False advertising

From ArticleWorld

Advertising is the promotion of goods, services, companies and ideas, usually by an identified sponsor. Marketers see advertising as part of an overall promotional strategy. Other components of the promotional mix include publicity, public relations, personal selling and sales promotion. False advertising is an act of deliberately misleading a potential client about a product, service or a company in general by reporting false or misrepresenting information or data in advertising or other promotional materials.

False advertising

is a type of fraud. By utilizing advertisement with titles such as "Going out of business", "Closing store", "and Liquidation sale “or “Bankruptcy sale" a message of urgency and "dumped" prices is conveyed - where in reality the business has no plans on closing its store or going out of business. Some cities in the U.S now require permits for these types of advertisements to combat the false advertising.By comparing a sale price to a regular price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low. The intent is to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service. Some clothing stores in particular have essentially every item on sale, and some grocery stores advertise "huge savings" over their (unreasonable) regular prices for those using loyalty cards.Utilizing words such as descriptive terms or location terms to increases the perceived value of a poduct. An example would be advertising "Maine Lobsters" when in fact the lobster is from the Pacific Ocean. Buy one; get two free, this type of false advertising concludes that more is better. By increasing the price of a fire cracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line. In other cases the free product is of lower quality than the originally purchased item.The use of labels with statements concerning quality, identity, quantity, manufacture or origin that is misrepresented or false. Another method of false labeling is hiding or destroying a label indicating the product's origin. False Credentials in this type an advertiser may have a false expert testify that a product is genuine and effective, when in fact it is not. An example of this practice is having actors dressed as doctors or wearing lab coats - lulling potential buyers into believing that the product is backed by the faith of knowledgeable experts. Another example of this is scripted witness testimony. An actor is hired to claim that they were satisfied by a product or service, when in fact they never used it. A buyer may interpret the statement to mean that if the other 'customer' was satisfied, then they will be too.A bait and switch is a form of fraud in which the fraudster lures in customers by advertising a good at an unprofitably low price, and then reveals to potential customers that the advertised good is not available but that a substitute good is. The goal of the bait-and-switch is to convince some buyers to purchase the substitute good as a means of avoiding disappointment over not getting the bait, or as a way to recover sunk costs expended to try to obtain the bait. It suggests that the seller will not show the original product or product advertised but instead will demonstrate a more expensive product.

Other advertising practices,

such as the use of loss leaders or the use of sales techniques to steer customers away from low-profit items, depend on many of the same psychological mechanisms as a bait and switch. Likewise, advertising a sale while intending to stock a limited amount of, and thereby sell out, the loss-leading item advertised is legal in the US.False advertising is often a crime. In some countries advertising practices (including "truth in advertising") are regulated by a government authority (FTC in the USA), in others the advertising industry is self-regulated and professional associations combat false advertising.