New Hampshire Department of Justice
New Hampshire Department of Justice - an official New Hampshire Government Web site
Smaller text size Reset text size Larger text size

Consumer Sourcebook

Preface | User's Guide | Table of Contents | Print Sourcebook Adobe Acrobat Reader Symbol

Advertising

We see or hear dozens of advertisements every day on the radio and television, and in newspapers, magazines, billboards, direct mail promotions, and catalogs. The information about the products or services advertised can range from very detailed and factual to very general. Advertisers are subject to both the New Hampshire Consumer Protection Act (CPA) and Federal Trade Commission (FTC) regulations that require advertisements to fairly and accurately represent the goods and services being promoted.

The Law

Both federal and New Hampshire laws prohibit advertising that may be misinterpreted by the average consumer. False, deceptive or misleading advertising not only hurts the consumer who is trying to obtain information prior to a purchase decision, but also injures competing businesses that accurately advertise their products and services. Although the laws describe a number of specific types of deceptive advertising strategies, the language of the laws does not prevent other situations from being considered deceptive or fraudulent.

Misleading Ads

An advertisement may violate the CPA if it is likely to confuse or mislead consumers about the nature, identity, or quality of goods or services. This is especially true if an ad makes a statement that falls into one of the categories the CPA expressly prohibits. Although the CPA is described in detail in the section entitled 1st Word, several of the provisions relevant to advertising are listed here. An advertiser may not:

  • Claim that goods or services are a particular quality or grade when they are not
  • Claim that goods or services are new or original when they are actually used or reconditioned
  • Indicate that goods or services come from a region or place other than where they are actually from
  • Claim that goods or services have characteristics, ingredients, uses, benefits or qualities when they do not
  • Claim that goods or services have sponsorship or approval when they actually do not, or that a person has a certain sponsorship, approval, status, affiliation or connection that he or she actually does not have
  • Pass off goods or services as someone else's
  • Disparage another business's goods or services by false or misleading statements
  • Make false or misleading statements about the existence of, reasons for, or amount of a price reduction

Under the CPA, a consumer need not actually be confused or misled if the ad is found to have the capacity to mislead or deceive. Literally true claims and photographs can be deceptive if the surrounding representations and circumstances make them deceptive. Moreover, subsequent disclosures in the store, on the product label, or in the written contract do not void deceptive claims in ads.

Bait and Switch Ads

Example: StupendoMart advertised that it is selling the "Famous Whoosh! Mach I Vacuum Cleaner for $100, Regular List Price $400!" When Mr. Klean goes to StupendoMart to buy a Whoosh! Mach I, salesperson Larry Zales tells him that a leading consumer magazine gave the machine its lowest rating, and that he hears LOTS of complaints about the Whoosh! Mach I, and besides, the last one in stock was JUST sold. Zales then tells Mr. Klean that StupendoMart just got a shipment of Whoosh! Dustfeasters, and that he can give Mr. Klean an unadvertised special of $399.99 which is a substantial savings off the Dustfeaster's regular list price of $430. Mr. Klean probably has been subjected to a bait and switch tactic. The remedy may be to return the vacuum and cancel the sale.

The CPA prohibits the "advertising of goods or services with intent not to sell them as advertised." This covers what is commonly called "bait and switch" tactics. The FTC defines bait and switch advertising as: "an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised."

Price and Quantity Advertising

The CPA prohibits the "advertising of goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity." Proving to a court that a product was advertised with "intent" not to supply a reasonably expectable public demand can be shown if:

  • The seller knew what its inventory of an item was before it ran an ad for the item, and
  • A reasonable seller would know that an inventory of that size for that item at that price would be too small.

Example: In May, WorldMart advertises the "Famous Yard Horse Lawn & Garden Tractor for the amazing low price of $150." John Clerk will testify that he told Mary Manager that the store had just one such tractor in stock and that it could get no more the day before the ad was sent to the newspaper. Professor Loftus Mentus will testify that, in May, a store like WorldMart can reasonably expect to sell 50 lawn tractors like the one advertised if they are offered for just $150. There is a strong case here that WorldMart "intended" not to supply a "reasonably expectable public demand." The outcome would be different if the words "quantities limited" were used in the ad. You should note also that proving what a "reasonable seller" would know is often a matter of expert opinion, and that the buyer's remedy may not be of great practical significance (such as the forced sale of the tractor at the advertised price).

FTC Rules

The FTC has made rules that apply to advertising which are useful to consumers, lawyers, and courts in analyzing consumers' rights under the CPA. The rules cover many different products, including but not limited to:

  • Closed end credit (for cars, furniture, home improvement loans, etc.)
  • Open end credit (credit cards)
  • Tires
  • Use of the word "free"
  • Cigarettes
  • Pictures shown by television sets
  • Retail "rain checks"

Some of these topics are covered in some detail elsewhere in the Sourcebook. For more information on closed-end credit, refer to Credit: Truth-In-Lending. For information on open-end credit, see Credit Cards. For rain checks, see the Extra Note: Rain Checks box.

The FTC has standards for analyzing whether claims made in an advertisement are "substantiated" (have a reasonable basis in fact) or not. The FTC criteria include:

  • The nature of the product advertised
  • The specificity of the ad's claims
  • The availability of data to substantiate a claim
  • The amount of substantiation that experts think is necessary
  • The benefits of a truthful claim
  • The consequence for the consumer if the claim is false
  • The consumer's reliance on the claim

Advertising Restrictions On Specific Products

Condominium and Land Sales

Condominium developments and subdivisions of land that are subject to the New Hampshire Land Sales Full Disclosure Act, a.k.a. New Hampshire's condominium law, RSA 356-A, must meet certain advertising requirements.

First, the developer must submit a "nonbinding reservation agreement" to the New Hampshire Consumer Protection & Antitrust Bureau for approval. This agreement allows the prospective purchaser of the real estate an unqualified right to cancel his or her transaction with the developer.

  • After submitting the agreement, a developer may advertise its development only if the advertisement carries a disclaimer stating that:
    • the development has not been registered; and
    • the developer may only take nonbinding reservation agreements.
  • Furthermore, a developer who advertises the development in a way that states or implies that it has improvements or amenities (roads, tennis courts, pools and the like) may only do so if:
    • The improvements or amenities are built; or,
    • The developer discloses that the improvements or amenities are not yet built or are only proposed. For more information about condominiums, refer to the section on Condominiums and Timeshares.

Environmental Claims

A group of state attorneys general has issued guidelines for making claims about a product's or a service's impact on the environment (a.k.a. "green advertising"). The guidelines do not have the force of law. Since they have the backing of several state governments and have been revised in light of public comments, they tend to be persuasive to manufacturers and courts. The guidelines cover:

  • Use of some terms including "Environmentally Friendly," "Safe for the Environment," "Recyclable," "Biodegradable," and "Recycled"
  • The distinctions between the environmental impact of the product versus the environmental impact of the packaging alone
  • Use of third party seals of approval (environmental certifications)
  • The need for objective scientific support for environmental claims.

Hearing Aids

The FTC hearing aid rule prohibits misleading, deceptive or untruthful statements in ads for hearing aids. The law specifically prohibits:

  • The use of words like "state-approved"
  • Claims of a scientific breakthrough
  • Claims that a hearing aid will restore hearing
  • Claims that a hearing aid will prevent further hearing loss
  • Claims that a hearing aid is good for all types of hearing loss or for noisy situations

Professional Services

The laws and boards governing the practice of certain professions such as law or medicine often regulate the advertising practices of persons in those professions. Advertising practices of some professions may also be subject to the CPA. For a list of regulated professions and their governing boards, refer to Licensed Professions and Regulated Activities.

Where To Go If You Have A Problem

If your complaint is about a local retailer's advertisement, express your concern to the store manager or customer service department. Mistakes do happen and it is a good policy to assume that the retailer is not trying to cheat or mislead customers. For information on effectively resolving a problem, refer to the section entitled Remedies: Effective Negotiation.

Contact the NH Consumer Protection and Antitrust Bureau.

NH Consumer Protection and Antitrust Bureau
33 Capitol Street
Concord, NH 03301

The Federal Trade Commission has information about advertising in general, and about the advertising of specific products and services that can be accessed through the FTC Web site.

Contact the Better Business Bureau. The BBB actively promotes ethical advertising standards between its members and the greater business community.

Better Business Bureau
25 Hall Street, Suite 102
Concord, NH 03301
603-224-1991

If the advertisement was on television, contact the advertiser and the network or its local affiliate. Your local public library should have addresses and telephone numbers for the networks and advertisers. Ask the librarian for help in locating what you need.

Adobe Acrobat Reader Symbol Adobe Acrobat Reader format. You can download a free reader from Adobe.


New Hampshire Department of Justice | 33 Capitol Street | Concord, NH | 03301
Telephone: 603-271-3658