2018 GNYADA Membership Directory

Materiality of the Claims Claims that are likely to influence consumers’ decisions about whether to buy a product or service, or about how they use it, are considered material. The FTC often presumes that certain types of claims are material, including express claims and claims about a central feature of the product, the product’s cost, or its safety. Keep in mind though that most claims are likely to be considered material, unless they are “puffery”– claims that are so broad and fanciful that consumers do not take them seriously (for example, “world’s best car”). Substantiation of the Claims In addition to claims that are false or misleading, it is deceptive to make a claim about an objective feature of a product or service without having competent and reliable evidence to substantiate the claim at the time it is made. This is the case even if it later turns out that the claim was true. The type and amount of evidence that is necessary depends on the type of claimmade. For example, a dealer that wants to advertise that it has the“lowest prices in the county”should survey the prices for the relevant comparison at the other dealerships in that county. Deception by Omission An advertisement can be deceptive not just for what it says, but also for what it does not say, that is, if it omits material information that is necessary to dispel a misimpression that the advertiser created. This usually arises in situations where there are significant qualifications, limitations, conditions, or restrictions on an offer. For example, it is deceptive to advertise financing at a particular rate without disclosing (when such is the case) that the rate may adjust upwards. Note that a disclosure is appropriate to qualify a claim, not contradict it. It is deceptive to claim one thing in the headline or text, while saying the opposite in a fine-print footnote. Moreover, a deceptive advertisement cannot be “cured”by providing the truth in a later communication with the consumer. Making Effective Disclosures All advertised terms must be“clear and conspicuous.”If a disclosure is not made clearly and conspicuously, it is the equivalent of not making the disclosure at all. The FTC has identified the four P’s for making effective disclosures: Prominence, Proximity, Placement, and Presentation. Prominence – A disclosure must be large enough and sufficiently contrasting with the background such that ordinary consumers will notice and read it. The FTC does not state a required or minimum type size for disclosures, but there are state laws that require a minimum of 8- or 10-point type. Depending on the layout of the advertisement and the importance of the information, however, type size larger than 8- or 10-point may be necessary or appropriate. Disclosures should be distinguished from the background of the ad by using a contrasting color, bolding it, and/or putting the disclosure within a border. Asterisks next to qualified terms should be at least 50% the size of the qualified term’s print size. Proximity – Disclosures should be located close to the terms being qualified. A small footnote at the bottom of the page or image is generally not sufficient. Nor is putting the disclosures on another page of a brochure or another screen or page of a website not close to the qualified term, or referring consumers to another location entirely to see the material terms (such as “see dealer for details”). In digital advertising, if hyperlinks are used to direct the consumer to the disclosure, they must be prominently displayed and clearly labeled to convey the importance and nature of the information. Information essential for consumers to understand the offer should not be disclosed through a hyperlink.

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