Some thoughts about false advertising

In general, a lot of deceit is legal in advertising. It is called puffing. Puffing is a great, fuzzy concept that allows businesses to deceive customers. The underlying lie is that all reasonable buyers would know that the puffs are false and not to be taken as true. But if that is the case, why is puffery so prominent in commerce? It is prominent because it is effective at deceiving enough customers to make puffery central to marketing, sales and profits. And even when sellers cross the line into flat out lies, the burden is on the consumer to show it. 

Perplexity describes puffery like this:

Puffery in advertising is generally considered legal and is not classified as false advertising. Puffery involves making exaggerated, subjective claims about a product or service that cannot be proven true or false, such as "world's best coffee" or "number one pizza" . These statements are seen as opinions rather than factual assertions and are typically not meant to be taken literally by consumers.

However, when advertising claims become specific and measurable, they may cross the line into false advertising. False advertising involves making objectively false statements that can be proven untrue, such as claiming a product has certain features or benefits that it does not actually possess . For example, stating that a product is "free-range" when it is not, or claiming a specific density for flooring that is not accurate, can be considered false advertising if these claims can be objectively verified and proven false .

A WaPo article discusses egregious puffery that got called out by the FTC (Federal Trade Commission):

Think twice before buying a car-repair contract. 

FTC settlement shows why.

The regulator ordered CarShield to pay $10 million, alleging it used deceptive ads and “trusted personalities to deliver its empty promises”

A check engine light flashes and you pull out your owner’s manual hoping it’s a loose gas cap and not something serious, like a faulty catalytic converter. Understanding this anxiety, CarShield, which heavily advertises on television, offers vehicle service contracts promising to be your financial knight should you need to make that dreaded trip to the mechanic.

Vehicle owners are told their monthly premiums would save them from worry.

“Drive with more peace-of-mind, knowing your vehicle and budget are protected from the unexpected,” CarShield advertises.

But like so many of these service contracts, the devil is always buried in the fine print. Too often there are so many exclusions it renders the policy useless.

So it was no surprise to me when the Federal Trade Commission announced this week an eight-figure settlement with CarShield. It wasn’t a car owner’s savior, the agency said.

“Instead of delivering the ‘peace of mind’ promised by its advertisements, CarShield left many consumers with a financial headache,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Worse still, CarShield used trusted personalities to deliver its empty promises.”

CarShield advertises and sells service contracts ranging from about $80 to $120 a month, the agency said.

The FTC said that only after purchasing a contract and “authorizing” CarShield to sign it on their behalf did consumers receive their contract, a “dense, 25- to 30-page document, filled with numerous exclusions, terms, and conditions that are not disclosed in CarShield’s advertising or by its telemarketers.”

Despite hundreds or thousands of dollars, consumers were often stuck having to pay for the very repairs they were assured would be covered, the FTC said in its complaint.  

According to some consumers, their preferred mechanic or dealership was unwilling to take on their repair job because of prior bad experiences with CarShield.

“Everyone laughs when I ask if they accept CarShield as coverage,” according to one customer cited in the FTC complaint.

Another said, “Out of the 10 repair facilities I called from CarShield’s website, all said they did not accept CarShield.” 

Even for “approved” repairs, consumers found CarShield wouldn’t completely cover labor costs. Facilities are reimbursed in an amount the company approves based on unspecified “nationally recognized labor guides,” the FTC said.

“Consumers are financially responsible for the cost difference between this amount and what the repair facility charges,” the agency said. “Thus, consumers are often left with substantial out-of-pocket costs.”

To me, the endless carpet bombing of worried consumers by CarShield ads had the feel of a large-scale scam. Turns out my gut was right. I never liked celebrity endorsers Ice-T or Vivica A. Fox, both of whom struck me as callous opportunists in CarShield ads.

Ice-T & friend scamming for fun and profit!