False advertising
False advertising (or more mildly,
deceptive advertising) is an act of deliberately misleading a potential
client about a
product,
service or a
company in general by reporting false or misrepresenting information or data in
advertising or other
promotional materials. False advertising is a type of
fraud, and may also be considered a
hoax.
False advertising is often a
crime. In some countries advertising practices (including "truth in advertising") are regulated by a government authority (
FTC in the USA), in others the advertising industry is
self-regulated and
professional associations combat false advertising.
To decrease their
legal liability for deceptive
marketing, many companies cover their tracks using
small print. In
radio, the equivalent is
fast talk, which likewise is nearly impossible to hear or understand. In either case, this often allows false advertisers to continue their
tactics without
prosecution.
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 pilfered 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 advertises
DSL service at low prices and with no installation charges, but in many of the same areas only offers
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.
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 gone to great lengths to make sure that consumers never get their rebates, and are then stuck with an unreturnable product.
"Going out of business" sales
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 - where 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.
Inflated price comparison
By 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 to mislead
consumers into thinking that they are saving money by purchasing the "on-sale" item or service. Some clothing stores in particular have essentially every item on "sale", and some grocery stores advertise "savings" over their (unreasonable) regular prices for those using
loyalty cards.
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
salesfloor until the time it is all gone at
closeout. This defies the definition of a sale event.
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 2.85
9, for example. This is 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.
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.
Introductory offers
An introductory offer is an offer for an ongoing service which is only valid for a certain
introduction period. After this period, the price or terms of the agreement 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 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.
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.
Units of sale and pricing
Another trick is to make the unit of pricing smaller than the unit of sale. One example is
airlines, where a one-way price is quoted, even though it 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 two.
In
grocery stores,
Kroger (and potentially others) advertise 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 the cookies.
Non-sale advertisements
Some stores will send out 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 are known for engaging in this, especially during the Christmas rush.
Outlet stores
While
outlet stores originally gained a
reputation for carrying
irregulars and
overstocks and very low prices, in more recent years they have just become regular
shopping malls with prices that are little if any lower than regular stores.
Misrepresentations
Utilizing words such as descriptive terms or location terms to increase the perceived value of a product. An example would be advertising "
Maine lobsters" when in fact the
lobster is from the
Pacific ocean, or
Vidalia onions which are from
Texas instead of near
Vidalia, Georgia. These can also be considered
infringement of
trademarks in many cases.
Meaningless terms
Manufacturers and sellers often use terms that sound advanced or
deluxe to the average consumer, but really mean nothing at all. 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 TV.
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 2
20 (1,048,576) bytes in
computer science, disk manufacturers began using the irrelevant
metric system (SI)
prefix meaning of 10
6 (1,000,000) bytes, thereby overstating capacity by neary 5%. With
gigabytes, the error increases to over 7% (1,073,741,824 instead of 1,000,000,000).
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.)
False labelling
The use of
labels with statements concerning quality, identity, quantity, manufactureor origin that are misrepresented or false.Another method of false labelling is hiding or destroying a label indicating theproduct's origin (e.g. "Made in
Taiwan" or "Made in
Botswana").
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.
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).
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.
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 what he or she is buying.
Food is an example of this, where
chicken meat is injected with
broth or even
brine, or
TV dinners are filled with
gravy or other
sauce instead of
meat.
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. 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.
A similar problem in Christmas lights and other light strings is that the length of each set seems to get shorter each year, despite containing the same number of lights. The length of the set is given in small print while the number of lights is in large print.
False credentials
An advertiser may have a false "
expert" testify that a product is genuine and effective, when in fact it is not. An example of this practice is having
actors dressed as
doctors or wearing
lab coats, lulling potential buyers into believing that the product is backed by the faith of knowledgeable experts. Another example of this is
scripted
witness testimony. An actor is hired to claim that they were satisfied by a product or service, when in fact they never used it. A buyer may interpret the statement to mean that if the other "customer" was satisfied, then they will be too. Some companies will even use
celebrities to do this.
Real-estate fraud
Although creative wording and other creative footwork can make a
tenement sound like a charming house, there are some points that can be considered real estate fraud. Listing a new condo building that has been open for 4 years as "brand new" is fraudulent and in some states in the United States can be grounds for
ethics charges from the
realty board or state
regulatory board.
*
Office of the State Attorney, Sixth Judicial Circuit of Florida - Consumer Protection & False Advertising*
Federal Trade Commision - Advertising and Marketing on the Internet: Rules of the Road*
Federal Trade Commision - General Advertising Policies
