False Advertising in New York
Advertising and marketing are major components when it comes to the decision-making and buying choices of consumers. Under New York State law, citizens are entitled to receive accurate information about the products and services that they are choosing to invest in.
For this reason, generating false advertisements impede on the rights of consumers to make informed purchasing decisions. False advertising is considered to be a crime under New York State law. So you’ve been arrested for false advertising or expect to be investigated for false advertising in the near future: what can you do?
Seek legal advice early on. Under New York State law, false advertising and related offenses are considered to be misdemeanors or violations. The penalties for false advertising can involve the imposition of harsh penalties on the offender, and a knowledgeable lawyer is necessary in order to protect yourself.
False Advertising Defined
False advertising is included in the section of the penal code relating to fraud. Penal Law Article 190.20 outlines false advertising in New York State. False advertising is a class A misdemeanor and is prosecuted in relation to the New York Consolidated Laws, General Business Law § 350.
The charge of false advertising is applied to cases in which an individual makes false or misleading statements in order to promote the sale of a product or service.
In order to be guilty of false advertising, the individual must make these false or misleading statements. The false or misleading statements must negatively affect a consumer or consumers, and the statements must have a negative effect that is substantial in nature. This includes:
- The intentional mislabeling of goods or the inaccurate depiction of services. When an advertisement states a claim that is not supported by fact, or the advertiser does not intend to follow through on their promises, then they are guilty of false advertising under New York Penal Law.
- Sellers are able to exaggerate the truth, but not to make outright false or dishonest claims. Many businesses make use of hyperboles to promote their products or services (e.g., “the best,” “most popular”), but are not outright dishonest. These hyperbolized claims are usually harmless and subjective in nature.
- An outright dishonest claim that would constitute false advertising usually relates to something that is objectively measurable like the label “scientifically proven” or a specific numerical price. Additionally, dishonesty by omission is considered to be a crime punishable under New York State Penal Laws relating to false advertising.
- Failing to include pertinent information in an advertisement for a product that results in a disservice to consumers is still considered to be harmful, and legally constitutes false advertising.
The Significant Factors to the Crime of False Advertising
Language and word choice are often significant factors when it comes to the crime of false advertising. Many crimes of false advertising are the result of inaccurate descriptors or labels.
For instance, when it comes to products or services that are intended to treat, mitigate, or otherwise address the presence of an illness or ailment, the term “doctor” can only be used when someone affiliated with the product is, in fact, a licensed medical professional in their respective field.
If an individual utilizes the title of “doctor” in their advertising campaign, but the product is not actually associated with a licensed medical professional, then the seller is guilty of false advertising.
The Elements of False Advertising
In a system in which you are innocent until proven guilty, the burden of proving that a particular crime occurred falls on the prosecution. Let’s delve a little bit more deeply into the elements of false advertising in order to better understand its meaning and implications.
Under article §190.20, for a defendant to be convicted of false advertising in a criminal trial for false advertising, the prosecution must prove that:
- a false, misleading, or untrue advertisement was posted by the seller
- a consumer saw the advertisement in question
- the consumer purchased a product, good, or service because of the false advertisement
- the consumer was negatively impacted by the falsity of the advertisement
What if the seller was unaware that they were committing the crime of false advertising?
Furthermore, depending on the circumstance, it must also be proven that the accused knowingly provided false statements regarding the product or service, hoping to benefit monetarily from the deception.
In this case, the penalties are much more severe than they might have been if the seller was unaware that what they were providing did not match up with what they had been promoting.
- Suppose Jonathon is starting a business. He has a product (a cell phone case), but the product isn’t selling the way that he believed that it would. The costs are beginning to outweigh the profit, and Jonathon isn’t sure what to do. He decides that the marketing for the cell phone case is the problem, and adds a new claim to the case’s advertising campaign:
Jonathon begins to claim that his cell phone case is waterproof and that it will protect consumers’ cell phones underwater. Sales start to rise, and Jonathan’s business is booming. But the problem is that this statement isn’t true: the cases are not waterproof.
When Jennifer, a first-time customer, buys the cell phone case, she expects it to protect her phone while she is out swimming at the beach. It fails to do so, and her $400 cell phone breaks. Jonathan can then be charged with false advertising.
What factors will affect his sentencing?
If Jonathan genuinely believed that the cell phone cases that he sold were waterproof and had a fair reason to think so, he would have an affirmative defense against the charge of false advertising. The charge of false advertising largely relates to the intention to mislead customers, thereby impeding their right to a knowledgeable and fair transaction.
In this case, Jonathan might be subject to a fine approximately equal to the cost of damages ($400) plus the cell phone case, or up to $500. But, if Jonathan knowingly and willingly promoted the cell phone cases that he sold utilizing a false statement, aware that they were not actually waterproof, he is guilty of false advertising.
In this case, Jonathan harmed the trust between consumer and seller and engaged in an act that violated the laws of New York State, which outline fair business practices. He can be fined for his offense based on the degree of harm that it has caused and its malicious nature. In this case, Jonathan can be fined for up to three times the actual cost of damages, with the maximum being $10,000.
What You Can Be Charged With: False Advertising and Related Crimes
Some of the penalties that deceptive sellers or advertisers are subject to under New York State General Business Laws include:
- up to $5,000 per charge of false advertising;
- an injunction, or court order to perform or refrain from action;
- the actual cost of damages or $500, whichever is greater;
- if the advertiser acted willfully or knowingly in their crime, up to three times the amount of actual cost of damages, upwards of $10,000; or
- the cost of attorney’s fees of the person seeking damages (fee-shifting)
Penal Law §145.30 Unlawfully Posting Advertisements
The New York Statutes most directly related to false advertising is Penal Law§145.30 Unlawfully Posting Advertisements. This statute applies to cases when an individual paints, posts, or otherwise affixes an advertisement or poster to a piece of property that does not belong to them, including both residential and commercial spaces.
The unlawful posting of advertisements is a violation under New York State Law and can result in a fine.
Important Cases That Define False Advertising in New York State
People v. Purdue Pharmacy
In 2019, New York State became the latest state to sue Purdue Pharmacy, one of the largest manufacturers of opioids in the country. Purdue Pharmacy, and the Sackler family behind the company name, are accused of utilizing deceptive business practices and advertisements to mislead the public about the dangers of opioids like OxyContin, thereby lending to the present opioid epidemic that New York currently faces.
In addition, they are accused of willful misconduct, as they failed to report or investigate numerous red flags relating to the distribution of their pharmaceuticals in New York State.
According to a press release from New York Attorney General’s Office released on March 28thof 2019, “manufacturers pushed claims that opioids could improve the quality of life and cognitive functioning, promoted false statements about the non-addictive nature of these drugs, [and] masked signs of addiction…”, lending to the growing abuse rate in the state.
Why is this significant?
This case is significant because it showcases the importance of intention in false advertising cases within the realm of New York Penal Law, and the extent to which the degree of harm is considered.
Purdue Pharmacy is being charged with false advertising because of the discrepancy between the claims that they represented to the public regarding the safety of opioid products, and the serious, “material” harm being done to the citizens of New York State who trusted that their business practices were honest and fair.
The opioid addiction epidemic is a public health crisis that has claimed the lives of thousands of people. This case is ongoing and follows the lead of cases raised by states like California and Massachusetts against the pharmaceutical company.
People v. Walmart
In 2014, Walmart promoted a Father’s Day sale that features a 12-pack of Coca-Cola products for a total price of $3.00. But, according to a press release from the office of the Attorney General, when customers went to actually buy the products, they were charged $3.50 for the same item that had been advertised at $3.00.
In certain cases, Walmart staff within New York were actually found to have been making untrue statements to inquiring customers, citing a non-existent “sugar tax” or telling them that the advertisement in question did not apply to Walmart stores within the state of New York specifically.
Ultimately, Walmart agreed to settle the case and was fined $66,000 in penalties and damages for overcharging customers in the 117 stores across New York State.
Why is this significant?
This case is important because it demonstrates a case in which customers came across a misleading advertisement, and made the decision to purchase a product, good, or service based on the false information when they might not have done so if they had known the truth.
This tactic is often referred to as “bait and switch” approach, which means that a consumer was lured in with the promise of one thing, and then offered another upon purchase.
Furthermore, not only did the larger company of Walmart engage in business practices that were unethical and against the codes outlined in the general business laws, but Walmart employees were complicit in this crime, intentionally misleading customers with outright untruths.
Possible Defenses to a False Advertising Charge
The charge of false advertising rests on the tenet that the advertiser misled consumers in order to elicit financial gain, either knowingly or unknowingly. The key component is the intention to commit the crime.
Therefore, in the case of false advertising, the most viable defense is usually that the false or misleading information was provided without the knowledge or intent on the part of the accused. In other words, the falsity must have been accidental in order to lessen the penalties or punishments associated with the crime.
How to prove that a seller is guilty of false advertising?
In order to successfully prove that a seller is guilty of false advertising, the complainant has to show that the advertising in question was untrue or misleading; that the falsity was “material”, which suggests that the seller made these false statements about an important matter; that the complainant believed in the claim made in the false advertisement; and that the complainant was adversely affected by the advertisement.
In this way, the burden of proof is on the prosecution to show that the misleading or false claim caused the complainant to buy the product or service, or that they were charged more than they should have been charged according to the advertised price.
The Test of the “Reasonable Consumer”
Additionally, false advertising claims are often put to the test of the “reasonable consumer.” When considering a claim of false advertising, the parties involved must consider whether or not an objectively “reasonable consumer” could be misled by the seller’s claim.
For instance, the claim that Starbucks drinks were being falsely advertised due to the ice-to-drink ratio was dismissed in court because a “reasonable consumer” would readily surmise that asking for less ice in the drink would result in more liquid being served.
Who investigates False Advertising in New York State?
In New York State, false advertising cases are investigated by the office of the New York Attorney General. The attorney general is the head of the Department of Law of New York and acts on the state’s behalf to prosecute a wide range of crimes.
According to the federal Freedom of Information Act, the complaints that have been filed against a business are freely and readily accessible to the public through the office of the New York Attorney General.
In order to view copies of the complaints that buyers or consumers have filed against a given business, an individual can send a Freedom of Information request to their office, located in Albany, New York.
What should additional considerations be made if you are facing a false advertising charge?
False advertising in New York State is defined in relation to federal statutes.The Truth In Lending Act (TILA), passed in 1968 is a United States federal law that was implemented in order to protect consumers and their right to make informed purchases by requiring disclosures about the true and factual cost of credit, products, and services.
Additionally, the Truth In Lending Act necessitates that consumers be made aware of true and factual costs in a way that they can easily understand. This statute is meant to regulate industry practices through the enaction of a nationwide standard of disclosure.
Why you need a lawyer if you’re facing false advertising charges?
If you are charged with false advertising, or even learn you are being investigated for possible participation in the act of false advertising, seek legal assistance early on. False advertising is a crime.
The price to pay for false advertising can be hefty, and you’ll want to have a legal team that understands the intricacies of the charges that you’re facing on your side. As mentioned, depending on the circumstances, you can be charged up to $10,000 in penalties. The offence of false advertising is multifaceted. It requires lawyers knowledgeable about:
- Possible defenses against false advertising;
- What conditions affect the potential penalties for false advertising;
- How false advertising is investigated in New York State; and
- How investigators may question you during an investigation surrounding a false advertising case
Lawyers can assist you in making statements. Choosing the right defense is imperative to tackling the situation properly from the onset of an investigation. You will need legal counsel that has defended others charged with false advertising to defend you. Your legal counsel will be able to:
- Analyze your specific situation to determine if you have been properly charged with the offence of false advertising;
- Develop the best possible defense to the charges, based on their experience in other cases and their understanding of your particular situation;
- Advocate forcefully on your behalf in all aspects of your defense.
Call us for help right away. We can help connect you with a criminal attorney in your area with experience in cases involving false advertising.