Introduction

In a market economy, businesses are encouraged to compete in pursuit of their own self-interests—making a profit. But what if a business does not compete fairly? What if it lies or cheats? Some argue that in the long run the market will punish the dishonest business. People will eventually discover its tactics and fewer people will buy from it.

But what about the businesses and consumers who were victims of the dishonest business? If you were in their shoes, would you be satisfied knowing that eventually the unscrupulous business may be forced out of the marketplace? All but the advocates of a completely unrestricted market system admit that some ground rules—regulations—are necessary to keep businesses operating within acceptable limits.

Advertisement and its Social Role

Advertising is often thought of as the paid, non-personal promotion of a cause, idea, product, or service by an identified sponsor attempting to inform or persuade a particular target audience. Advertising has taken many different forms since the beginning of time. For instance, archaeo-logists have uncovered walls painted in Rome announcing gladiator fights as well as rock paintings along Phoenician trade routes used to advertise wares. From this early beginning, advertising has evolved to take a variety of forms and to permeate nearly every aspect of modern society. The various delivery mechanisms for advertising include banners at sporting events, billboards, Internet Web sites, logos on clothing, magazines, newspapers, radio spots, and television commercials. Advertising has so permeated everyday life that individuals can expect to be exposed to more than 1,200 different messages each day. Advertising is a source of information. People easily know what new products are available for them to consume, consumers never feel stranger to markets, they have already seen the products in advertisements. Secondly, it reduces the cost of distribution for producers, contrary to older days where sales men go door to door to introduce their products to the consumers to attract them to buy. One minute ad on television has a potential to inform every human on this planet. Similarly, the newspapers, internet, hoardings, etc. Thirdly, Advertisement encourages competition between producers, manufacturers and benefits consumers with low rates for example the battle between several telecommunication companies now days like Mobilink, Telenor, Ufone, Warid etc.

 What Is a Deceptive Ad?

To sell their products, advertisers try to make them look as good as possible. This can involve the use of puffery and weasel words. Puffing is the use of opinions and exaggerated statements. The words "better", "best", "greatest", and "finest" are typically used in puffery advertisements. The information is not intended to be factual. All three of the following advertising claims use

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puffery:

"Coke is it.""The best part of waking up is Folger’s in your cup.""Hoover makes the most powerful vacuum cleaner in America."

A "weasel word" is used in advertising to make a claim look legitimate to the casual listener or reader. On closer examination it, too, proves to be empty and meaningless. For example, a medication that claims to "help control acne" does not actually claim to stop or cure acne. "Help" and "control" are weasels. Commonly used weasel words include: "helps", "acts", "works", "can be", "up to", "as much as", "refreshes", "comforts", "fights", "the feel of", "looks like", "tastes like", and "strengthened".

The dictionary says “deception” refers to a form of trickery involving the selling of goods or services to consumers. But puffing and weasel words are generally not considered deceptive in the eyes of the law. It is assumed that most “reasonable consumers” know a seller will exaggerate a bit. Sellers are allowed some leeway in describing their products, and such statements are typically considered innocent misrepresentations.

Over time, government regulations and court cases have established rules for determining when advertising claims cross over the line to become illegal deception. Advertising is generally considered deceptive under federal law if it involves these elements:

A representation, omission, or practice that is likely to cause a substantial segment of potential customers to have a false belief about the advertiser’s or a competitor’s product.

The deception is material—it is likely to influence the purchasing decision. Consumers are likely to have chosen differently if there had not been the deception.

Someone has been or is likely to be injured as a result of the deception. The party harmed is usually a business that has lost sales to the advertiser or by a lessening of the goodwill associated with its products.

What does this mean? As noted previously, puffing and weasel words are generally defended as legal because reasonable consumers are too savvy to believe them. An advertiser also can’t be charged with deception because a very small number of people believe something outlandish such as that "Danish pastry” is made in Denmark.

Advertisements that contain factually wrong statements are clearly deceptive. If a company advertises that its medicine will “cure” cancer, its advertisement is deceptive unless the company has specific proof that the statement is true. This proof must usually come from extensive scientific studies of the product.

An advertisement does not have to be untrue to be deceptive. For example,

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ads for a loaf of bread claimed that it had half as many calories per slice as its leading competitors. The advertiser failed to say, however, that each slice of its bread was also half as thick as the competitors. The ads were ruled to be deceptive.

When an ad targets a specific audience, the court assesses the effect of the claim or practice on reasonable members of the targeted group. The courts have established that some people are particularly vulnerable to deceptive advertising and deserve special protection. If a company markets a cure to the terminally ill, the practice will be evaluated from the perspective of how it affects an ordinary member of that group. There is concern that the terminally ill might be particularly susceptible to exaggerated cure claims. By the same token, if the same product is being promoted to well-educated doctors, it would be judged in light of the knowledge and sophistication of that group.

It is generally accepted that children do not always have the experience to identify exaggerations and untruths. Other groups that may need extra protection are the elderly, those with limited language skills, persons who are mourning the death of a loved one, people who are trying to lose weight, and people who are trying to stop smoking.

"Any advertising or promotion that misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities" (Lanham Act, 15 U.S.C.A. § 1125(a)).

Proof Requirement

To prove that an advertisement is false, a plaintiff must prove five things: (1) a false statement of fact has been made about the advertiser's own or another person's goods, services, or commercial activity; (2) the statement either deceives or has the potential to deceive a substantial portion of its targeted audience; (3) the deception is also likely to affect the purchasing decisions of its audience; (4) the advertising involves goods or services in interstate commerce; and (5) the deception has either resulted in or is likely to result in injury to the plaintiff. The most heavily weighed factor is the advertisement's potential to injure a customer. The injury is usually attributed to money the consumer lost through a purchase that would not have been made had the advertisement not been misleading. False statements can be defined in two ways: those that are false on their face and those that are implicitly false.

Development of Regulations

The five-step proof requirement developed from common law, which allowed a consumer or competitor to bring action against a seller or advertiser for deceit or fraud if the consumer or competitor could meet all five requirements.

Legislation against false advertising is generally more consumer protective at the state level than it is under common law. One early attempt to establish industrywide guidelines was made in 1911 when the trade journal Printer's Ink

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proposed that false advertising be classified as a crime. False advertising became a misdemeanor in the forty-four states that enacted statutes based on the model statute proposed by Printer's Ink. These statutes are still in effect; however, they are rarely used because it requires proving that the false advertising exists beyond a reasonable doubt, a difficult standard to meet.

In place of the Printer's Ink statute, eleven states have adopted the Uniform Deceptive Trade Practices Act, which lists a dozen different items that make up prohibited trade practices. The only remedy available under this act is injunctive relief — a court order that admonishes the guilty party for its actions — which may explain the low number of states that have adopted it. Other states have different statutes regarding false advertising. Most of these statutes require the courts to interpret the state laws with the federal guidelines later provided by the Federal Trade Commission (FTC) in mind.

The second movement of change in the advertising industry came in 1964 when the FTC amended its standards to help regulate cigarette labeling. The FTC required proof of three elements to show that an advertisement was false or unfair. The ad had to offend public policy; be immoral, unethical, oppressive, or unscrupulous; and substantially injure consumers. Now, as outlined in the five-step proof guideline, the most important consideration is the potential to injure consumers.

Another gradual change has been seen in the definition of deceptive trade practices. Today, these are defined as practices that will mislead a consumer who is acting reasonably under the circumstances, to that consumer's detriment. Before this formal policy was adopted by the FTC in 1988, deception was determined by a practice's tendency or capacity to deceive and its effect on an ignorant or credulous consumer.

Types of Deceptive Advertising

Besides advertising that is either deceptive/false on its face or implicitly false, today's regulations define three main acts that constitute false advertising: failure to disclose, flawed and insignificant research, and product disparagement.

Failure to Disclose

It is considered false advertising under the Lanham Act if a representation is "untrue as a result of the failure to disclose a material fact." Therefore, false advertising can come from both misstatements and partially correct statements that are misleading because they do not disclose something the consumer should know. The Trademark Law Revision Act of 1988 (15 U.S.C.A. § 1051 et seq.), which added several amendments to the Lanham Act, left the creation of the line between sufficient and insufficient disclosure to the discretion of the courts.

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American Home Products Corp. v. Johnson & Johnson, 654 F. Supp. 568, S.D.N.Y. 1987, is an example of how the courts use their discretion in determining when a disclosure is insufficient. In this case, Johnson and Johnson was advertising a drug by comparing its side effects to those of a similar American Home Products drug, leaving out a few of its own side effects in the process. Although the Lanham Act does not require full disclosure, the court held the defendant to a higher standard and ruled the advertisement misleading because of the potential health risks it posed to consumers.

Flawed and Insignificant Research

Advertisements based on flawed and insignificant research are defined under section 43(a) of the Lanham Act as "representations found to be unsupported by accepted authority or research or which are contradicted by prevailing author- ity or research." These advertisements are false on their face.

Alpo Pet Foods v. Ralston Purina Co., 913 F.2d 958 (D.C. Cir. 1990), shows how basing advertising claims on statistically insignificant test results provides sufficient grounds for a false advertising claim. In this case, the Ralston Purina Company claimed that its dog food was beneficial for dogs with canine hip dysplasia, demonstrating the claims with studies and tests. Alpo Pet Foods brought a claim of false advertising against Purina, saying that the test results could not support the claims made in the advertisements. Upon looking at the evidence and the way the tests were conducted by Purina, the court ruled not only that the test results were insignificant but also that the methods used to conduct the tests were inadequate and the results could therefore not support Purina's claims.

Product Disparagement

Product disparagement involves discrediting a competitor's product. The 1988 amendment to the Lanham Act extends claims for false advertising to misrepresentations about another's products.

Trademark Infringement

A topic similar in form to product disparagement is trademark infringement, which is listed in section 32(1) of the Lanham Act. This section states that

anyone who shall, without the consent of the registrant — (a) use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution or advertising of any goods or services or in connection with which such use is likely to cause confusion, or cause mistake, or to deceive … shall be liable in a civil action by the registrant.

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The confusion or deceit involved does not have to be in regard to the source of the product; the only requirement is that the public thinks the trademark's owner either sponsored or approved the use of the trademark.

The Polaroid Test

For purposes of determining whether there is a likelihood of confusion under the Lanham Act, the courts use the Polaroid test, which includes eight factors established in Polaroid Corp. v. Polara Electronics Corp., 287 F. 2d 492 (2nd Cir. 1961). They are the strength of the plaintiff's mark, similarity of uses, proximity of the products, likelihood that the prior owner will expand into the domain of the other, actual confusion, defendant's good or bad faith in using the plaintiff's mark, quality of the junior user's product, and sophistication of consumers. These eight factors do not all have to be satisfied to prove a case; the major factor the courts focus on is the potential to confuse consumers.

The Polaroid test is for cases that involve commercial exploitation. When a case raises First Amendment concerns, the Polaroid test can become awkward. False advertising cases that raise First Amendment concerns most often involve the use of parody.

Parody

For parody cases, a balancing test that is more useful than the Polaroid test was established by Cliffs Notes v. Bantam Doubleday Dell Publishing Group, 886 F.2d 490 (2nd Cir. 1989). In Cliffs Notes, the court held that Bantam's production of Spy Notes, which was a parody of Cliffs Notes study guides, was not a violation of the Lanham Act, because it conveyed not only that it was the original but also that it was not the original and was instead a parody. The balancing test used by the court in Cliffs Notes basically requires that a parody have two simultaneous, contradictory messages in order to be protected under the First Amendment. If a parody does not have both messages, it is likely to confuse the consumers, therefore opening itself up to false advertising claims.

Another claim involving parody is the 1995 case of Hormel Foods Corp. v. Jim Henson Productions, 73 F.3d 497 (2nd Cir. 1996). In this case, Hormel brought Jim Henson Productions to court for trademark infringement and false advertising under the Lanham Act. At the time the case was initiated, Henson was producing the movie Muppet Treasure Island with a new character: an exotic wild boar named Spa'am. Henson's intention was to make the audience laugh at the intended parody between the Muppet's wild boar and Hormel's tame luncheon meat.

Hormel's claims of false advertising and trademark infringement under the Lanham Act and its common-law claims of trademark dilution and deceptive practices were all denied by the court for several reasons, the main one being that Henson had clearly, in all his advertising, identified Spa'am as a character from a Muppet motion picture. This usage was not confusing under the Polaroid test and therefore was not a solid basis for a false advertising or

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trademark infringement claim. Henson's usage also satisfied the balancing test requirements set up by Cliffs Notes.

Deceptive Advertisement Techniques

Pricing-based methods

Hidden fees and surcharges

Service providers often tack-on fees and surcharges that are not disclosed to the customer in the advertised price. One of the most common is for activation of services such as mobile phones, but is also common in broadband and telephony. Other fees are taken from gift cards and bank accounts. In most cases, the fees are hidden in fine print, though in a few cases they are so confused and obfuscated by ambiguous terminology that they are essentially undisclosed.

This may also occur with the bait-and-switch tactic. BellSouth, for example, often advertised DSL service at low prices and with no installation charges, but in many of the same areas offered only FITL/FTTC service, which requires installation of separate Ethernet wiring into the home at significant cost.

Cable and telephone customers in the U.S. are often hit with a "regulatory cost recovery fee" (among other names), which sounds like it is mandated by the government, but which is actually the provider charging the customer for having to abide by the law. These are allegedly for local number portability and the Universal Service Fund, however consumer advocates allege that, because these fees are totally unregulated and are often well above what the companies are required to contribute, these fees are simply being used to skim extra profit from subscribers.

Mail-order companies often hit customers with "shipping and handling" charges not included in the stated price, and only show at the very end of a TV commercial.

Rebates

Rebates were originally intended to pass savings directly from the manufacturer to the consumer. However in the U.S. they have become probably the biggest way to trick shoppers into paying more than the advertised price. Stores advertise a "sale" price and note only in the fine print that it is not the price at which it is actually sold for, but instead an "after rebate" price, which also fails to include sales tax. Many rebate fulfillment companies have been accused of intentionally reneging on obligations to return money to the customers.

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Inflated price comparison

In comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low. The intent is obviously to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service by advertising a large-percentage "discount". Some clothing stores in particular have essentially every item on "sale", and some grocery stores advertise "savings" over their "regular" prices for those using loyalty cards (which allow the stores to track their purchases).

Another common problem is the comparison to old prices on technology, such as computer memory, hard drives, memory cards, USB drives, and other items which tend to fall in price quickly.

In the United Kingdom, under the Sale of Goods Act, any item in a sale must have been sold at the non-sale price for at least 28 consecutive days. Many companies sidestep this requirement by selling items at very high prices in a single store (often in expensive parts of London) for 28 days, before selling the items at the "sale" price in their other stores.

Perpetual "sales"

Another closely-related trick is the "sale" which becomes more or less permanent, though the actual price or percent off may fluctuate, or even briefly go back to the inflated regular price. In the U.S. this is often seen in craft and home décor stores such as Michaels and Jo-Ann, and to a lesser extent Hobby Lobby and Garden Ridge. Because these stores carry a high proportion of seasonal merchandise (Christmas, Halloween, summer, etc.), those products are constantly on "sale" from the time it is all stocked on the sales floor until the time it is all gone at closeout. This defies the definition of a sale event.

"Selected items"

Some stores, especially discount stores like variety stores, use the disclaimer that "selected items" are on sale. However, the items actually "selected" may be arbitrary.

Psychological pricing

Psychological pricing "lowers" the price of item, usually by one cent (or local equivalent), to fool customers into thinking the price is somehow "less" than the price point the seller has set. This works because people tend to pay attention only to the most significant digit in the price.

Another similar trick is to hide the cents in small print. Gas stations in the U.S. almost always tack-on nearly an extra cent per gallon, by advertising as $2.859 (two dollars and eighty five and nine-tenths cents), for example. This is

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also done by other retailers, such as $199.99 for an item that is, for all intents and purposes, 200 dollars.

Cost-plus pricing

Some U.S. stores advertise one price on the signs for each item throughout the store, but add the small print "plus 10% at register" at the bottom. This makes real-price comparisons more difficult. In addition, the "cost" to which the 10% is added is not the real wholesale cost as it implies, but also shipping and overhead, thus making it more like "cost plus more costs plus 10%". This is common at some lesser grocery stores such as Food Depot, which end up being nearly the price of regular stores, and often more compared to the other stores' sale prices.

Buy x, get y free

This type of false advertising concludes that more is better. By increasing the price of a firecracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line.

In other cases the free product is of lower quality than the originally-purchased item, or its value a greatly overstated.

Often, buy-one-get-one "deals" are simply an excuse to use the word "FREE" in advertising. The item may simply be "50% off" or "half price", or the shopper may actually be forced to buy at least two, or even in multiples of two. Because the shopper must buy something first, the "free" item is not truly gratis.

Bait and switch

A bait-and-switch is an offer of a service or product at a very low price (often a loss leader), with little or no intention to sell said service or product as advertised. If available at all, this low price is accomplished by lowering standards on the advertised product, such as guarantees, credit terms, or quality, thereby making it undesirable.

Another method is to offer a "limited quantity" deal, with only a few of the advertised product[s] per store. Once the consumer is in the store, sales personnel will try to coax him or her to purchase a different and more expensive product. This is more common, as it is often legal if there is a disclosure of the limited quantity available. This frequently happens on "Black Friday" newspaper ads published on Thanksgiving in the U.S.

Introductory offers

An introductory offer or "free trial" is an offer for an ongoing service that is valid for a limited period. After this period, the price or terms of the agreement

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change, often without further notice to any consumers which have accepted the initial offer. This differs from bait and switch because the terms or "bait" are in fact actually delivered (making it only deceptive rather than inherently false), but the switch still occurs later on.

The most common form of this is credit cards, which offer low interest rates (0% APR) to start and then rise greatly afterward. Enormous increases in rates are often triggered by a single late or overdraft, in addition to the enormous fees for the late or overdraft. Credit card companies have been criticized in the U.S. for luring college and university students with these offers and then making huge profits from the fees and rates after the students get themselves into debt. Adjustable-rate mortgages are also like this when initial rates are low.

Introductory offers are also very common for cable TV, satellite TV, VoIP, and Internet services, especially those with bundling. The intent is to get the consumer used to receiving the service before the price goes up, so that they will continue on as customers with a much higher profit margin for the service provider. This may also be combined with a requirement that a credit card be automatically billed every month at the provider's convenience instead of the customer's.

"Going out of business" sales

In many cases, the liquidators which are hired to sell merchandise from a closing store will actually raise the prices on items that were already marked-down on clearance. For items already marked-down to 50% off, this means the liquidator is doubling the price (quadrupling it for a 75%-off price), and then "discounting" it from there. Also common is for the sale prices at a retail chain's other stores to be lower than the liquidator's prices at the closing stores. Both of these were proven to be the case in November 2008, with the same liquidator (Hilco) committing both offenses: the markups at Linens 'n Things, and the higher prices on around one-third of the items compared to other Circuit City stores remaining open. Additionally, liquidators refuse to accept returns, so if a customer does find he or she has been overcharged, there is no apparent recourse. [1]

Occasionally, stores will advertise such a sale with no intention of going out of business. By utilizing advertisement with titles such as "going out of business", "store closing", "liquidation sale" or "bankruptcy sale" a message of urgency and "dumped" prices is conveyed -- when in reality the business has no plans on closing its store or going out of business. Some cities in the U.S. now require permits for these types of advertisements to combat the false advertising. A few stores have done a "going out for business" sale, perhaps hoping that the small word substitution will go unnoticed.

Units of sale and pricing

Another trick is to make the unit of pricing smaller than the mandatory unit of sale. One example is airlines, where a one-way price is quoted, even though it

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is impossible to get a one-way ticket for that price, and the flyer is instead forced to pay for a two-way ticket. Similarly, loudspeakers are often quoted as single units, even though the buyer is forced to buy a pair.

In telecom circles, this is known as bundling, where customers are forced to buy two or more of pay TV, landline telephony, mobile telephony, and Internet access in order to get the advertised price, and are otherwise charged more.

In grocery stores, Kroger (and potentially others) advertise a box of cookies for ten cents, using a giant fluorescent red-orange sticker. However, under the enormous "10¢", there is tiny fine print, less than the size of the large "1", which says "per cookie". This is further reinforced by the fact that the box is clear plastic, allowing the shopper to actually see all of the cookies.

The tactic is also used on infomercials, home shopping TV networks, and barker channels and promos for pay TV premium channels, by stating the amount of each payment instead of the total price, such as "three payments of 99.99" instead of the total 299.97 (essentially 300).

Rent-to-own stores also emphasize the "affordable" monthly payments while downplaying the enormous rental charges that make items far more expensive in the end than an outright purchase.

Memberships and "loyalty" programs

Many grocery stores have started a program where shoppers can get a special card for that store which may save a few cents per item at the checkout, but in allows the store to track every purchase the shopper makes. Aside from the often-undisclosed privacy problem, this allows the store to advertise lower prices (if the shopper has a member card), while non-members are charged a higher price that may only be listed in small print.

A slight variant on this approach that also includes the unit price approach is the technique used by Costco and Sam's Club where a person actually pays for a membership with the hope of saving money. However, the items are sold in bulk making it difficult to compare to other stores unless one calculated the unit price. It appears someone might be saving money because of buying more items, but it is hard to tell on the fly without calculating unit price. Then one would also have to consider how many times per year they would buy that bulk quantity, and the amount of waste for perishable items or unwanted excessive quantities, to determine if the membership fee is worth it.

Non-sale advertisements

Some stores will use ads which show products that are not even on sale at all. Since the great majority of advertising is for sales, this often misleads the consumer into thinking that the items are at a special price, when in fact they are not. Wal-Mart and others with "everyday low prices" (meaning no weekly sales ads) are known for engaging in this, especially during the Christmas rush.

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Other deceptive methods

Disclaimers and fine print

Companies often use disclaimers to try to absolve themselves of legal responsibility for their own actions. Along with unreasonable conditions, these are usually hidden in fine print, in hopes that consumers will commit themselves without reading them. Some courts of law have struck these "agreements" down as unconscionable and therefore unenforceable.

Photo manipulation

Up until very recently, photographs have been accepted as fact in many aspects. However, as photo manipulation technology has improved greatly, this problem is becoming more and more prevalent. HP has used this technique in advertising its photo printers, and it is commonly used now for cosmetics, anti-aging, and weight loss advertisements. There is also the same issue with advertising of TV sets and their "simulated pictures".

Manipulation of standards

Sellers may manipulate standards to mean something different than their widely-understood meaning. One example is with personal computer hard drives. While a megabyte has always meant 220 (1,048,576) bytes in computer science, disk manufacturers began using the irrelevant metric system (SI) prefix meaning of 106 (1,000,000) bytes, thereby overstating capacity by nearly 5%. With gigabytes, the error increases to over 7% (1,073,741,824 instead of 1,000,000,000), and nearly 10% for the newer terabyte. Seagate Technology and Western Digital, were sued in a class-action suit for this, both companies agreed to settle the suit and reimburse customers in-kind, yet they still continue to advertise this way.[1][2]

Also common in the U.S. is the manipulation of television set and computer monitor sizes. While TV sets have always had to list their actual diagonal size, CRT computer monitors are still a loophole, and are usually sold by the size of the picture tube, not all of which is visible even on the front. The viewable image size (VIS) is actually about one inch or 25mm smaller in diagonal measurement. The advent of LCD screens and plasma displays appeared to have eliminated this problem, but in 2008 many stores again began misrepresenting the size of monitors by using the word "class" after the false statement of size, as in "32-inch class" for a screen with only 31.5 inches diagonal measurement (an overstatement of 3.2% of screen area).

Furthermore, the diagonal measurements of widescreen displays are inherently misleading, as the area is less than with a fullscreen [disambiguation needed] display. For the same diagonal, consumers are actually being cheated out of nearly 7% of the screen area for a 16:10 computer display, and over 12% for 16:9 HDTV television sets. This explains why manufacturers so quickly pushed widescreen and eliminated

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fullscreen, even without any great demand from consumers, and despite the fact it makes viewing most webpages (which are oriented vertically instead of horizontally, like the scroll wheel) more difficult.

Another such issue is with antennas, where dBi is used instead of dBd. In this instance, dBd refers to the gain (and therefore the ability to receive radio waves) an antenna has compared to a standard dipole antenna. However, dBi refers to an imaginary isotropic antenna that radiates equally in every direction, which could never be built. This makes the labeled antenna appear to have more gain than it actually does.

A different use of this tactic is in refinancing of mortgages, where a U.S. radio ad in June 2006 advertised an "apparent" interest rate of just "1¼%" several times, but slipped-in the real rate of over 6% just once in the ad. (See interest-only mortgage.)

Fillers and oversized packaging

Some products are sold with fillers, which increase the legal weight of the product with something that costs the producer very little compared to what the consumer thinks that he or she is buying. Food is an example of this, where chicken meat is injected with broth or even brine (up to 15%), or TV dinners are filled with gravy or other sauce instead of meat. Both malt and ham have been used as a color filler in peanut butter.[3] Canned tuna may also be labeled with a weight that includes the water or vegetable oil, though these are almost always drained off and are therefore useless.

In other cases, packages are under-filled, simply leaving empty space at the top, in products such as coffee cans which cannot be seen into until being purchased and opened at home. Particularly deceptive is when the same size of packaging is used for less product than it used to be. This deceives consumers into continuing to buy the product, which they expect to have the same amount it always has. To evade legal problems, the label is changed to reflect the actual new amount, but this is essentially fine print which anyone is unlikely to notice. The package may also be reduced in size — Hershey's and Coca-Cola have engaged in this practice, among others. This may be imperceptible, such as changing the bottom of a jar of mayonnaise to have a very deep indentation.

A similar problem in Christmas lights and other light strings is that the length of each set has gotten shorter since the 1990s despite containing the same number of lights. Originally 8 inches (20 cm) for most sets of 35 or more, it became 6 inches (15 cm) by the 1990s, 4 inches (10 cm) in 1998 when new UL rules took effect, and now even less than that in most cases, to as little as 2 inches (5 cm). This not only forces consumers to buy more sets to cover the same length or area, but it is also detrimental to energy use. The reduced length of the set is given in small print while the number of lights is in large and bold print. Some also fail to list the lighted length, instead including the lead-in cord which has no lights.

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Misrepresentation of endorsements

Ads and labels often use descriptive terms or locations to increase the perceived value of a product.

An example would be advertising white sparkling wine as "Champagne" when it is from Burgundy instead of Champagne, or Vidalia onions which are from Texas instead of near Vidalia, Georgia. These can also be considered infringement of trademarks in many cases.

Another example is the celebrity endorsement, when the celebrity does not even use the product. Companies may also claim non-celebrity endorsements, such as by "four out of five" doctors (usually "in a recent survey"), or use actors to pretend to be experts on or users of the product.

Meaningless awards

Often, awards and accolades are mentioned for a particular product. Sometimes this can be deceptive when the award is not from any important or critical endorsement body. Similarly rating statements can be made using words that are meaningless. A common example are the auto advertisements that say, "Best in Class". The word "class" is meaningless and can be defined however someone desires - for example, the class could be defined as only four-door minivans made by Nissan whose model name starts with NV2. In this case, the NV200 would be "best in class".

Advertising the maximum

Internet service providers may advertise their service as offering "up to 8 Mbit/s", whereas on average use it could be just 1 Mbit/s. The use of "up to" in the description protects them legally, while raising false hopes in the customers. Further, in the fine print it is mentioned that this includes both the download and upload speeds, deteriorating the customer's usage experience even more.

Sale signs within stores may state "up to 75% off" for example, when there may be little or nothing on the marked rack or shelf that is that deeply discounted.

There is also the related practice of advertising the minimum, raising false hopes that the customer may somehow get more than this. This is the case where a very low price is advertised, along with an extremely limited availability such as "minimum 3 per store".

Usage limits

Broadband Internet access may be capped by cable modem and DSL ISPs, incurring huge "overage" charges much like mobile phones. On cable this is also an anti-competitive practice, effectively preventing customers from

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watching IPTV channels that are not provided by the cable company. Such limits are usually only disclosed in the contract the customer must sign, and not in the advertising. Some have actually stated "unlimited" use when that is blatantly false. Some use bandwidth throttling to effectively choke the user's connection, while some will cut users off entirely either temporarily or even permanently.

Meaningless terms

Manufacturers and sellers often use terms that sound advanced or deluxe to the average consumer, but really mean nothing at all. Most generically, this includes words like "deluxe", "advanced", "super", "ultra", "premium", "heavy duty", "hi-tech", "space age", and others.

The most-abused term of the 2000s is "digital", often applied to things which are not digital in any way. Headphones are often labeled as "digital" or "digital ready", when in fact they are inherently and entirely analog. The term has also been applied to amplified radio antennas used to receive over-the-air television, even though digital TV signals are radio waves just as with analog television.

Undefined terms

Many terms do have some meaning, but the specific extent is not legally defined, leading to their abuse [disambiguation needed]. A frequent example (until the term gained a legal definition) was "organic" food. "Light" food also is an even more common manipulation. The term has been variously used to mean low in calories, sugars, carbs, salt, texture, thickness (viscosity), or even light in color. Tobacco companies, for many years, used terms like "low tar", "light", "ultra-light", "mild" or "natural", but in recent years it was proved that those terms were considered misleading.

Another example is the United Egg Producers' "Animal Care Certified" [4] logo on egg cartons which misled consumers by conveying a higher level of animal care than was actually the case. Both the Better Business Bureau and the Federal Trade Commission found the logo to be deceptive and the original logo can no longer be used.

Failure to inform

It is mandatory in most countries to have a date of expiry in products. Many countries enforce that a 'normal' food and beverage 'must' expire within six months or one year. However, some products, intentionally code the manufactured date and not the expiry date or the reverse (where the expiry date is printed but not the date of production).

The other form of information required is the net weight (which means, the actual weight of the product without the weight or size of packaging) of the product.

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Many products also lack the country of manufacture and instead have the country forwarding the product. Some products have a list of countries permitted to sell the product but have no information of the country of origin.

Other offenses include failing to notify consumers of something they have the right to know, such as whether the food is genetically engineered, or whether meats have been treated with carbon monoxide (which displaces the oxygen that causes browning of raw beef).

False privacy or security claims

Companies have been found to be in violation of their privacy and terms of service policies - such as claiming to follow good security practices while failing to remedy a known, serious security problem for years. ISPs have violated privacy policies that barred disclosure of customer information with limited exceptions. Consumers who make decisions based on such false advertising have been deceived.[5]

Label tampering

Product labels may initially contain truthful information which is later removed or obscured.

For foods, the expiry date may be changed, which in meats can cause dangerous levels of salmonella or other bacteria to grow. For other foods, they may simply become stale while still being safe to eat. Canned foods may have their labels removed.

Another method of false labelling is hiding or destroying a label indicating the product's origin (e.g. "Made in India" or "Made in Botswana").

Prices may also be raised by liquidators and then "discounted".

Branding

Many well-known companies simply rent their names out to other lesser-known companies. This misleads the consumer to believe that he or she is getting a quality product, which will be backed-up by the company, when in reality this may not be the case. General Electric, for example, no longer makes its own Christmas lights, and never made USB hubs at all, though its logo appears on both. (These are actually marketed by Santa's Best Craft and Jasco, respectively.) Another example is the IBM PCs, which are now made by the Lenovo Group.

Ad placement

Many newspaper ads show a price which does not include everything pictured. The most common offense is to show the price for a personal

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computer within the computer screen, when that price does not even include the screen it is printed on.

This is also seen in stores, where a sign is placed around merchandise which is not on sale. However, this is more likely the result of ignorance [disambiguation needed] than deliberate intent in most cases.

Fitness for use

Some products are labeled as not being for a particular use, even though that is clearly the function for which a person would purchase it. This labeling is intended to protect the company from any legal responsibility.

In a different type of case, LED Christmas lights are rated and labeled for outdoor use, however this is only for safety purposes. On generic (unbranded) sets, the cheap steel used for the leads on each light will rust if left in the rain, which also negates claims of long life, forcing people to keep buying light sets just as they have with incandescent sets.

Warning labels

Some items may present a danger to the public, but may not state that danger clearly on the product. This is much less of a problem now, due to consumer protection legislation and litigation. (There have been recent cases of lead, melamine, and other dangerous chemicals in the late 2000s, however these should not be in products to begin with, thus their labelling is not the issue.)

The opposite of this is excessive labelling, where products that are not dangerous are labelled as being so, because it is inconvenient for manufacturers to sort or label products according to their actual potential for harm. Much of this has occurred in the U.S. as a result of California Proposition 65 (1986). While this did bring to several issues to consumer attention, such as the use of lead in PVC electrical insulation, some items are stuck with the label just so the manufacturer can avoid responsibility "just in case", which amounts to a wolf cry which consumers eventually ignore, even on items which actually do pose a risk. Other excessive warnings include only connecting three sets of Christmas lights from end to end, even though 18 mini incandescent sets of 50 lights each will run on a three-ampere fuse (a UL rule). In 2008 (several years later than their introduction) this was increased to 43 for LED sets, though it can handle 150 circuits (50 to 150 sets of one to three each) of 2.4 watts (25 to 60 LEDs, depending on color) each.

Scare tactics

Some advertising uses scare tactics, to instill a sense of fear, uncertainty, and doubt which will then cause consumers to act. For example, a duct cleaning company may show a picture of an extremely dirty air-conditioning duct with years of accumulated dust, and a list or graphics of various bacteria and fungi, in order to make potential customers think that is what their own ducts look like and have, when in fact what is shown is a worst-case

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scenario [disambiguation needed]. Another TV commercial showed bubbling mud superimposed on a bed, in order to encourage the use of Clorox bleach. Direct marketing and telemarketing, as well as door-to-door sales are more likely to engage in this tactic, which sometimes is used on the elderly as an outright scam.

It is also used heavily in American political campaigns, including those regarding referendums rather than politicians. This was used in the United States Senate election in Georgia, 2008 runoff to scare voters regarding the potential for a filibuster-proof supermajority by Democrats, making false and baseless claims about the alleged intent of Jim Martin [disambiguation needed], Nancy Pelosi, and Barack Obama. Such claims that the opponent "wants to raise your taxes" are also common in many other political races. It has also been used in campaigns against same-sex marriage, with claims that traditional marriage for others is "threatened" in unspecified or unrealistic ways by extending those rights equally to all couples.

Similar issues

Creative financing

The subprime mortgage crisis of 2008 was caused mainly by banks misrepresenting the cost of homes which customers could afford. This came back to haunt both sides when interest rates increased and monthly mortgage payments soared, effectively also making it an introductory offer. Other forms of creative financing were invented and sold without full disclosure.

Political advertising

Political advertising usually consists of attack ads in American politics, amounting to a smear campaign the candidates wage against each other. These ads often manipulate certain votes in the candidate's record of political office, and other statements he or she has made, twisting them and taking them out of context so that the sound far worse than they are. These ads often make patently ridiculous statements, such as that the other candidate is "against families" or "voted against children".

Legislation and lobbying

Lobbyists often exaggerate or even falsify the alleged effects of passing or not passing certain legislation, often trying to create fear, uncertainty, and doubt in the minds of legislators. In one case, the National Association of Broadcasters gave artificial and unrealistic recordings of supposed "interference" to the U.S. Congress, in an effort to get them to ban new low-power FM radio stations, while still allowing their own members' LPFM broadcast translators, and interference caused by members' HD Radio signals.

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Another tactic is to name a bill something different than its actual intent, making it a "caption bill". Similarly, lawmakers may try to sneak unpopular legislation through by attaching it as a rider, under the guise of something unrelated which is more likely to pass.

Remedies for Deceptive Advertising

Had Hormel won its claim against Henson, three remedies would have been available to it: injunctive relief, corrective advertising, and damages.

Injunctive Relief

Injunctive relief is granted by the courts upon the satisfaction of two requirements. First, a plaintiff must demonstrate a "likelihood of deception or confusion on the part of the buying public caused by a product's false or misleading description or advertising" (Alpo). Second, a plaintiff must demonstrate that an "irreparable harm" has been inflicted, even if such harm is a decrease in sales that cannot be completely attributed to a defendant's false advertising. It is virtually impossible to prove that sales can or will be damaged; therefore, the plaintiff only has to establish that there exists a causal relationship between a decline in its sales and a competitor's false advertising. Furthermore, if a competitor specifically names the plaintiff's product in a false or misleading advertisement, the harm will be presumed (McNeilab, Inc. v. American Home Products Corp., 848 F.2d 34 [2nd. Cir. 1988]).

Corrective Advertising

Corrective advertising can be ruled in two different ways. First, and most commonly, the court can require a defendant to launch a corrective advertising campaign and to make an affirmative, correcting statement in that campaign. For example, in Alpo, the court required Purina to distribute a corrective release to all of those who had received the initial, false information.

Second, the courts can award a plaintiff monetary damages so that the plaintiff can conduct a corrective advertising campaign to counter the defendant's false advertisements. For example, in U-Haul International v. Jartran, Inc., 793 F.2d 1034 (9th Cir. 1986), the plaintiff, U-Haul International, was awarded $13.6 million — the cost of its corrective advertising campaign.

Damages

To collect damages, the plaintiff generally has to show either that some consumers were actually deceived or that the defendant used the false advertising in bad faith. Four types of damages are awarded for false advertising: profits the plaintiff loses when sales are diverted to the false advertiser; profits lost by the plaintiff on sales made at prices reduced as a

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demonstrated result of the false advertising; the cost of any advertising that actually and reasonably responds to the defendant's offending advertisements; and quantifiable harm to the plaintiff's good will to the extent that complete and corrective advertising has not repaired that harm (Alpo).

Impacts of Deceptive Ads

Deceptive advertising occurs more often than you would like to think. Truthfully, there is some sort of deception in every advertisement that you see. For example, did you ever notice that the people in gym equipment infomercials or fat burning pill infomercials are never fat or out of shape? They always hire muscle bound models and use them as an example of how you could look by using the machine or product.

However, because the machine or product is new and that model has been buff for quite some time, we can logically conclude that the model on the infomercial did not get his/her physique by using the equipment or product being sold on the infomercial. As such, the infomercial has just engaged in deceptive advertising by suggesting that the model's body is a result of that particular workout equipment or product.

Even though these types of deceptions occur on a daily basis, the deceptions that really cause damage are the deceptions that are bold faced lies. Using our workout equipment example above, even though you may not get a body like the models shown on the infomercial, the piece of workout equipment may still help you lose weight and get in shape and thus, the product works as promised. However, if the product did not work and the advertisement flat out lied about the results that one could see, then this is the type of deceptive advertising that makes people ultra skeptical about new products in the market place.

Deceptive advertising not only causes many people to be taken advantage of, it also negatively impacts the economy. Because these companies engaged in deceptive advertising and sold a product that does not work, upon discovery of such failure to give the results promised, customers are going to be looking for a refund. Should the company that sold the product refuse to give such a refund, there most likely will be a lawsuit filed against the company on behalf of the aggrieved customers. Lawsuits take time and cost taxpayers money via court costs, judge's salary, and jury payment, to name a few. As such, even if the suit is settled out of court, due to the average length of such a case, society could still be out several thousands of dollars. This amount of money may not be a big deal in the grand scale of things, but if many of these types of lawsuits are filed (which most likely there are) the cost to society could be substantial.

Although most false advertising claims brought against advertisers are by competitors, consumers can also file such claims. No hard-and-fast rules exist for all consumer-initiated cases; courts deal with claims brought by consumers on more of a case-by-case basis than they do with claims brought by

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competitors. The issues surrounding consumer rights were discussed during the drafting of the 1988 Trademark Law Revision Act, but were not resolved.

In cases where consumers have sued, they have most often been held to the same standards as competitors: they need to show that they have a reasonable interest in order to be protected. This standard was demonstrated by the class action lawsuit of Maguire v. Sandy Mac, 138 F.R.D. 444 (D.N.J. 1991). In that case, the class included both resellers, who had purchased a ham product from the defendant, and consumers, who had ultimately bought the ham products. The lawsuit claimed that the defendant sold ham products falsely represented as meeting U.S. Department of Agriculture standards. The court ruled for the plaintiffs, saying that "the plaintiff and the proposed class, the consumers, have a reasonable interest in being protected from criminal misrepresentations."

Another way consumers are protected is by state laws on deceptive trade practices. Some such laws define these practices as showing goods or services with the intention of not actually selling them as advertised. In Affrunti v. Village Ford Sales, 232 Ill. App. 3d 704, 597 N.E.2d 1242 (3rd. Dist. Ct. App. 1992), a consumer filed a lawsuit against an automobile dealership that sold him a car for more money than it was actually advertised for. Ronald Affrunti went to Village Ford Sales, a used-car lot, and looked at a blue 1986 Celebrity with twenty-nine thousand miles on the odometer. The car did not have a sticker price, so he asked the salesman, Fred Galaraza, for a price. Galaraza answered that he would have to check in his office. After showing Affrunti several other used cars, and without going to his office, Galaraza quoted a price of $8,600 for the Celebrity. Affrunti and Galaraza settled on a final price of $8,524, which included a trade-in and a discount for a front-end alignment. Upon returning home, Affrunti came across an advertisement by Village Ford Sales for a 1986 blue Celebrity with twenty-nine thousand miles on the odometer for $6,995. Affrunti called the dealership. Galaraza checked and said, "By God, it's the same!" Affrunti asked to redo the deal based on the advertised price. Galaraza put him on hold. When Galaraza came back on the line, he said the car in the ad had been sent to auction, and they could not redo the deal because it was not the same car.

At trial, the sales manager testified that prices listed in advertisements are not necessarily the listed cars' actual prices; dealers can sell the cars for higher prices. After hearing the evidence, the judge ruled that the dealer had an obligation to inform the plaintiff of the advertised price of the car, and awarded Affrunti the difference between the purchase price and the advertised price, which amounted to $1,529.00. On appeal, the Illinois Appellate Court ruled that "the defendant's failure to disclose the advertised sale price constituted deceptive conduct under the Consumer Fraud Act." The appellate court also added attorneys' fees to Affrunti's award, bringing the total up to $1,937.50.

False advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or

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misleading advertising. Truth in labeling refers to essentially the same concept, that customers have the right to know what they are buying, and that all necessary information should be on the label.

Laws and Regulations in PakistanAlthough there is not any one specific law or piece of legislation that encompasses all aspects of advertising, there are codified pieces of legislation and frame wares. these include the Pakistan Advertising Association ‘s (PAA) code of ethics , the codes of ethics of PTV (Pakistan Television) and PBC (Pakistan Broadcasting Corporation), APNS (All Pakistan Newspapers Society) has also laid out a pet of criterions a for the accreditation of agencies and , like the different code of ethics , also deals with regulating the content of advertising.The advertising codes, although generate broad and comprehensive in nature; have suffered from a lack of effective implementation and a new specific focus. The PAA’s code deals, in the main, with the procedural operation of agencies, such as commission, fair competition and content.PTV ‘s code of ethics covers all aspect of content , from disallowing Subliminal and political advertising to assuming that ads do not lower the moral of the viewer’s and no advertisement should go against good taste or decency or be offensive to public feelings .Other more specific legislation includes how men and women should interact in a commercial and the cultural and moral modes that must be adhered to, including advertising with children, tobacco advertising, advertising of medicine etc.The majority of codes with respect to content are based on widely accepted concepts of social and moral decency. The occasionally vague and non specific nature of the regulations has often led to problems, where specific parties or social groupings take it upon themselves to exclude what is moral and what is not.There is still a need for specific legislation covering all aspects of advertising, from content to procedural operations from competition to accountability to ensure the industry continues to evolve and thrive.

Pakistan Advertising Association is the sole organization representing the advertising profession on all Pakistan basis. It was established in 1973 and was registered with the Ministry of Commerce, Government of Pakistan. This Association has also the privilege of being a member of the Federation of Pakistan Chambers of Commerce and Industry. Pakistan Advertising Association is working for the benefit of the advertising profession in general and for the member advertising agencies in particular. second year in member countries wining the bid.No doubt Pakistan is a developing country with a relatively less developed industry. But advertising agencies are not all that new. Actually, the PAA was preceded by an Advertising Association of Pakistan (AAP) that was first formed in the early 50's by the pioneering advertising figure, Mr. Wajid Mahmud. These were the early years of independence, when whatever industry existed was served by foreign ad agencies. Things begin to change. Foreign ad-agencies that used to repatriate their profits from Pakistan soon began to either pack up from Pakistan or convert into local companies, now

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headed by the Pakistani ad practitioners who were once the employees of these foreign companies.

ConclusionOther than the extreme deceptive advertisements, it is nearly impossible to judge the starting point of deception in advertisements and it would remain an ethical dilemma for the consumers, law makers, advertisement associations, agencies, etc. There are no straight ‘YES’ or ‘NO’ in categorizing deceptive ads.

There are different levels of deception and which vary consumer to consumer. Deception for one might not be deception for others. However, for the most part, if we are foolish enough to believe what they offer, and millions do, we will continue to be abused by the onslaught of these insulting claims, and as long as they can get away with it, they will do so.

The majority of codes with respect to content are based on widely accepted concepts of social and moral decency. The occasionally vague and non specific nature of the regulations has often led to problems, where specific parties or social groupings take it upon themselves to exclude what is moral and what is not.There is still a need for specific legislation covering all aspects of advertising, from content to procedural operations from competition to accountability to ensure the industry continues to evolve and thrive.

Yes! If we talk about to mitigate deception, there are ways in which we could educate the consumers through different educational programs, public health messages, campaigns and other such activities in which consumers could get awareness and have knowledge about their rights but there are no ways to eradicated.

“Advertisements are now so numerous that they are very negligently pursued, and it is therefore necessary to pin attention by magnificence of promises and by eloquence sometimes sublime and sometime pathetic. Promise large promise is the soul of advertising. The trade of advertising is now so near perfection that is not easy to propose any improvement”

Samuel Johnson (The Idler 1758)

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BibliographyBooks:

1- The Social Dimensions of Advertising (Written by: S S Kaptan)2- Principles of Advertising (Written by: Monle Lee. Carla Johnson)

Web Sites:1- www.Answers.com 2- www.scour.com 3- www.marketing.about.com/od/marketingglossary/g/decaddef.htm 4- www.scribed.com 5- www.ask.reference.com/related/ Deceptive + Advertising ?qsrc 6- www.en.wikipedia.org/wiki/False_ advertising

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Table of Contents

Introduction...................................................................................................................1

Advertisement and its Social Role................................................................................1

What Is a Deceptive Ad?...............................................................................................1

Proof Requirement........................................................................................................3

Development of Regulations.........................................................................................3

Types of Deceptive Advertising.....................................................................................4

Deceptive Advertisement Techniques...........................................................................7

Remedies for Deceptive Advertising...........................................................................19

Impacts of Deceptive Ads............................................................................................20

Laws and Regulations in Pakistan.............................................................................22

Conclusion...................................................................................................................23

Bibliography................................................................................................................24

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