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12.2 Do Ads Need to Tell the Truth?

Learning Objectives

  1. Delineate different types and degrees of deceitful advertising.
  2. Discuss legal and regulatory responses to deceitful advertising.
  3. Map the ethical issues surrounding deceptive ads.

Types of Deceitful Advertising

An initial way to distinguish informational advertising from branding is by asking whether consumers are supposed to ask whether the claims are true. In the case of the Old Spice body wash TV spot, there’s no question. The actor asserts that “anything is possible with Old Spice” as diamonds flow magically from his hands. But no one would buy the product expecting to receive diamonds. They wouldn’t because branding ads are neither true nor false. Like movies, you enjoy them (or you don’t) without worrying about whether it could really happen. Informational ads, on the other hand, derive their power from selling consumers hard facts. When the ad claims the product costs less than similar offerings from rivals, the first question is “really?” When the answer is “no,” the advertising is deceitful.

There are four ways that informational advertising can be deceitful:

  1. False claimsA kind of deceitful advertising where claims made are directly false. directly misrepresent the facts. For example, an Old Spice body wash ad could announce that it costs less per ounce than Axe. When you go to the store, however, the opposite is true. It may be that the manufacturer’s suggested retail price is less, or Axe is on a special sale, but if the ad says Old Spice is cheaper and it’s not, that’s a false claim.
  2. Claims that conceal factsA kind of deceitful advertising where claims made aren’t directly false, but pertinent information is intentionally left out. are more common than directly false ones because they’re not flatly untrue and so can’t be easily disproven. A body wash, for example, may conveniently leave out the fact that chemical scents frequently react differently with different skin types and body temperatures, meaning a product may smell great on one man but come off as nauseating when used by most others. Another set of examples surround the infamous fine print on contracts. Every day, someone somewhere receives an offer for a free issue of a magazine and sends the business reply card in. It’s not until a few months later, however, that they realize that getting the free one also committed them to buying a year’s worth. Another example of a concealed fact is a juice made from “natural ingredients,” and it turns out the natural ingredient is sugar, which is natural, but not the fruit juice from real oranges you were expecting.
  3. Ambiguous claimsA kind of deceitful advertising where claims made aren’t directly false, but true information is used or exaggerated misleadingly. resemble concealed facts in not being directly untrue. Where claims that conceal facts manipulate consumers by leaving something out, ambiguous claims mislead by putting too much in. For example, a body wash may announce that it “kills the smelly bacteria that women hate most,” and that may be true, but the implication that only Old Spice does that is misleading because all soaps and washes wipe out some bacteria. Just water washes a good bit away. Similarly, Viagra announces that before using the product, men should check with their doctor to “ensure that you are healthy enough to engage in sexual activity.” The misleading idea is that the rock and rolling will be so intense it could be life threatening. The truth is that the drug itself may be dangerous for the unhealthy. Finally, cigarette companies use a similar strategy when they advertise light cigarettes as (truly) containing less cancer-causing tar, but they leave out the fact that the lower nicotine levels cause many smokers to light up more often and so take in as much, or even more, than they otherwise would have. In every case, the ad’s claim is technically true, but it leads consumers toward possibly false assumptions that just happen to make the product more attractive.
  4. PufferyA technical term in advertising signifying expressed views that are so clearly subjective exaggerations or product slogans that no reasonable person would take them literally. is a technical term in the advertising world. It signifies expressed views that are clearly subjective exaggerations or product slogans, and not meant to be taken literally. In the Old Spice ad, the actor’s claim that “anything is possible with Old Spice” is actually an ironic joke about puffery: the ad is poking fun at those other personal care products that in essence claim the women (or men) will come running. Here are two standard examples of puffery: Budweiser is “The King of Beers” and Coke is “The Real Thing.” More generally, any product labeled “The Finest,” and all services that announce they “Can’t be beat!” are engaging in the practice. Of course these kinds of slogans can be harmless with respect to their violation of strict truth telling, but they do place a burden on consumers to be wary.

Deceitful advertising, finally, is not the same as false advertising. All false ads are also deceitful, but there are many ways of being deceitful that don’t require directly false claims.

Legal Responses to Deceptive Advertising

Created in the early 1900s, the Federal Trade Commission (FTC)An agency of the federal government charged with investigating and preventing unfair and deceptive marketing practices. was originally tasked with enforcing antitrust laws. With time, its responsibilities have expanded to include consumer protection in the area of marketing and advertising. Today, many legal conflicts over truth and sales run through its offices.

The act authorizing the FTC to begin regulating advertising declares that “unfair and deceptive practices” are illegal, and the agency is charged with the responsibility to investigate and prevent them.Section 5, Federal Trade Commission Act. In judging what counts as deceptive, two models are frequently used. The reasonable consumer standardA presumption that protections against deceitful advertising should only be extended to cover marketing efforts that would significantly mislead a thoughtful, moderately experienced consumer. is the looser of the two. It presumes that protections should only be extended to cover advertising that would significantly mislead a thoughtful, moderately experienced consumer. One advantage of this stance is that it allows the FTC to focus on the truly egregious cases of misleading advertising, and also on those products that most seriously affect individual welfare. Very close attention is paid to advertising about things we eat and drink, while fewer resources are dedicated to chasing down garden-variety rip-offs that most consumers see through and avoid.

One borderline case is the FTC v. Cyberspace.com. In that case, and according to their press release, the FTC charged that the defendants

engaged in an illegal scheme to deceive consumers by mailing $3.50 “rebate” checks to millions of small businesses and consumers. The check came with an attached form that looked like an invoice and used terms like “reference number,” and “discount taken,” making it look like there was a previous business relationship. By cashing the checks, the FTC alleged that many small businesses and consumers unknowingly agreed to allow the defendants to become their Internet Service Provider. After the checks were cashed, the defendants started placing monthly charges of $19.95 to $29.95 on the consumers’ telephone bills. According to the FTC, the defendants then made it very difficult to cancel future monthly charges and receive refunds.“Bogus ‘Rebate’ Offers Violate Federal Law,” Federal Trade Commission, August 5, 2002, accessed June 2, 2011, http://www.ftc.gov/opa/2002/08/cyberspace.shtm.

The judge sided with the FTC.

Whether or not these businesspeople should have seen through the free-money scam and thrown the “check” in the trash, it’s certain that the FTC should have stepped in under the ignorant consumer standardA presumption that protections against deceitful advertising should be extended to cover marketing efforts that would significantly mislead any consumer, including those much less sophisticated or experienced than typical buyers.. Within this framework—which is much stricter than the reasonable consumer version—consumers are protected even from those scams and offers that most people recognize as misleading. One point to make is that the “ignorant consumer” isn’t synonymous with dumb. Though the category does catch some people who probably should’ve tried a bit harder in school, other ignorant consumers may include immigrants who have little experience with American advertising practices and customs. The elderly too may fall into this category, as might people in situations of extreme or desperate need. One example would be late-night TV commercials appealing to people in deep debt. Some ads promise that loan consolidation will lower their overall debt. Others imply that filing for bankruptcy will virtually magically allow a start-over from scratch. Both claims are false, but when creditors are calling and threatening to take your home and your car, even the most reasonable people may find themselves vulnerable to believing things they shouldn’t because they want to believe so desperately.

The federal government, finally, through the FTC has the power to step in and protect these consumers. Strictly from a practical point of view, however, their resources are limited. The task of chasing down every ad that might confuse or take advantage of someone is infinite. That factor, along with good faith disagreements about the extent to which companies should be able to shine a positive light on their goods and services, means (1) the ignorant consumer standard will be applied only sparingly by government regulators, and (2) borderline cases of advertising deceit will be with us for the foreseeable future.

The Ethics of Deceitful Advertising

One way to enter the ethical debate about dubious product claims is by framing the subject as a conflict of rights. On one side, producers have a right to talk sunnily about what they’re selling: they’re free to accentuate the positives and persuade consumers to reach for their credit card. On the other side, consumers have a right to know what it is that they’re buying. In some fields, these rights can coexist to some significant extent. For example, with respect to food and drink, labeling standards imposed on producers can allow consumers to literally see what’s in their prospective purchase. Given the transparency requirement, companies can make a strong argument that they should be allowed to advocate their products with only minimal control because consumers are free to check exactly what it is they’re buying.

Even these clear cases can become blurry, however, since some companies try to stretch labeling requirements to the breaking point to suit their purposes. One example comes from breakfast cereal boxes. On the side, producers are required to list their product’s ingredients from high to low. At the top you expect to see ingredients including flour or similar, as quite a bit of it goes into most dry cereals. At the bottom, there may be some minor items added to provide a bit of flare to the taste.

One specific ingredient many parents worry about is sugar: they don’t want to send their little ones off to school on a massive sugar high. So what do manufacturers do? They comply with the letter of the regulation, but break the spirit by counting sugar under diverse names and so break up its real weight in the product. Here are the first few lines of the ingredients list from Trix cereal:

Corn (Whole Grain Corn, Flour, Meal), Sugar, Corn Syrup, Modified Corn Starch, Canola and/or Rice Bran Oil, Corn Starch, Salt, Gum Arabic, Calcium Carbonate, High Fructose Corn Syrup, Trisodium Phosphate, Red 40, Yellow 6, Blue 1.

Sugar is sugar, corn syrup has a lot of sugar, high fructose corn syrup has even more sugar. We’d have to get a chemist to tote up the final results, but it’s clear that a reasonable consumer should figure this is a sugar bomb. Is it fair, though, to assume that an immigrant mother—or any mother not well versed in sugar’s various forms—is going to stop and do (or be able to do) a comprehensive ingredient investigation? The question goes double after remembering that the first image consumers see is the product’s advertising on the box featuring a child-friendly bunny.

More generally, in terms of a pure rights-based argument, it’s difficult to know where the line should get drawn between the right of manufacturers to sell, and the right of consumers to know what they’re buying. The arguments for pushing the line toward the consumer and thereby allowing manufacturers wide latitude to make their claims include the following:

  1. Free speech. The right for people to say whatever they want doesn’t get suspended because someone is trying to sell a product. Further, on their side, consumers are completely free to buy whatever they want, they’re free to listen to pitches from competing merchants, and they can consult the Consumer Reports web page and talk to friends. Ours is, after all, a free market, and advertisers participate in it. The right to make whatever advertising claims one wishes is justified on principle, on the ideal of a liberal (in the sense of free) economic world.
  2. Marketers have a moral responsibility to do everything they possibly can to sell because they’re obligated to serve their employers’ interest, which is to make money, presumably. In this case, deceitful advertising may be morally objectionable but less so than failing to turn the highest profit possible.
  3. Within the context of an open market economy, one way to help it function efficiently, one way to get products and services sent where they’re supposed to go in a way that benefits everyone, is by maximizing the amount of information consumers have before they purchase. And one way to maximize information, it could be argued, is by letting competing sellers advertise freely against each other. They can say whatever they like about themselves and point out exaggerations and untruths in the claims of competitors. This is similar to what happens in courtrooms where plaintiffs are allowed to say more or less whatever they want and defendants can do that too. Both sides cross-examine each other, and in the end, the jury weighs through it all and decides guilt or innocence. Returning to the economic realm, the argument is that the best way to get the most information possible out to consumers is by allowing a vibrant advertising world to flourish without restriction.

On the other side, distinct arguments are frequently proposed to defend the position that sellers should operate within tight restrictions when advertising the virtues of their goods and services. The consumer should be vigorously shielded, the reasoning goes, from claims that could be deceptive. Arguments include the following:

  1. Consumers have a fundamental ethical right to know what they’re buying, and even mildly ambiguous marketing techniques interfere with that right. If a box of breakfast cereal is marketed with a harmless and helpful bunny, then the ingredients of Trix cereal better be harmless and helpful (and not sugar bombs). Everyone agrees, finally, that advertisers have a right to free speech, but that right stops when it conflicts with consumers’ freedom to purchase what they really want.
  2. Advertisers are just like everyone else insofar as they’re bound by an ethical duty to tell the truth. That duty trumps their obligation to sell products and help companies make profits.
  3. Both advertisers and the manufacturing companies are duty bound to treat everyone including consumers as ends and not as means. The basic ethical principle here is that no one should be treated as an instrument, as a way to get something else. There’s no problem with advertising a product and allowing consumers to decide whether they want it, but when the advertising becomes deceptive, consumers are no longer being respected as dignified human beings; they’re being treated as simply means to ends, as ways the company makes money. Consumers become, in a sense, indistinguishable from the machines in the factory, nothing more than cogs in the process of making owners wealthy.
  4. Purchasing a product is also the signing of an implicit contract between producer and consumer. The consumer gives good money and expects a good product, one in line with the expectations raised by advertising. Just as companies are right to apply drug tests to workers because those companies have a right to a full day’s good labor for a full day’s pay, so too when the consumer pays full price for a product it should fully meet expectations.
  5. Though the idea of allowing marketers to say whatever they want may sound good because it allows consumers to maximize information about the products that are out there, the theory only works if consumers have massive amounts of time to study the messages from every producer before making every purchase. In reality, no one has that much time and, as a result, advertisers must be limited to making claims that are clearly true.

Conclusion. There’s a lot of space between truth and lies in advertising; there are many ways to not quite tell the whole truth. Both legally and ethically, the limits of the acceptable can be blurry.

Key Takeaways

  • Deceitful advertising occurs along a range from exaggerations to direct falsehoods.
  • Legal responses to deceitful advertising may be organized through the FTC.
  • The degree of consumer legal protection depends on premises about the marketplace sophistication of the consumer.
  • Ethical debates concerning deceitful advertising pit the rights of marketers to sell against the rights of consumers to know what they are purchasing.

Review Questions

  1. What’s the difference between deceitful advertising and direct falsehoods?
  2. Define the reasonable consumer standard for consumer protection. How is it different from the ignorant consumer standard?
  3. What are two arguments in favor of granting marketers wide latitude to promote their products?
  4. What are two arguments in favor of forcing marketers to stay very close to the pure truth when promoting their products?