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responsible advertising: the fundamentals

Most countries around the world have safeguards in place to check misleading or deceptive advertisements
Charles Schofield

Advertising is one of the fundamentals of a market economy. For sellers, it provides the opportunity to put their products and services out into the market. Buyers can get information about available alternatives or be notified of special offers.

The spread of information, which is at the heart of advertising, can play an important role in the economy. The premise of an efficient market economy is that when it comes to purchasing something, buyers have information about each alternative, including prices and features, readily available. In those circumstances, it is easy for a buyer to seek out the best option and not just settle for a limited range.

Problems can occur where information in advertisements is distorted or even fabricated, so that it becomes misinformation. If this is prevalent it will reward unfair conduct and encourage deceitful practices and over the long term erode consumer confidence. For the advertising industry, deceptive and misleading practices can undermine the consumer trust and goodwill that makes it worthwhile for businesses to advertise in the first place.

The legal dimension
In most countries around the world it is an offence to run a misleading or deceptive ad. In Oman, there are specific provisions of the Commercial Code (Royal Decree 55 of 1990) that makes it illegal for anyone who resorts to deception and fraud to sell products. Those provisions may be enforced by a buyer who suffers loss due to deception, or by the Consumer Affairs Department of the Ministry of Commerce and Industry.

In some countries, the advertising industry has taken steps to regulate itself. This may take the form of an industry body formed to adjudicate on advertising complaints.

What is a deceptive advertisement? In some cases it is clear that an advertisement is misleading. It may contain untrue statements that overstate the benefits of a product or service. Classic offenders are advertisements for weight loss products. All of us have seen adverti-sements for diet pills or new gadgets that claim fantastic benefits within a short period without any exercise. It is not uncommon to find advertisements for these types of products forming the bulk of consumer complaints.

In some cases, the offending assertion may not be stated clearly in the advertisement, but may be implicit in other claims. For example, a statement that ‘Acme mouthwash prevents colds’ is an express claim. The same claim can be implied in the following statement: ‘Acme mouthwash kills the germs that cause colds’. Although the second statement does not expressly state that the product prevents colds, it is reasonable to infer the same.

Making a case
In such cases, one has to consider what a sensible consumer will infer from the advertisement. Will he be misled by it? An example which demonstrates some of the issues in making this assessment arises where a stat-ement is clearly untrue but it is not intended to be believed by consumers. In such cases, the context in which the statement is made becomes important.

For example, advertisements for a well known soft drink claim that the drink ‘gives you wings’. This is clearly not correct. However, it is also not misleading. The context in which the claim is made is humourous, as illustrated by the pictures used in those advertisements. The reasonable consumer would not take the claim literally and it is unlikely that anyone would buy the product because they wanted to grow wings.

This example also serves to illustrate another aspect of whether an ad is misleading. There needs to be a materiality to the misleading nature of the statement. If a false claim is unlik-ely to cause a person to buy a product or service, then the advertisement itself is unlikely to be considered deceptive or misleading.

Checklist for advertisers
Businesses that regularly run ads should have a process in place for approving the content of their advertisements. As a part of that process, ads should be checked in detail so that all statements of fact are identified and verified.

If a claim is made about a product or service, the business should ensure that it has a reasonable basis for making the claim. If the claim is technical in nature, for example, then it should be supported by proper research.

Ensuring that there is a reasonable basis for each statement of fact and keeping a record of that assessment will reduce the risk of the company being fined for misleading and deceptive advertising. It will also stand the business in good stead if the advertisement is challenged.

Advertisements which should be treated with extra care are those which make claims related to health or safety — where the consequences of getting it wrong is significant — or contain claims that are technical in nature that consumers will have difficulties assessing. Businesses should ensure at a minimum that those ads are carefully reviewed and the basis for each statement of claim verified.

Since avertising is a very important part of modern market economy, it must be done with some degree of credibility or there can be unwelcome impacts on both consumers and advertisers alike. One aspect of ensuring credibility is by making sure that advertisements are not routinely misleading or deceptive.