What Standard Should Govern Consumer Interpretation of Company Claims?

If anyone’s interpretation of a claim could be used to prove a violation of the FTCA, all advertising would have to be very carefully crafted. Advertisers would have to excise humor and hyperbole, lest the Commission decided to take cases to protect the humorless and completely credulous. A too literal enforcement scheme would cause advertisers to omit important but complex information that might confuse some consumers.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1]

The Commission’s 1983 Deception Statement attempted to narrow the scope of deception claims by heightening the standard for consumer credulity applied. Over the years, however, the FTC has not been held to high standards. Consider these different credulity standards:

The fact that a false statement may be obviously false to those who are trained and experienced does not change its character nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he transacts business. Laws are made to protect the trusting, as well as the suspicious. The best element of business has long since decided that honesty should govern competitive enterprises, and that the rule of caveat emptor should not be relied upon to reward fraud and deception.

The practice of promising free books where no free books were intended to be given, and the practice of deceiving unwary purchasers into the false belief that loose-leaf supplements alone sell for $69.50, when in reality both books and supplement regularly sell for $69.50, are practices contrary to decent business standards. To fail to prohibit such evil practices would be to elevate deception in business and to give to it the standing and dignity of truth…[2]

In a case concerning “Charles of the Ritz Rejuvenescence Cream,” the Second Circuit upheld the Commission’s determination that the product was deceptively marketed:

There is no merit to petitioner’s argument that, since no straight-thinking person could believe that its cream would actually rejuvenate, there could be no deception. Such a view results from a grave misconception of the purposes of the FTCA. That law was not ‘made for the protection of experts, but for the public— that vast multitude which includes the ignorant, the unthinking and the credulous; and the ‘fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced.[3]

In a case against Clairol for various claims about its hair-coloring products, the Second Circuit deferred to the Commission’s determination that advertising the product as “permanent” was deceptive because new hair that grows in would not be dyed:

…It seems scarcely possible that any user of the preparation could be so credulous as to suppose that hair not yet grown out would be colored by an application of the preparation to the head. But the commission has construed the advertisement as so representing it, and so construed it is false. One witness was found who by dint of much prodding was finally induced to testify “that you would think `permanent’ means you would never need to bother having it dyed again;” although she herself knew better. Since the Act is for the protection of the trusting as well as the suspicious…we think the order must be sustained on this point.[4]

[1] George J. Alexander, Honesty and Competition: False-Advertising Law and Policy under FTC Administration (1967).

[2] FTC v. Standard Education Society, 302 U.S. 112 (1937). Compare the reversed opinion below by Judge Learned Hand: “We cannot take seriously the suggestion that a man who is buying a set of books and a ten years’ ‘extension service,’ will be fatuous enough to be misled by the mere statement that the first are given away, and that he is paying only for the second. Nor can we conceive how he could be damaged were he to suppose that that was true. Such trivial niceties are too impalpable for practical affairs, they are will-o’-the-wisps, which divert attention from substantial evils.” 86 F.2d 692, 695–96 (2d Cir. 1936).

[3] Charles of the Ritz Distributors Corp. v. FTC, 143 F.2d 676 (2d Cir. 1944); Feil v. FTC, 285 F.2d 879 (9th Cir. 1960)(“…courts have, ever since the enactment of the Federal Trade Commission Act, sustained orders which sought to limit the use of language which, although seemingly innocuous to the expert was likely to deceive the unlearned and gullible.”).

[4] Gelb et al. v FTC, 144 F.2d 580 (2d Cir. 1944)[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]