Although the Competition Bureau prohibits misleading advertising, many companies present the public with false materials, selling prices, unauthorized use of testimonials or tests, double ticketing and bait selling. Advertisers are required to be accurate about their services and products as well as for those of their competitors to avoid lawsuits. The Competition Act contains prohibitions regarding misleading or false representations, requiring brands certain marking or labeling information designed to aid the customer in making informed decisions.
However, most of us are or have been victims of false advertising. In marketing, there is a big difference between making a false claims and pushing the truth. The question everyone wants to know the answer to is, will companies change their immoral habits and start prioritizing the consumer’s rights over profits? Below are 3 major brands involved in false advertising scandals that have paid millions in compensation for their actions and have dealt with negative publicity:
This company sent an emails to millions of people informing them that old friends and classmates were attempting to contact them. Clasmates.com promised to reconnect old friendships in exchange for a Gold membership and a small price to pay. However, the reunions never came, even with an upgraded account. The social media site was trying to make easy money at the expense of its users. One individual filed a lawsuit in 2008 against the company. After winning it, the company had to pay a $9.5 million settlement, giving each subscriber $3.
- Amgen pleads guilty
This global pharma company told doctors that they can make millions more annually if they prescribe Amgen anemia drug instead of Procrit, it’s direct competitor. This brand certainly regrets having to pay a $762 million settlement in this False Claims Act case. The price for that sin is $150 million in criminal penalties and $612 million for causing false claims towards Medicare and other programs. Moreover, it will enter a five-year Corporate Integrity Agreement designed to increase accountability of individuals and board members and transparency.
- Kellogg’s Rice Krispies
The famous Rice Krispies advertising claimed that the Krispies can improve a child’s immune system with 25 percent daily value of nutrients, Vitamins A, B, C and E antioxidants. Because Kellog was misleading customers about the properties of the product, the Federal Trade Commission ordered the company to stop all advertising. Moreover, a year prior, the Frosted Mini-Wheats campaign claimed that kids’ attentiveness will be improved with 20 percent. It was shot down after FTC discovered that there was no clinical evidence to support the claim. The company had to pay $5 million, a $2.5 million medical negligence compensation claim to consumers and the other half to charity.