Advertising can pose a challenge to marketers. On one side, they want to present their products and services in the best light to appeal to customers. On the other, high prices or flaws in quality may be an unappealing aspect of their products and services, causing potential customers to choose competitors instead. Marketers have to balance highlighting best qualities in order to attract customers and being honest about the realistic – and possibly negative – features of products and services. Because of this, some marketers fall into a trap of false or deceptive advertising.
False advertising can be defined as “the crime or tort of publishing, broadcasting, or otherwise publicly distributing an advertisement that contains an untrue, misleading, or deceptive representation or statement which was made knowingly or recklessly and with the intent to promote the sale of property, goods, or services to the public.” 1 Violators of false advertising laws can be subject to fines or imprisonment depending on the instance. 2
Ads for Turbo Tax’s free service repeatedly use the word “free,” deceiving customers into believing they qualify for the service when they do not.
Turbo Tax was accused of false advertising for free services when, in reality, “many … people don’t qualify to file for free on TurboTax and are instead pushed to pay for services.” 3 While there’s nothing illegal about “two-thirds of U.S. taxpayers in the 2020 tax year” being unable to qualify for free tax filing with the company, the issue lies in not informing customers that “they have to pay until they have spent time inputting their personal and financial information.” 4
“The [Federal Trade Commission] said it is filing another complaint to determine if Turbo Tax’s marketing violated deceptive advertising laws.” 5
Watch some of the ads below:
Another company finding themselves in hot water over false advertising is Burger King. A lawsuit filed against the fast-food chain claims “Burger King has misled customers by … inflating the size of its burgers in images.” 6
“The entire burger is 35 percent larger than the real-life version, with double the meat than what is actually served.” 7
Part of the goal of advertising is appealing to customers through images, messages, slogans, etc., which becomes difficult if the real-life product is sub-par. Burger King wants their burgers to look appetizing and wants customers to choose them over competitors. However, marketing the burgers in an unrealistic way deceives customers into believing they are paying for something infinitely better than the actual product. It is better to market the product for its best and realistic features rather than unsubstantiated claims.
Lastly, both Target and Chick-fil-A have faced lawsuits in the last year over undisclosed price increases. In-store versus online prices on the Target app changed once customers entered the parking lot of a store without notice. “Can prices still differ online and in-store? Yes, there’s nothing illegal about that. But now, customers should know what to expect to pay, however you shop.” 8 Chick-fil-A, similarly, had price discrepancies between pickup and delivery orders. While it is not unusual for delivery orders to have higher prices, “the issue … hinges on a perceived lack of transparency about pricing practices on Chick-fil-A’s part.” 9 In advertising, customers need to remain informed of price changes, the realistic qualities of products, and the prices of services.
Questions marketing managers would ask:
- If you were in charge of a marketing campaign, how could you ensure your advertisements do not falsely advertise products and services?
- Why do you think companies continue to have issues with false advertising despite the legal consequences?
1 Merriam-Webster. (n.d.). False advertising. Merriam-Webster.com. https://www.merriam-webster.com/legal/false%20advertising
2 Legal Information Institute. (n.d.). 15 U.S. Code § 54 – False advertisements; penalties. Cornell Law School. https://www.law.cornell.edu/uscode/text/15/54
3 Pisani, J. (29 March 2022). FTC Sues Intuit Over Turbo Tax Ads Offering Free Tax Filing. The Wall Street Journal. https://www.wsj.com/articles/ftc-sues-intuit-over-turbotax-ads-offering-free-tax-filing-11648577189
4 Pisani, J. (29 March 2022). FTC Sues Intuit Over Turbo Tax Ads Offering Free Tax Filing. The Wall Street Journal. https://www.wsj.com/articles/ftc-sues-intuit-over-turbotax-ads-offering-free-tax-filing-11648577189
5 Pisani, J. (29 March 2022). FTC Sues Intuit Over Turbo Tax Ads Offering Free Tax Filing. The Wall Street Journal. https://www.wsj.com/articles/ftc-sues-intuit-over-turbotax-ads-offering-free-tax-filing-11648577189
6 Wile, R. (4 April 2022). Burger King accused of false advertising in lawsuit alleging Whoppers are too small. NBC News. https://www.nbcnews.com/business/consumer/burger-king-false-advertising-lawsuit-whopper-burgers-rcna22916
7 Wile, R. (4 April 2022). Burger King accused of false advertising in lawsuit alleging Whoppers are too small. NBC News. https://www.nbcnews.com/business/consumer/burger-king-false-advertising-lawsuit-whopper-burgers-rcna22916
8 Hrapsky, C. (27 April 2022). Target settles lawsuit alleging false advertising, overpricing; fined $5M. Kare 11. https://www.kare11.com/article/news/local/kare11-extras/target-settles-ca-lawsuit-alleging-false-advertising-overpricing-fined-5m/89-ba4a5441-c38e-4c9f-b524-b0d13414042f
9 Littman, J. (13 October 2021). Chick-fil-A customers sue chain over ‘deceitful’ delivery costs. Industry Dive. https://www.restaurantdive.com/news/chick-fil-a-customers-sue-chain-over-deceitful-delivery-costs/608106/