Draw the Law, People Issues X: Customers and Advertisements

Today’s Draw the Law will be brief (as I will be also posting about the next talk at The Box Jelly), but it will get us rolling in dealing with customers. For the past several weeks I have talked about mainly the employer-employee side of things of the business. While, there are a lot of other things to talk about in that kind of HR vein, as a way to break up the subject, I will now focus on the business-customer relationship.

Ads and Consumer Protection

Nowadays, there are a lot of consumer protection laws on the books as opposed to the old days where it was caveat emptor (“Let the buyer beware.”)  This can sometimes restrict the methods that you market or sell your products. However, one thing not to worry about is a simple advertisement.

A general ad is not going to form a contract between a business and the customers. A contract needs an (1) offer, (2) acceptance, and (3) consideration.

Often, business owners ask me if I put out this ad, is it a contract between me and the potential customers?

In general, your regular ad is not going to create contracts with everyone who reads it. It does depend on the words used. However, for a contract to be formed you need an (1) offer, then (2) acceptance, and finally (3) consideration. A store’s ad is not considered an offer, but “an invitation to bargain.”

Exceptions: “Free Gift” or “First Hundred Customers Get Special Discount”

Unless, you intend to actually give a free gift or give a special discount for some special action taken by a customer don’t make these kinds of promises. In this cases, the customer can accept the offer, and their consideration is taking the extra or special action.

Here we have an OFFER to give a free extra pair IF the customer does BUY 2 pairs of slippers. If the customer ACCEPTS and does the act, there is CONSIDERATION, and the business has to honor its ad.

False Advertising

Without going too deep into the various laws just realize there are laws that counteract “lying.” For example, don’t label a product from somewhere that it is not and don’t state that your service is of a certain level or caliber (i.e. master carpenter) when it is not. These will lead you to give a false impression.

What you should do is be accurate about material aspects of the product or services that you offer. The word material means a representation, statement, or depiction (so pictures) in the ad would likely affect a consumer’s purchase or use of the advertised products. Basically, does the aspect you are talking about important to a reasonable person to make a decision to purchase your product or service?

Puffery

It is one thing to say your cake is the “best one on the block” versus your cakes will “always be enough to serve a party of 10.” Puffery is that act of exaggerating things that we all understand is someone just promoting their product or service. Mere puffery is ok, but when you start stating things as fact or categorically true and it is not you have entered deceptive advertising waters.

Puffery are those exaggerations of "greatest" or "best" that we are used to seeing. Something material is a representation that you are trying to express about the product or service that is key to a purchase decision.

Bait-and-Switch

We know about “bait-and-switch” practices thanks to the numerous lawsuits and complaints against car dealerships. However, it can be applied to most other situations. In general, do not place the “bait” in an ad luring the customer to the storefront knowing full well you won’t have that product, and intend to “switch” it by focusing the customers attention to something else (in general more expensive than the deal “bait”).

If you really have a limited supply it is best to tell that in the ad. The deal lasts as long as supplies are available, and that supplies are limited rather than leaving out the deal dangling out.

Last Word

Have a process when making an ad. Here is an example of a checklist to go through to consider when making an ad and trying to avoid headaches:

  1. Consider the product or service – what do you want to emphasize in an ad?
  2. Is what your emphasizing trying to be factual?
  3. Are you making it a material claim?
  4. If you decide to compare your material aspects against a competitor’s be very careful of the claims you make – in short they better be true.
  5. If you are trying promotional sales or discounting be clear about what it is you are offering
  6. Don’t do a bait-and-switch!
  7. Lastly, be sure to double check the prices and pictures.

The main thing to takeaway from today's post is whether or not you can stand by your ad in what it states and claims. Main thing is be truthful when making material claims.

Don’t forget to “Subscribe” to this blawg and have an Aloha Friday!

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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2 thoughts on “Draw the Law, People Issues X: Customers and Advertisements

  1. Hi, I came across an ad that is quite unusual. This company is advertising “all new blackberry bold 9900” in their ad but in their terms and conditions they state that they false advertise to draw in traffic to their ad and that all products sold are fake. Is this legal?? They also purposely mislead all consumers that are interested by never revealing that the products are fake. The only way you find out is by reading the terms and conditions or when its too late and you have already purchased the fake product.
    Please comment or advise in this scenario.
    Thanks

    • First, without seeing the ad myself and knowing what jurisdiction this is taking place in I can’t really give advice. Moreover, I prefer to give legal advice in person. In general, though under US law, as administered through the FTC, deceptive ads are ones that contains a statement – or omits information – that:

      Is likely to mislead consumers acting reasonably under the circumstances; and
      Is “material” – that is, important to a consumer’s decision to buy or use the product.

      An unfair ad is one that:

      it causes or is likely to cause substantial consumer injury which a consumer could not reasonably avoid; and
      it is not outweighed by the benefit to consumers.

      Deceptive and/or unfair ads are a violation of the truth-in-advertising rules of the FTC. In general, a person would submit a complaint to the FTC about an ad, and then the FTC would take a look at it and make a determination.

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