Ads are used by small enterprises. That is a proven fact and a typical corporate practice. Additionally, while advertising, tiny firms occasionally like using "puffery" (exaggeration). That is also a fact and is also prevalent. And occasionally, firms run overly inflated or deceptive advertisements. That is also a fact.
However, that final one is also illegal under California's consumer protection laws and is a misdemeanor that can land you in jail.
What? Yes.
The key is to comprehend precisely what constitutes misleading advertising so that you can steer clear of it at all costs. So let's get started!
What is the False Advertising Law in California?
False advertising is prohibited in California, whether it occurs offline, online, or through analog or digital media. This extends to labels as well.
But how can you tell whether a commercial is fake?
If you can demonstrate the following circumstances "beyond a reasonable doubt," you can prove that an advertisement is false in California.
a) The defendant was a specific individual, business, company, or organization, or any of its employees.
This section of the legislation is very simple. Its jurisdiction would extend to any individual or organization conducting business. No caveats, ifs, or buts are included.
b) Whether intentionally or unintentionally, the defendant's actions were.
Things start to become a little bit more hazy at this point. When someone or a company "acted with intent," it means that they knew (or should have known) that what they were saying was untrue and nevertheless intended to advertise it that way. This is referred to as "acting with knowledge."
As a result, it's crucial to comprehend that unintentionally deceptive advertising is not illegal. In this instance, being careless is not illegal. According to cases from appellate courts, intentionally misrepresenting to California consumers is a criminal.
In the California Business and Professions Code section 17500, if you're wondering where this law is truly located.
California's Penalties for Breaking the Law
This professional code has both civil and criminal penalties.
- First, as stated, each offense carries a potential jail sentence of up to six months (that is, per each advertisement)
- Additionally, civil fines of up to $2,500 are also conceivable, and once more, that is for each offense.
A class action lawsuit would also be feasible if the advertisement misled a large group of people. Similar to criminal penalties, a person or business found guilty of deceptive advertising may also face civil litigation or an injunction.
False advertising examples
Law can can become complex. Especially considering that this law is somewhat complex, but fortunately you don't need the assistance of a law professional to grasp it. We're here to assist (I practiced law for many years.)
What is and is not illegal should be clarified with a few specific examples.
1) Guilty
First, here is an illustration of a controversial advertisement:
A job seeker who responds to a Marty's Temp Agency web advertisement will pay $100 per month in exchange for a "guaranteed job."
Because he was constantly successful in placing people in positions, Marty assumed that no one would ever realize that there were no guaranteed jobs. After that, Marty's signs up 27 people for the monthly service, but it subsequently becomes clear that no jobs were ever guaranteed.
Because it complies with all relevant legal requirements, this would be an illegal advertisement and a criminal misrepresentation: Despite knowing it to be untrue, Marty's Temps marketed the error in an effort to get people to subscribe to its service.
Similar to that, it would be against the law and criminal under this rule for a law company to promote "free consultations" while actually charging for them.
2) Not Guilty
However, given that some exaggeration is permitted in advertising, the following advertisement would not be seen as having over the line:
In a Google advertisement, Electrician Co. claims to be the "best electricians" in the region. Consequently, Mr. Johnson contracts Electrician Co. to repair a problem at his home.
Sadly, Electrician Co. was unable to effectively resolve the problem and even made it worse. To remedy the entire problem, Mr. Johnson had to employ a separate electrician. Given that referring to themselves as the "best electricians" in the neighborhood was a boast rather than a criminal false statement, Electrician Co. would not be held accountable under this California regulation.
Here is another illustration of a commercial that wouldn't be prohibited:
80-inch TV," Ms. Martin wrote in her Facebook Marketplace advertisement. Aged one year. $50.” She realized she had written $50 rather than $500 in the ad when she was inundated with answers. Because it was an error and not a deliberate, criminal attempt to defraud others, Ms. Martin would not be found guilty.
Here is one more instance of inaccurate advertising that is not misleading advertising.
Let's say you run a grocery store in Los Angeles and want to attract customers over the holidays. You get a special deal on turkeys when you phone your distributor. Let's further assume for the sake of argument that you are informed that you can purchase them for $1 per pound. As a result, you will be charging $2 per pound for them.
Following that, you make a TV commercial boasting your incredible price on turkeys for $2 per pound, based on that promise. Sadly, your distributor was unable to complete the order, therefore you are no longer able to sell those turkeys at such a fantastic price. Your advertisement was fraudulent.
Due to the fact that you did not "act with intent," you would not be held accountable under California's false advertising law. Yes, you meant to advertise the price, but you didn't mean to tell a lie. Advertising that was misleading, but not on purpose or with malice. That is both the difference and the key.
As you can (hopefully) see, the fact that the person or corporation running the advertisement knew it was false, didn't care, and exploited it to persuade people to buy anything renders it illegal in California. It's illegal because of the lying and deception. Carelessness or negligence do not.
What Is My Chance of Being Found Guilty of False Advertising?
If you are accused of breaking this consumer protection law, you have a lot of defenses. The truth comes first. That is, it was not a crime provided the advertisement was not false.
Second, it is difficult to satisfy the criminal requirement of "beyond a reasonable doubt." Beyond a reasonable doubt, according to Cornell Law, signifies that the jury must be almost certain of the defendant's guilt. This level of proof is substantially higher than the "preponderance of the evidence" threshold used in civil cases, which only requires a degree of confidence greater than 50%.
Additionally, it might be challenging for a prosecution to establish intent in a circumstance like this. Evidence supporting the defendant's knowledge that the advertisement was false must be abundant. It would be very challenging to prove malevolent intent if the defendant could demonstrate an exercise of reasonable care that was honest.
The California Business and Professions Code and the California Unfair Competition Law both incorporate a "statute of limitations" into this law. Accordingly, the lawsuit must be filed no later than three or four years (depending on the specifics) following the incident.
How to Avoid False Advertising Charges Under California Law
This is a simple part. If you want to prevent problems of this sort, California law (as opposed to federal law) provides that:
- In your advertising or solicitations, don't deceive.
- Also keep in mind that misleading labeling is prohibited.
- Do not publicly assert that you are the owner of any intellectual property that you are not.
While the federal courts and the Federal Trade Commission might not have much to say if you engage in any of these activities, the California Attorney General or a local City Attorney or District Attorney would undoubtedly have a lot to say (and nothing that you would like).
That is the reality.
Can a business be penalized for deceptive advertising?
In a word, yes. In California, this behavior is actually punishable by fines and/or incarceration as a crime.
How may deceptive advertising be demonstrated?
It has been established with concrete evidence, just like every other contested matter in a court case. An accusation is insufficient. In particular, it must be demonstrated through testimony or tangible evidence that the advertiser knew the claim was false yet nonetheless promoted it.
What regulations apply to deceptive advertising?
According to the pertinent California law, it is deemed fraud if you intentionally make a false statement with the goal of persuading someone to buy from you.