Elaine Margrethe Alcantara
No one likes the feeling of being deceived or misled. There are many companies that are willing to do anything to boost their sales, that includes falsely advertising their products or services.
Being misled leaves a horrible feeling of distrust among your customers and massive repercussions.
Advertising has three main goals — to inform customers, to persuade them, and to increase sales. With markets saturated with competitors and brands, advertisers go above and beyond to think of clever ways to stand out. Sometimes, there are those who push the boundaries and go as far as to stretch the truth.
Don’t think brands get away with false advertising. In fact, there are many examples of multi-million dollar lawsuits that plagued brands. In this piece, we’ll take a closer look at six controversial false advertising examples and what they cost the brands.
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What Is False Advertising?
False advertising is misleading and deceptive information pushed by brands to sell their products. It is unethical and is considered a crime in many countries.
Here are the common types of false advertising employed:
- False savings = This involves promoting fallacious and shocking price cuts that usually lure unwitting customers. The brand will unnecessarily hike the price of the products, and then suddenly drop them to create a false sense of urgency.
- Bait-and-switch advertising = This involves enticing customers with the promise of a promo that does not exist anymore or is actually inferior in quality only to upsell them.
- Failure to disclose = This is when a brand refuses to disclose valuable information about a product or service that could affect its quality or worse.
- Flawed research = This involves advertising that’s based on flawed or limited research.
- Mislabeling = A form of false advertising that overstates or exaggerates information about the product. These are common within the food industry, especially for dietary products.
Competing brands, customers, and organizations can sue brands for false advertising in many countries. There are many laws that protect buyers’ rights, and many are not afraid to go head to head with the brands that duped them.
Learn more about the cost of advertising: “How to Make An Advertising Budget [With Template]”
6 Examples of False Advertising
False advertising is the worst. Even the biggest brands are not spared from the consequences that come from deceptive advertising. Here are some examples that get costlier and costlier:
New Balance’s Calorie-Burning Sneaker Ads
False advertising claims within the fitness and athletic scene aren’t new. Whether their dietary supplements or revolutionary gear, customers that want quick solutions are susceptible to getting tricked by misleading claims.
Based in Boston, Massachusetts, New Balance is one of the biggest names in the footwear and sports apparel industry. Back in 2011, the shoe giant was hit with a lawsuit for the advertising of its True Balance toning footwear that claimed unproven benefits.
Source: The New York Times
Researchers concluded that there was no sufficient scientific evidence or data to support the claim that the shoe helped muscle activation or exercise. The lawsuit sought more than $5 million in damages from New Balance but eventually, the plaintiff agreed to a settlement of about $2.3 million.
Kellogg’s ‘Healthy’ Cereals
Healthy products The Kellogg Company, more famously known as Kellogg’s, is a Michigan-based food manufacturing company known for its Corn Flakes, Frosted Flakes, and Raisin Bran. The company was met with a class action lawsuit because of its mislabeled cereals.
The court didn’t rule in favor of any party and Kelloggs denied all of the accusations. Ultimately, the cereal maker agreed to pay a settlement worth $13 million that would benefit customers who purchased their cereals that were labeled “heart healthy” and “lightly sweetened.”
Airborne’s Herbal Health Formula
This brand isn’t as well-known as it used to be but the advertising industry remembers its phenomenon-like climb and controversial lawsuits. Airborne is a supplement launched in 1999 and was marketed as a herbal supplement or health formula ideal for boosting immune systems.
The former markers of the product were accused by the Federal Trade Commission (FTC) and the Center for Science in the Public Interest (CSPI) of making unproven claims. A class action lawsuit was filed against the former owners of the company for alleged false advertising.
Source: Center for Science in the Public Interest
On March 2008, the company agreed to pay a whopping $23.3 million settlement fee. After the headaches and settlements, the company brought in a new management group to run the company.
To this day, the Airborne immune support supplement is still sold in stores across the nation and is owned by Reckitt, a British multinational consumer goods company that owns many brands in the health and nutrition markets. The supplement is now marketed for its vitamins and minerals.
Dannon’s Activia Yogurt
A serving of yogurt a day doesn’t keep the doctor away. In 2010, The Dannon Company was struck with a lawsuit for falsely advertising health benefits for its Activia and DanActive yogurt.
The products were advertised to be good for regulating digestion and boosting immune systems. According to the FTC, there is no scientific data that back up the beneficial claims of the product. The class action lawsuit reached federal court where the company defended its products but agreed with the settlement that cost a staggering $45 million.
Hyundai’s Exaggerated Horsepower
The automotive industry isn’t spared from false advertising scandals. In fact, the sector has some of the biggest controversies.
The Hyundai Motor Company is a Korean automaker, and within the automotive community, their cars are usually known for their fuel efficiency and dependability.
Back in 2004, the company along with its affiliate, Kia Motors, was slammed with a class action lawsuit for overstating the horsepower of their engines. Hyundai’s Elantra was advertised to have 140 horsepower but tests showed that it was actually only 135.
In the company’s defense, they said that their cars weren’t specifically known for power but they still admitted their misstatements. They initially tried offering extended warranties and roadside assistance plans to appease customers but lawyers pushed for a better settlement.
The cost of the settlement was said to range from around $76 million to $127 million.
Volkswagen’s “Eco-Friendly” Diesel Cars
If you think Hyundai’s headache was already big, another automaker was caught in a much bigger and costlier problem.
Volkswagen, a German motor vehicle manufacturer, once advertised environmentally friendly diesel cars that seemed too good to be true. Unlike cases that involved mislabeled products, the company’s controversy ran deep.
In their ad campaign, Volkswagen showcased low levels of pollutants in their cars, but in 2016, the FTC found that they were cheating emission tests.
According to the Environmental Protection Agency (EPA), Volkswagen vehicles sold in the US were rigged with “defeat devices” that automatically activated when they were tested. The defeat devices changed the performance of the car to improve results, violating the US Clean Air Act.
The automotive titan agreed to two settlements — one with the United States and the State of California and another one with the US FTC. The automaker ultimately agreed to spend around $14.7 billion which will be broken down into settlement fees and zero-emission effort support.
After all of that, the company made an effort to take accountability and acknowledge that they’ve broken their customers’ trust. Since then, they’ve changed management and worked to earn the trust of their public back.
Protect Your Brand from Advertising Nightmares
Spare yourself from the headache that comes with false advertising. Sometimes it’s tempting to bend the truth or exaggerate some facts in order to stand out but the repercussions aren’t worth breaking the trust of your customers.
Consumers have the right to know important details about products and services. They have the right to truthful information and advertising. There are strict consumer protection laws and many entities that will come and get you if you try false advertising.
After all, the lawsuits that come with false advertising are nightmares that you wouldn’t want for your brand. Team up with the best advertising agency on Visual Objects to get the best results.