can
ask to see the transaction made beforehand to make sure they were not lying. Truth
in advertising says, “One step you can take is to call ahead to any store or showroom
to check that the product in question remains in stock and available for sale. Be sure
to ask for the name of the salesperson with whom you are speaking so that you are
able to report not only the company but also the specific salesperson to the FTC in
the event a complaint is filed”.11
The next one is called, “High-Pressure Sales Tactic”.12 This normally gets a
consumer to purchase a product he/she does not need or want. This is usually seen
through telemarketers or an unsolicited salesperson. The best way to avoid getting
caught into “high pressure” is to place your phone number on a “Do Not Call List”. It
is also important to make decisions beforehand instead of making them on the spot.
Give yourself time to think of a decision because you can always go back to the
place. Lastly, do not let unsolicited salespeople into your home. Make sure to do the
homework- research is very important because it will save the customer time and

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be able to make the right decision. Next, understand sales tactics. Sales people have
to reach deadlines, be aware if they mention this is the last sofa, or prices will
double. Lastly, stop the chatter. Maintain relationships with the salesperson and
know when to cut off the conversation. Ultimately the consumer is in control and
should be able to steer away from high-pressure sales tactics.13
Next is, “Deceptive form Contracts” which is contracts or agreements that
have fine print or are too complicated.14 The consumer can easily overlook this
agreement. According to Truth in Advertising a consumer should always read the
fine print. As a consumer it is important to remember that advertisers are trying to
sell us something, and they can take advantage of us by saying the fine print super
fast in a radio commercial, or in an ad having the font be super tiny compared to the
headline and body text.15 Disclosures should be clear, which means it should not be
hidden. There is no rule on how tiny font should be or how long it is mentioned for
on the radio or television. “The FTC does use a 4- pronged test to determine if an
ad’s fine print passes muster: Prominence, presentation, placement, and
proximity.”16 Prominence has to deal with font size- can people read and notice?
Presentation refers to the way it is said and the layout of the disclosure. Next, the
placement refers to where the disclosure is located. Lastly, are proximity and the
fine print near the claim it qualifies for? If the consumer can answer no to any of
these four rules then the fine print does not meet the standards of the law.17
There can also be “Artificially Inflating Prices.”18 This is when a consumer
sees an ad or a commercial and the deal seems to be great. But once the consumer
looks closely or inquires about the deal hidden fees may be involved.

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Lastly, “Failure to disclosure” is when the company forgets to tell the consumer a
deal has expired or not available anymore.19 If a consumer has experienced false or
misleading advertising he/she may be awarded a variety of remedies. Remedies
include: “Monetary damages, injunctions ordering the businesses to stop running
the advertisements, injunctions ordering the businesses to stop engaging in
deceptive practices, and injunctions ordering the businesses to include disclosure
statements in their advertising.”20 “The Supreme court rarely takes care of false
advertising cases.”21 If a consumer wants to bring a false advertising case he/she
should file a suit in a civil or small claims court.22
Case exemplifying False Advertising
Lord and Taylor Settles FTC Charges It Deceived Consumers Through Paid Article in an
Online Fashion Magazine and Paid Instagram Posts by 50 “Fashion Influencers”
Lord and Taylor is a national retailer and FTC charged the company with
deceiving consumers “by paying for native advertisements, including a seemingly
objective article in the online publication Nylon and a Nylon Instagram post, without
disclosing that the posts actually were paid promotions for the company’s 2015
Design Lab clothing collection.”23 Lord and Taylor went ahead and paid 50 online
influencers to post themselves wearing the same paisley dress from the new
collection on Instagram. Lord and Taylor failed to reveal that each influencer was
paid thousands of dollars in exchange for the their endorsement as well as given the
dress. What Lord and Taylor did wrong was they did not have the influencers say
they were compensated in exchange for their endorsements.24 The Director of the
FTC’s Bureau of Consumer Protection, Jessica Rich, said: “Lord & Taylor needs to be

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straight with consumers in its online marketing campaigns. Consumers have the
right to know when they’re looking at paid advertising.”25 The Federal Trade
Commission is to report to consumers when an ad is false. Here Lord and Taylor did
not disclose important information that these endorsers were paid.
Example of False advertising
Lane Bryant advertisement:
This is an example of false advertisement. It says “40% off
entire store on absolutely everything!” But if you notice the
smaller print says, “excludes DKNY JEANS products, SPANX,
and ASSETS products.” This is considered false advertising
because “on absolutely everything” and “entire store”
makes it false. If a consumer just saw “entire store on
absolutely everything” he/she has every right to believe
that Lane Bryant means everything. Everything else on this
ad is entirely true. To make this ad true the store would
need to put “40% off”! “Excludes DKNY JEANS products, SPANX, and ASSETS
products.”26
Conclusion:
As I want to go into advertising as a career I stop and think about the
advertisements I see day-to-day. As I walk through a mall and look out store
windows at signs that say, “Whole store 40% off”! I can’t help but wonder if the
store is actually 40% off? I decide to go into the store and of course it is either sale
items that are 40% off or it just excludes new arrivals. The tricky sign worked

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because it still had me walk into the store. That is why advertising works even if it is
false advertising. One topic I talked about is fine print. It’s legal, as long as it
corresponds with the ad and the naked eye can read it. Companies have cruel sales
tactics that work on any consumer. It is our job as consumers to not fall for their
tactics and be a smart shopper. Bait and switch, high pressure, deceptive form
contracts, artificially inflating prices, and failure to disclosure were the type of facts
mentioned in Jacob Meyers article. His article informed consumers what to do in
situations when those tactics are used.
Without the Federal Trade Commission we would not have anybody
regulating the advertisements we see. The Federal Communications Commission
can then broadcast the ads after the FTC regulates them. These two federal agencies
are what prevent us from being exposed to false advertisements. It is not only
advertisements they can prevent us from seeing, it’s also companies like “Lord and
Taylor” who used native advertisements posted through Instagram. The general
public is supposed to be informed when they are being exposed to an ad. That is
why Instagram has sponsored posts because we know we are being informed.
Paying people to pose in a dress without the general public knowing that endorsers
are getting paid for it is just as false as a misleading advertisement.
It is important it keep our eye out for ads that are misleading or false. The
Federal Trade Commission is to protect us from being harmed or exposed to false
advertisements. Remember to use the tactics and always think before purchasing a
product through an advertisement. As seen in the Lane Bryant ad as mentioned, the
fine print will tell the consumer what the real sale is. Companies want to make

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money, and the best way to do that is to lure the consumer into buying a product
with a good deal. Consumers love bargains and they love to save money! Overall, if
false advertising harms someone he/she may bring the case to a small claims court.
Always read the fine print in any disclosure of an advertisement. Lastly, company’s’
tactics are to trick consumers into getting a good deal. Never be fooled.

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Bibliography
Primary Sources:
"Complaints About Broadcast Advertising." Federal Communications Commission. Web.
22 Mar. 2016.
Katz, Mitchell J. "Lord & Taylor Settles FTC Charges It Deceived Consumers Through
Paid Article in an Online Fashion Magazine and Paid Instagram Posts by 50 "Fashion
Influencers"" Federal Trade Commission. 15 Mar. 2016. Web. 22 Mar. 2016.
S. Doc. No. 2 Advertising Trends and Consumer Protection (2009). Print.
"Supreme Court Changes False Advertising Law Across the Country." LexisNexis
Academic. Legal Monitor Worldwide, 26 Mar. 2014. Web. 22 Mar. 2016.
"Truth in Advertising." Federal Trade Commission. Web. 22 Mar. 2016.
Secondary Sources:
"Consumer." Deceptive Advertising Definition -. Web. 23 Mar. 2016.
"The Legal Definition of Advertising." AGCM. Web. 23 Mar. 2016.
"False and Misleading Advertising." Jacob and Meyers. Web. 23 Mar. 2016.
"Bait & Switch Advertising." Truth In Advertising. 2014. Web. 23 Mar. 2016.
Better Business Bureau. Start with Trust®. "High Pressure Sales Tactics." Better
Business Bureau. 7 June 2013. Web. 23 Mar. 2016.
"The Fine Print - Read It." Truth In Advertising. 2012. Web. 23 Mar. 2016.
Meem, Sarah. "How to Sue Someone for False Advertising." EHow. Demand Media.
Web. 23 Mar. 2016.

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Foot Notes
1 Advertising Trends pg. 2
2 Federal Trade Commission
3 Federal Communications Commission
4 “Consumer”
5 “Consumer”
6 The Legal Definition
7 False and Misleading Advertising
8 False and Misleading Advertising
9 False and Misleading Advertising
10 False and Misleading Advertising
11 Bait and Switch
12 False and Misleading Advertising
13 Better Business Bureau
14 False and Misleading Advertising
15 The Fine Print
16 The Fine Print
17 The Fine Print
18 False and Misleading Advertising
19 False and Misleading Advertising
20 False and Misleading Advertising
21 Supreme Court Changes False Advertising Law Across the Country
22 Meem, Sarah
23 Federal Trade Commission
24 Federal Trade Commission
25 Federal Trade Commission
26 The Fine Print