Marketing experts estimate that Americans take in between 4,000 and 10,000 digital and traditional ads each day. That’s a lot of ads! Along with this constant barrage of information comes a series of ethical issues around deceptive advertising, consumer data storage and the extent to which lead aggregators are liable.
The Federal Trade Commission’s (FTC) consistent and severe crackdown on the first of these ethical issues, deceptive advertising, has shed a lot of light on the practice. Deceptive advertising is defined by the FTC as advertising that is not truthful, is misleading, and is not backed by scientific evidence when appropriate. You can read more about truth in advertising here.
Why does this affect you? It’s important that consumers can understand their rights and have tools to know when they’re the targets of deceptive advertising. The roundup below demonstrates key cases from the past year in which the FTC charged companies across several industries. Each charge reflects a scenario in which a company took advantage of consumers without their knowledge, and the FTC along with other entities brought justice for the consumer.
Auto Industry: $14.7B+
Volkswagen: $14.7 BILLION. The German automaker, cheated emissions tests and deceived consumers. What’s the price for the company’s bad behavior? After being charged by the FTC, they’ll settle for $14.7 billion (yes, BILLION!). $10.03 billion of that will go to compensating consumers who have been cheated by an advertising campaign that suggested the car always used full emissions controls. You can click here to read the full FTC brief from June 2016.
Education Industry: $100M+
DeVry University: $100 Million. The university agreed to a $100 million settlement that said they misled prospective students to false promises of high employment success rates and incomes after graduation. The FTC’s crackdown encompasses all industries including the financial space. Part of the money will be distributed to students who qualify and were harmed. The other part will be given to students for debt relief.
Health & Wellness Industry: $182M+
Lumosity: $2 Million. Lumos Labs, the company that created Lumosity, claimed the online “brain training” program could prevent cognitive decline, and that playing their games had a host of other preventative benefits when it comes to age-related conditions. The FTC charged the company with deceiving consumers, and not having the scientific evidence to back up their claims. They settled to pay $2 million, and notify subscribers.
Supple: $150 Million. The company agreed to settle after falsely advertising that their product provided “complete relief from chronic and severe join pain.” They manufacture a liquid supplement to address arthritis and fibromyalgia. The FTA said their claims were not scientifically proven, and they made false claims to having an independent expert endorsement.
Pure Green Coffee: $30 Million. Nicholas Congleton, the person behind this product, falsely advertised green coffee for weight-loss through several companies under his control. The product was first made popular on “The Dr. Oz Show.” At the FTC’s request, a $30 million judgement was made against the pitchman.
Lord & Taylor: $ Unknown. The national retailer deceived consumers by writing an allegedly objective article in a magazine without disclosing that the article was in fact an ad. Lord & Taylor also paid fashion influencers to post Instagram pictures of their new line of dresses without disclosing this to consumers. Lord & Taylor settled with the FTA.
Technology Industry: $25M+
Breathometer: $5 Million. The company is an app-supported smartphone device that allows consumers to make smart decisions after drinking and before driving. It became famous through Sharktank, but lacked the scientific evidence to back up their advertising claims that the breathalyzer could gauge consumers’ blood alcohol content accurately. The order would require the company to pay back full refunds to customers who request them. According to the complaint, sales totaled over $5M.
Uber: $20 Million. The ride-share company agreed to pay $20 million to settle FTC charges. They led prospective drivers to believe that they’d make higher earnings than the reality in an effort to attract new drivers. The money will be used to refund affected drivers.
Total Amount: More than $15B in 2016 alone.