Also known as: false advertising · deceptive advertising · false or deceptive advertising · misleading advertising · unfair advertising
Written by attorneys — see sources below.
Commercial speech containing false or misleading representations about goods or services. Such speech receives no First Amendment protection and exposes the speaker to tort liability, regulatory discipline, or injunction.
Attorney Faye Fuller runs a television ad depicting herself dramatically addressing a jury in a trial setting. In reality Fuller has never tried a case to verdict before a jury. A disciplinary board finds the visual creates a false impression of her experience and imposes sanctions.
Lexmark advertises that only its own cartridges work with its printers and warns that third-party chips will damage machines. Static Control, a component maker, proves the statements are false. Static Control recovers damages under the Lanham Act for the misleading advertising.
Lexmark International, Inc. manufactures and sells laser printers along with the toner cartridges designed exclusively for those printers. It introduced a Prebate program that offered customers a 20-percent discount on new cartridges if they agreed to return the empty cartridges to Lexmark once used. The program terms were communicated to consumers through notices printed on the toner-cartridge boxes. Static Control Components, Inc. manufactures and sells components necessary for remanufacturers to refurbish used Lexmark toner cartridges. Static Control developed a microchip that could mimic the microchip in Lexmark Prebate cartridges, enabling remanufacturers to refurbish and resell those cartridges after replacing the original chip. In 2002 Lexmark sued Static Control alleging violations of the Copyright Act and the Digital Millennium Copyright Act. Static Control counterclaimed under section 43(a) of the Lanham Act, alleging that Lexmark misled end-users into believing they are legally bound by the Prebate terms. Static Control further alleged that Lexmark sent letters to remanufacturers falsely advising that it was illegal to sell refurbished Prebate cartridges and to use Static Control products. Static Control alleged that these statements caused it lost sales and damage to its business reputation. The district court granted Lexmark’s motion to dismiss the Lanham Act counterclaim on prudential standing grounds. The Sixth Circuit reversed after applying the reasonable-interest test. The Supreme Court granted certiorari to decide the appropriate analytical framework.
View caseA state board bans pharmacists from advertising prescription drug prices. Consumer groups challenge the ban. The Court holds that truthful commercial speech about lawful prices is protected and the prohibition violates the First Amendment.
Virginia law made it unprofessional conduct for a licensed pharmacist to publish, advertise, or promote any price for prescription drugs under Va. Code Ann. § 54-524.35(3). The Virginia State Board of Pharmacy regulated the profession to protect public health, safety, and welfare. It licensed pharmacists only after they showed good moral character, graduated from an approved school, completed up to twelve months of experience, and passed a Board examination. Licensed pharmacists remained subject to penalties or license revocation for negligence, fraud, or unprofessional conduct. Prescription drug prices varied sharply even within the same locality. In Richmond the cost of forty Achromycin tablets ranged from $2.59 to $6.00. In the Newport News-Hampton area the price of tetracycline ranged from $1.20 to $9.00. About ninety-five percent of prescriptions were filled with dosage forms prepared by manufacturers. Some pharmacies refused to quote prices over the telephone. An individual Virginia resident who suffered from diseases requiring daily prescription drugs, together with two nonprofit organizations whose members included many users of such drugs, brought suit against the Board and its members. The plaintiffs claimed the ban prevented them from learning where their limited resources could be spent most effectively. A prior challenge to the same statute brought by a drug retailer and one of its pharmacists had been rejected on due-process and equal-protection grounds. The three-judge District Court for the Eastern District of Virginia declared the quoted portion of the statute void and enjoined its enforcement. The Supreme Court noted probable jurisdiction of the Board's appeal.
View caseMassachusetts requires tobacco ads to be placed at least five feet above floor level near schools. Tobacco companies challenge the height and location rules. The Court strikes down the restrictions as overly broad limits on truthful commercial speech.
In November 1998, Massachusetts joined over forty other states in reaching a master settlement agreement with major cigarette manufacturers that provided monetary payments and injunctive relief. Shortly after the agreement, the Attorney General announced plans to issue consumer protection regulations to close gaps in the settlement and prevent recruitment of underage customers. In January 1999, the Attorney General promulgated comprehensive regulations under Mass. Gen. Laws ch. 93A § 2 governing the advertising and sale of cigarettes, smokeless tobacco, and cigars, with an effective date of February 1, 2000. The regulations contained three principal restrictions. Outdoor advertising, including billboards and signs visible from outside retail establishments, was prohibited within a 1,000-foot radius of any public playground, playground area in a public park, elementary school, or secondary school. Point-of-sale advertising was barred if any portion appeared lower than five feet from the floor in retail establishments within the same radius, unless the establishment was adult-only. Self-service displays were forbidden, and all tobacco products had to be placed behind counters accessible only to outlet personnel, with limited exceptions for adult-only stores and small text-only signs. Before the regulations took effect, petitioners—including Lorillard Tobacco Company, Brown & Williamson Tobacco Corporation, R. J. Reynolds Tobacco Company, Philip Morris Incorporated, U. S. Smokeless Tobacco Company, several cigar manufacturers and retailers, and an advertising agency—filed suit in the United States District Court for the District of Massachusetts. The complaint alleged that the regulations violated the Commerce Clause, the Supremacy Clause, the First and Fourteenth Amendments, and were preempted by the Federal Cigarette Labeling and Advertising Act for cigarettes. The District Court granted summary judgment to the Attorney General in two rulings. On appeal, the United States Court of Appeals for the First Circuit affirmed in part and reversed in part. The Supreme Court granted certiorari in 2001 to address the preemption and First Amendment questions.
View caseRhode Island prohibits all advertising of liquor prices. Liquor stores challenge the total ban. The Court holds that the prohibition on truthful price information fails the Central Hudson test and violates the First Amendment.
In 1956, the Rhode Island Legislature enacted two separate prohibitions against advertising in any manner the price of alcoholic beverages offered for sale in the state. The first prohibition applied to vendors licensed in Rhode Island and to out-of-state manufacturers, wholesalers, and shippers. The second applied to the Rhode Island news media. In 1985 the Rhode Island Supreme Court reviewed and upheld the constitutionality of the first ban in two separate cases. Petitioners 44 Liquormart, Inc. and Peoples Super Liquor Stores, Inc. are licensed retailers of alcoholic beverages. 44 Liquormart operates a store in Rhode Island. Peoples operates stores in Massachusetts that Rhode Island residents frequent. In 1991, 44 Liquormart placed an advertisement in a Rhode Island newspaper. The ad stated that state law prohibited advertising liquor prices. It displayed the word WOW next to pictures of vodka and rum bottles along with low prices for peanuts, potato chips, and Schweppes mixers. The Rhode Island Liquor Control Administrator assessed a four-hundred-dollar fine against 44 Liquormart. After paying the fine, 44 Liquormart and Peoples filed suit in the United States District Court for the District of Rhode Island. The complaint sought a declaratory judgment that the two statutes and the administrator's implementing Regulation 34 violated the First Amendment. It also asserted a claim under 42 U.S.C. § 1983. The parties stipulated that the price advertising ban was vigorously enforced. Rhode Island permitted all advertising of alcoholic beverages except price references outside licensed premises. The proposed advertisements concerned lawful activity and would not be false or misleading. The district court heard conflicting expert testimony and reviewed multiple studies. It found as a fact that the ban had no significant impact on levels of alcohol consumption in Rhode Island. The district court held the statutes unconstitutional in 1993. A panel of the Court of Appeals for the First Circuit reversed the district court judgment. The full court sitting en banc later affirmed the result after rehearing in 1995. The Supreme Court granted certiorari in 1995 because of the importance of the questions presented.
View caseAn Ohio attorney runs newspaper ads offering contingent-fee representation in personal-injury cases but omits required disclosures about client costs. The disciplinary board sanctions the lawyer. The Court upholds the disclosure requirement as a permissible regulation of commercial speech.
In late 1981, Philip Q. Zauderer, an attorney practicing in Columbus, Ohio, placed a small advertisement in the Columbus Citizen Journal offering to represent defendants in drunken driving cases with a full legal fee refund if convicted of drunk driving. Charles Kettlewell, an attorney employed by the Office of Disciplinary Counsel of the Supreme Court of Ohio, telephoned Zauderer the second day the advertisement ran and informed him that it appeared to offer representation on a contingent-fee basis in a criminal case. Zauderer immediately withdrew the advertisement and wrote Kettlewell that he would decline any employment resulting from it. In the spring of 1982, Zauderer placed a larger advertisement in thirty-six Ohio newspapers. The advertisement featured a line drawing of the Dalkon Shield accompanied by the question "DID YOU USE THIS IUD?" It described alleged injuries including pelvic infections resulting in hospitalizations, tubal damage, infertility, and hysterectomies. It also described unplanned pregnancies ending in abortions, miscarriages, septic abortions, tubal or ectopic pregnancies, and full-term deliveries. The advertisement stated that the firm was presently representing women on such cases on a contingent fee basis of the amount recovered and that if there is no recovery, no legal fees are owed by clients. The advertisement attracted well over two hundred inquiries and led Zauderer to initiate lawsuits on behalf of one hundred six women. On July 29, 1982, the Office of Disciplinary Counsel filed a complaint against Zauderer alleging violations of several Ohio Disciplinary Rules arising from both advertisements. With respect to the Dalkon Shield advertisement, the Office of Disciplinary Counsel stipulated that the information and advice regarding Dalkon Shield litigation was not false, fraudulent, misleading, or deceptive and that the drawing was an accurate representation of the Dalkon Shield. The complaint charged that the advertisement violated rules prohibiting illustrations, self-recommendation, accepting employment from unsolicited advice, and failing to disclose client liability for costs. A panel of the Board of Commissioners on Grievances and Discipline heard the charges and found that Zauderer had violated multiple Disciplinary Rules. The Board of Commissioners adopted the panel's findings but recommended indefinite suspension rather than the public reprimand proposed by the panel. The Supreme Court of Ohio adopted the Board's findings that appellant's advertisements had violated the Disciplinary Rules specified by the hearing panel and concluded that appellant's conduct warranted a public reprimand. Zauderer appealed to the United States Supreme Court. He contended that the Ohio rules violated the First Amendment as applied to the Dalkon Shield advertisement. He also claimed that the manner of discipline for the drunken driving advertisement violated due process. The Court noted probable jurisdiction in 1984.
View caseNo. False and deceptive commercial speech is categorically unprotected by the First Amendment because it does not contribute to the marketplace of ideas or the commercial marketplace.
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A party harmed by justifiable reliance on a public misrepresentation about product safety or quality may recover for resulting physical injury under strict liability. Injunctive relief is also available even when constitutional speech concerns are present.
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Yes. A marketplace that repeats a seller's safety claims in its own promotional materials can be strictly liable for physical harm caused by consumer reliance, regardless of the marketplace's own negligence or good-faith belief in the statements.
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