Consumer protection statutes commonly prohibit fraudulent advertising. Most advertising regulations are entrusted to an administrative agency, such as the Federal Trade Commission
(FTC). The FTC is authorized to issue orders to stop false or misleading advertising. Statutes prohibiting false advertising are liberally interpreted. A business is liable for false advertising when it advertises a reduced price sale of a particular item, but that item is out of stock at the time the sale begins. It is no defense to the store that the pre-sale demand was greater than usual.
Under consumer protection statutes, deception rather than fraud, is the significant element. There can be a breach of a consumer protection statute even though there is no proof that the wrongdoer intended to defraud or deceive anyone. Instead of basing the law in terms of fault of the actor, the law is concerned with the problem of the buyer who is likely to be misled. The good faith of an advertiser or the absence of intent to deceive is immaterial. The purpose of false advertising legislation is to protect the consumer rather than to examine the advertiser’s motives.
The FTC requires that an advertiser maintain a file containing the data claimed to support an advertising statement as to safety, performance, efficacy, quality, or comparative price of an advertised product. The FTC can require the advertiser to produce this material, If it is in the interest of the consumer, the FTC can make this information public, except to the extent that it contains trade secrets or material that is privileged.
When an enterprise has made false and deceptive statements in advertising, the Federal Trade Commission may require that new advertising be made in which the former statements are contradicted and the truth stated. This corrective advertising required by the Federal Trade Commission is also called retractive advertising.
Seals of Approval
Many commodities are sold or advertised with a sticker or tag stating that the article has been approved or is guaranteed by some association or organization. Ordinarily, when a product is sold in such a way, it will in fact have been approved by some testing laboratory and will probably have proven adequate to meet ordinary consumer needs. Selling with a seal of approval of a third person makes, in effect, a guarantee that the product has been so approved. A seller is liable if the product was, in fact, not approved.
Closely related to the regulation of advertising is the regulation of labeling products. Various federal statutes are designed to give the consumer accurate information about the product, while others require warnings about dangers of use or misuse. Consumer protection regulations prohibit the use in the labeling of products with such terms as jumbo or giant which tend to exaggerate and mislead.
Consumer protection statutes prohibit the use of improper and deceptive selling methods. These statutes are liberally construed to protect consumers from improper practices.
Consumer protection statutes and deceptive trade practice acts are violated when the statements or the business methods of the defendant are deceptive. It is not necessary to prove that the defendant was guilty of fraud. It is immaterial that the defendant who misrepresented the facts did not intentionally do so.