False advertising lawsuits are on the rise: Marketer's Brief Podcast
Big marketers are battling it out in court as much as they are on the airwaves this year. Several big-name brands–including MillerCoors, Sprint and Clorox–have bypassed the industry's self-regulation system and gone straight to court to file false advertising lawsuits against competitors.
On the latest edition of Ad Age's Marketer's Brief podcast, Goldstein dishes out advice for brands to avoid legal exposure in this increasingly litigious environment. And she describes when brands should sue competitors if they think they have been wronged. Her biggest rule: Don't file a lawsuit unless your own house is in order. "When you go into federal court, there is always a risk of counterclaims against your own advertising," she says. "And so it's very important before any company goes into court to take a look at their own advertising and see if they would be putting any of their own advertising claims at risk."
Ad lawyers are keeping a close eye on several recently filed false advertising lawsuits involving big-spending marketers:
- In late March, MillerCoors sued Anheuser-Busch InBev over its Bud Light ads that mock Miller Lite and Coors Light for using corn syrup. MillerCoors alleges that the ads are meant to deceive beer drinkers into thinking its beers contain high-fructose corn syrup, which has long had negative connotations with consumers.
- Meanwhile, The Clorox Co. recently sued Reckitt Benckiser over a series of comparative ads pitting RB's Lysol brand cleaning products against Clorox products. One of the spots claims that a Clorox spray leaves behind "harsh chemical residue." But Clorox says the campaign is misleading because it compares Clorox and Lysol products that are not in the same category; like a higher-strength Clorox spray against one from Lysol that is meant for lighter use.
- A legal battle is also brewing in the wireless industry where Sprint sued AT&T, alleging that the carrier's "5Ge" marketing falsely portrays the availability of fifth-generation mobile technology, commonly known as 5G.
In each case, the marketers opted to go to court instead of using the self-regulation system put in place by the Council of Better Business Bureaus' National Advertising Division in which brands can submit claims against each other.
The NAD bills its system as less costly and burdensome than going to court. But Goldstein notes that NAD cases will not result in monetary rewards for the challenger if ads are found to be misleading. So "some brands feel they need to go for the bigger guns and the bigger impact of a Lanham Act challenge," she says, referring to the name of the statute governing false advertising lawsuits.
On the podcast, Goldstein also discusses the potential legal pitfalls for subscription-based brands. Marketers like Netflix have popularized the model of paying for services on a month-to-month basis. Even the car business is adopting it.
But brands can get into trouble if they don't share all the purchasing obligations up front. "You have to very clearly tell the consumer that you are in this until you cancel," Goldstein says. And brands must "get consent in a way that indicates the consumer understands what they are signing up for and then you have to give them a really easy way to cancel."
We also chat a bit about how the spectacular failure of the Fyre Festival could have a lasting effect on influencer marketing. Hint: it could lead to more regulations.