Deceptive Advertising

“Deception” in its Ordinary and Legal Senses

Setting the issue of materiality aside, the sense of “deception” found in the legal notion of deceptive advertising can be usefully contrasted with our “ordinary” concept of deception in two respects. First, at least insofar as issues of moral concern are raised, the ordinary concept of deception, like that of lying, applies only to acts done intentionally and purposefully. For regulatory and legal purposes, however, an [Page 551]advertisement need not be intentionally deceptive. Rather, the legal notion focuses exclusively on false consumer beliefs caused by the advertisement. Second, deception in the ordinary sense requires a measure of success; there cannot be a deception without at least someone who is actually deceived or misled. Deception differs from lying in this respect, as one can be lied to without being taken in by the lie. The legal notion of deception is also outcome oriented, but in a special way. Since a deceptive advertisement must be likely to mislead a consumer acting reasonably under the circumstances, strictly speaking, the law does not require that anyone has actually been deceived. Consequently, one might say that the legal definition focuses on deceptiveness rather than deception—the likelihood that an advertisement will cause false beliefs rather than whether it in fact has done so.

In terms of actual regulatory practice, however, the issue is somewhat more complicated. The likelihood that an advertisement will mislead a consumer depends not only on the advertisement itself but also on the background knowledge and sophistication possessed by the consumer. For a time, backed by decisions of the U.S. Supreme Court, the FTC applied an ignorant person standard according to which an advertisement need only mislead the most gullible consumers in order to be deceptive. Invoking this criterion, the FTC once found deceptive Clairol's claim that its hair coloring would color hair permanently on the grounds that some (particularly naïve) consumers might interpret this to mean, falsely, that Clairol would color all the hair to be grown in a user's lifetime. More recently, however, the FTC has adopted a more lenient approach. Since advertisers typically dispute FTC allegations that their claims are likely to mislead, the agency often relies on extrinsic evidence, usually in the form of consumer surveys, to show that a significant percentage of consumers have formed materially false beliefs as a result of exposure to particular advertisements. Typically, the threshold percentage for FTC prohibition is in the range of 20% to 25%. In this way, regulators can be seen as attempting to strike a balance between the costs of suppressing informative claims and the benefits of suppressing deceptive claims.

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