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overdraft credit

False advertising

False advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or misleading advertising.

Pricing-based methods

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 been accused of intentionally reneging on obligations to return money to the customers.

Inflated price comparison

In comparing a sale price to a "regular" price for the same product, advertisers can inflate the "regular" price in the order to create the impression that the sale price is very low. The intent is obviously 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 regular prices for those using loyalty cards.

In the United Kingdom, under the Sale of Goods Act, any item in a sale must have been sold at the non-sale price for at least 28 consecutive days. Many companies sidestep this requirement by selling items at very high prices in a single store (often in expensive parts of London) for 28 days, before selling the items at the "sale" price in their other stores.

Introductory offers

An introductory offer is an offer for an ongoing service that is valid for a limited 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.

Other deceptive methods

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 are 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. Another example is the United Egg Producers' "Animal Care Certified" logo on egg cartons which misled consumers by conveying a higher level of animal care than was actually the case. Both the Better Business Bureau and the Federal Trade Commission found the logo to be deceptive and it can no longer be used.

Seagate Technology and Western Digital, makers of computer storage devices, were sued for misrepresenting the capacity of their hard drives. The class action suit filed against the two companies accused them of using a definition of gigabyte that overstated available capacity by about 7%. Both companies agreed to settle the suit and reimburse customers in-kind.

Advertising the maximum

Internet service providers may advertise their service as offering "up to 8 Mbit/s", whereas on average use it could be just 1 Mbit/s. The use of "up to" in the description protects them legally, while raising false hopes in the customers. Further, in the fine print it is mentioned that this includes both the download and upload speeds, deteriorating the customer's usage experience even more.

Fillers and over-sized 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 that 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 addition weight in either ounces, grams, milliliters, pounds... etc. is printed on the package to indicate the weight of the actual content.

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.

Non-existence of required information

It is mandatory in most countries to have a date of expiry in products. Many countries enforce that a 'normal' food and beverage 'must' expire within 6 months or 1 year. However, some products, intentionally code the manufactured date and not the expiry date or the reverse (where the expiry date is printed but not the date of production).

The other form of information required is the net weight (which means, the actual weight of the product without the weight or size of packaging and fillers) of the product.

Many products also lack the country of manufacture and instead have the country forwarding the product. Some products have a list of countries permitted to sell the product but have no information of the country of origin.

Regulation and Enforcement

UK

In the UK, most price based methods of false advertising are prohibited and strictly regulated. Hence, the methods detailed in the pricing section are rarely encountered and used only by the most disreputable operators, who are likely breaking the law by doing so.

False advertising regulations in the United States

Advertising is regulated by the authority of the Federal Trade Commission, a United States administrative agency, to prohibit "unfair and deceptive acts or practices in commerce. While it makes laymen's sense to assume that being deceptive is being unfair, deceptiveness in practice has been treated separately by the FTC, leaving unfairness to refer only to other types. All commercial acts may be deceptive, not just advertising, but noncommercial activity such as advertising for political candidates is not subject to prosecution under the FTC Act. The 50 states have similar statutes, which generally are very similar to that of the FTC and in many cases copied so closely that they are known as "Little FTC Acts." While the terms "false" and "deceptive" are essentially the same for most, being deceptive is not the same as producing deception. What is illegal is the potential to deceive, which is interpreted to occur when consumers see the advertising to be stating to them, explicitly or implicitly, a claim that they may not realize is false and material. The latter means that the claim, if relied on for making a purchasing decision, is likely to be harmful by adversely affecting that decision. If an ad is implicitly false, evidence must be obtained for what consumers saw the ad saying, and for the materiality of that, and for the true facts about the advertised item, but no evidence is required that actual deception occurred, or that reliance occurred, or that the advertiser intended to deceive or knew that the claim was false.

The goal is prevention rather than punishment, reflecting the purpose of civil law in setting things right rather than that of criminal law. The typical sanction is to order the advertiser to stop its illegal acts, or to include disclosure of additional information that serves to avoid the chance of deception. Corrective advertising may be mandated ,. But there are no fines or prison time except for the infrequent instances when an advertiser refuses to stop despite being ordered to do so.

The actual statute defines false advertising as a "means of advertisement other than labeling, which is misleading in a material respect; and in determining whether an advertisement is misleading, there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual."

References

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