On January 22, 2004, the FTC announced a settlement with
Chicago-area entrepreneur Robert Barefoot and two of his companies,
Deonna Enterprises Inc. and Karbo Enterprises Inc. The defendants
were ordered to stop touting the health benefits of Coral Calcium
Supreme, a dietary supplement Barefoot developed and advertised
through TV infomercials. The companies may no longer claim that
coral calcium can cure cancer, multiple sclerosis, heart disease
and high blood pressure. They also can't say the supplement is
absorbed by the body better than other calcium supplements, or that
a serving of Coral Calcium Supreme has as much calcium as two
gallons of milk.
Why not? Because there isn't enough scientific evidence for
any of these claims. Under federal law, you can't make medical
claims in your ads without solid medical evidence to back them. The
Lanham Act and the laws of all 50 states prohibit advertisements
that might mislead people into buying products or services they
wouldn't buy if they knew the truth. It's the job of the
FTC and its counterpart in each state to enforce these laws by
following up on complaints from consumers or competitors, or by
monitoring particular industries for violations.
Amendments to the Lanham Act prohibit misleading statements as
well. For example, a food company got into trouble for saying its
soups were low in fat and cholesterol but neglecting to mention
they were loaded with sodium.
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The law has expanded in recent years to include brochures,
letters, videos, trade show presentations and telemarketing. You
can even get in trouble for what your distributors claim about a
product, whether or not company ads make the same claims. Avon
Products Inc. had to order its distributors to stop telling
customers that its Skin-So-Soft bath oil worked as an insect
repellent unless there were studies to support the claim.
What do you need to support your claim? The law recognizes
"puffery," which is generalized praise. If you declare
that your shop sells the world's best cookies, don't worry
that the FTC will demand proof. But if you say something that
sounds verifiable, such as 4 out of 5 customers say your cookies
taste fresher than your competitor's, you'd better have a
statistically significant stack of customer surveys to back up that
claim. Be especially careful with claims about health, safety and
environmental impact, because that's where consumer protection
agencies are most vigilant.
The bottom line: Don't lie, and don't mislead. If
you're advertising a sale price, make sure the item was offered
at the former price for more than a day or two. If you compare your
price to others, make sure it's for similar merchandise. If you
advertise two for the price of one, be sure people normally do pay
this price for one.
What if your competitor is luring customers with misleading
claims? Notify your state's attorney general. If that
doesn't stop it, have your lawyer threaten to sue. These laws
protect businesses as well as consumers.
Jane Easter Bahls is a writer in Rock Island, Illinois,
specializing in business and legal topics.