Both federal and California law prohibits unfair and deceptive business practices including making false statements in advertising and on your packaging. Here is a brief description of the legal issues and some advice on how to avoid false advertising.

What is False Advertising?

Legally speaking, whether something is deemed “false advertising” is judged from the standpoint of a “typical consumer.” If the statement made is incorrect or “likely to create a false impression” in the minds of a “typical consumer,” then courts will generally deem that statement false. If the statement is part of your advertising or packaging, then that is false advertising.

What Kinds of Claims/Statements Might Constitute False Advertising?

Statutes and judge-made case law have delineated a long list of statements and claims that cannot be misleading or false. The list includes:

• Nature of product or service
• Price
• Hidden charges
• Quality
• History — new or refurbished, etc.
• Origin — geographic or manufacturer, etc.
• Awards or rankings received
• Certifications — from industry, government, or otherwise
• Performance
• Benefits of use
• Warranties

What is Advertising?

Traditional advertising is commercials on television, ads in magazines and newspapers, and billboards of the highway. But “false advertising” is implicated in many more situations. First, in today’s market, advertising is done in a myriad of ways including word-of-mouth. Just as importantly, false statements can be deemed false advertising even if the statement does not seem like “advertising.” Examples include:

• Media statements provided by your staff/employees
• Any type of online statement
• Your business’ response to consumer reviews (such as Yelp)
• Paid or controlled consumer reviews and testimonials — both on your business’s website and on independent sites
• Paid or controlled testimonials on your website
• Testimonials on social media pages
• Twitter statements made by your business, staff and/or employees
• Filings with governmental agencies

Labeling and Packaging Deserve Special Attention

Statements on your labels and packaging must also be accurate and non-misleading. EVERY component of the label must be accurate. For example, if your egg carton says “Grade A Jumbo Eggs From Free Range California Chickens,” each separate part of that label must be true. The claim about governmental grading and inspection (“Grade A”) must be true; the claim about size (“Jumbo”) must be true, the claim about the nature of the product (“Eggs”) must be true, the claim about the origin (“California”) must be true, and the claim about the chickens (“Free Range”) must be true. Otherwise, the packaging could be deemed false advertising.

Advice on Avoiding False Advertising

Here a few tips for avoiding false advertising:

• Do not make false statements
• Make sure your business has documentation for any claims that might be questioned — like that the eggs are sourced from “free range” chicken farms — consider posting such documentation on your website
• Update your labeling and website if things change
• Avoid disclaimers and other legalistic “fine print” — if you are adding “disclaimers,” you could be engaged in false advertising; if you must, make sure the disclaimers are conspicuous
• Provide training for staff and employees about statements made to the media and on social media
• Update employee handbooks and company policies regarding social media use
• Disclose paid or controlled testimonials and reviews

Contact San Diego Corporation Law Today

If you would like more information about avoiding false advertising and laws concerning unfair and deceptive business practices, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides legal services for all businesses including drafting and reviewing business contracts and employee handbooks, handling corporate formation and annual filings, and providing legal guidance and advice with respect to sales, mergers, and acquisitions. Mr. Leonard can be reached at (858) 483-9200 or via email.

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