Business Law: False Advertising it Is Ethically

Business Law: False Advertising

It is ethically and legally important to remain truthful in advertising. Companies are not allowed to attract customers with false advertisement. Legally speaking, a company can come under attack for promising something it doesn't mean to deliver or changing the terms of delivery of those promises when customer makes a demand. But several times, businesses especially small business owners might use bait and switch advertising tactic to attract customer and this can give rise to legal issues. Bait and switch advertisement is seriously forbidden by law and consumers are protected against such actions through various FTC guidelines. The terms of the advertisement are binding according to FTC rules and guidelines. FTC clearly states that when a product is advertised, it must be present at all mentioned outlets at the price mentioned in the advertisement. A person would be accused of false advertising if the product is no longer available when customer walks in to purchase it, or when the seller tries to sell it at a higher price or when another product is offered in its place. All these actions would be considered bait and switch. FTC clearly defines bait and switch advertising as, "…an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised." [Section 238.0]

Since the offer made in advertisement must be bona fide in nature, any breach of advertisement terms can be seen as violation of consumer laws and a person can be accused of false, fraudulent or bait & switch advertising. The terms of advertisement are binding because the law clearly states that, "No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may otherwise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another." [Sec 238.2]

It is also said that if the initial contact was secured by means of deceptive advertising, it would be considered a violation of law. For this reason, we can say that advertising terms are binding and must be treated as such. If a seller refuses to sell the product after securing the first contact, then there is a good chance that consumer would be upset. This shows that seller wasn't trying to make a bona fide offer and that is again against the terms of advertising.

An advertisement that clearly states the value of a product mentions its features and says it is available is considered a bona fide offer by the seller. It must thus be completely true and there should not be any hidden facts about the advertised product that would only be revealed to the customer when he has finally reached the store to purchase it. According to FTC laws, an advertisement must be truth and not deceptive, it should be fair and it must be backed up with evidence. Truth in advertisement is immensely important and evidence makes all the difference. For example if a weight loss program states that people can lose 10 lbs. In three weeks then the claims should be backed by some study or research that clearly showed those results. If that is not possible, such claims should be avoided.

Ethically speaking, the seller should take this fact into consideration and act in accordance with the advertisement terms but since ethics are compromised through the use of bait and switch advertising, it is very clear that seller doesn't care much about ethics in business dealings. For him, it is much more important to hook the customer somehow and then make a sale even if the advertised product is no longer available or was never available in the first place. Thus we can only speak in legal terms and legally speaking, while bait and switch advertising can put a person into serious legal complications, the fact that a person took great pains to find the location to secure the deal is not significant for someone who is engaged in false advertising.

Business law now makes it illegal for anyone to make false promises through advertisements but companies would still do it especially the ones who are not so much in the public eye. But even big names have also been guilty of making false promises and hooking the customers who later find out truth the hard way.