Deceptive Advertising written on the sheet

What Qualifies as Unlawful Advertising?

David H. Schwartz, INC Dec. 29, 2022

Both federal and state statutes cover what is termed false advertising. False advertising is kind of a blanket term that covers not only advertising that is patently untrue, but also advertising that is misleading, deceptive, or unfair. 

Violations of these false advertising laws can lead to both civil and criminal accusations. On the national level, the Federal Trade Commission (FTC) investigates allegations of false advertising and will seek remedies, if warranted, ranging from warnings all the way up to daily fines and lawsuits.  

In California, the Office of the Attorney General (AG) fields complaints about false advertising unless the business being accused is regulated by another agency. In California, consumers can report false advertising to the AG’s office for investigation or initiate lawsuits themselves, whether individually or as a class action. 

If your business in or around the Greater San Francisco Bay Area is facing a lawsuit or other legal action alleging false advertising, contact the Law Offices of David H. Schwartz, INC. 

Attorney David Schwartz has more than four decades of experience in helping businesses defend against legal challenges, and he will work with you to develop a strategy aimed at achieving the best possible result. The Law Offices of David H. Schwartz, INC also proudly serves clients in San Jose, Santa Clara, San Mateo, Oakland, and all of Alameda County. 

Who Governs What Is Legal in Advertising? 

As mentioned briefly above, the Federal Trade Commission is the nationwide arm of false adverting regulation and enforcement. As such, it issues rules and regulations that define what can and what cannot be done when it comes to advertising and other business practices that affect consumers and competing businesses. 

The FTC gains its authority from the Federal Trade Commission Act, which sets for the laws governing many fields of commerce in the United States, including advertising and marketing. The Commission is thereby empowered to issue regulations to clarify and enforce the laws. In addition, the Lanham Act allows for civil lawsuits that “misrepresent the nature, characteristics, qualities, or geographic origins of goods or services.” 

Here in the Golden State, California’s False Advertising Law covers advertising abuses. The particular section tends to be wordy and somewhat difficult to decipher, but it forbids disseminating a statement that “is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading” in order to “induce the public to enter into any obligation relating thereto...” 

The Office of the Attorney General fields many if not most complaints unless another agency, such as the Public Utilities Commission, has regulatory power of the business being accused of false advertising. The California Department of Consumer Affairs (DCA) is also a regulator of those to whom it has issued license, totaling some 3.4 million professionals. 

What Is Unlawful Advertising? 

Unlawful advertising can be broken down into different types, including false advertising, misleading or deceptive advertising, and unfair advertising: 

  • FALSE ADVERTISING: This occurs when a claim is made that is simply not true, for instance, “XYZ Hair Remedy will restore your hair to its youthful beauty and fullness in 30 days.” 

  • MISLEADING OR DECEPTIVE ADVERTISING: This occurs when the truth is bent to promote a benefit or quality that is not really there. The advertising for Juul e-cigarettes is a prime example. Ads claimed Juul was low in nicotine compared to cigarettes, but actually contained more nicotine. 

  • UNFAIR ADVERTISING: This generally refers to instances when one business makes a false or misleading claim about a competitor. 

The Reporting and Recovery Process 

Under California law, you can report your false advertising complaint to the AG’s Office and/or initiate an individual or class action lawsuit. In contract, in a federal complaint, you must first report it to the FTC and you cannot take any action until they have reviewed your claim. Many times, they will resolve the situation on their own or even initiate a lawsuit themselves. 

The FTC at first usually issues a warning letter to seek compliance with advertising laws, and if that fails, it will seek a cease-and-desist court order. If things never get resolved, a lawsuit can be initiated. Meanwhile, the FTC can levy hefty fines on the business for every day they fail to comply.  

Experienced Representation When You Need It Most 

Suppose another business is suing you for unfair advertising because you made a questionable claim about them in your own advertising campaign. You have 30 days to respond to the interrogatories they submit with the lawsuit, or they can get a default judgment against you. You need to act fast and enlist the most experienced and focused legal representation you can find. 

In the Greater San Francisco Bay Area, rely on the Law Offices of David H. Schwartz, INC for your business litigation needs. Attorney David Schwartz will focus his experience and insights into creating a tailored defense plan aimed at resolving everything in the best way possible.