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Enforcement Overview

The only way to prevent false advertising from cropping up is to enforce the penalties imposed to punish perpetrators. But these penalties differ from the penalties surrounding many other types of fraud

The Federal Trade Commission was established in an effort to have a regulatory organization, the sole purpose of which would be to protect consumers from fraudulent acts. This includes protecting consumers from false advertising by investigating cases of false advertising and prosecuting the perpetrators. The FTC does not pursue such cases with an intent to press criminal charges, but instead it seeks to pursue a civil court case.

Such cases specifically focus on remedying an unjust situation as opposed to punishing the parties involved. This reflects one of the most important qualities of the FTC: its role is to protect consumers, not to punish falsely advertising companies.

The FTC's two primary criteria for determining whether a given case deserves prosecution are (1) whether or not the false advertising was deceptive, and (2) whether or not the false advertising was unfair. The difference between these two cases is that a deceptive piece of false advertising misleads the consumer in a significant way, while the unfair piece of false advertising damages the consumer in a significant way. It is possible for a given instance of false advertising to fall under the purview of both possibilities. To find out more about the FTC and its role in stopping false advertising, follow the link.

Most of the charges involved in a false advertising case are not criminal, as criminal charges are used to prosecute only cases of a significantly more injurious nature than most false advertising cases. The FTC levels charges of false advertising against perpetrators who create advertising that falls into either or both of the FTC's two main categories of false advertising, which are "deceptive" advertising and "unfair" advertising. But these charges are civil, and are most often focused on obtaining a court-enforced injunction against such advertising, without seeking any kind of monetary fine. Civil class action lawsuits represent another type of false advertising lawsuit.

The charges of such a class action lawsuit will be similarly civil, but can often focus significantly more on monetary damages, in order to provide some form of remuneration for deceiving all the plaintiffs of the class action lawsuit. These lawsuits are moderately rare, however, if only because it is difficult to assemble enough such plaintiffs to make such a lawsuit work.

Prevention

The prevention of false advertising relies primarily upon deterrence, as well as upon the FTC's enforcement of its policies against false advertising. The FTC attempts to quickly pounce on and end any instances of false advertising which fall into its purview, and will often make sure that some form of agreement is signed by the perpetrator, ensuring that the perpetrator will commit no further acts of false advertising.

But even more often than this, a given company will sue another company for false advertising, because the defendant makes some false claim about the efficacy of its product, or makes a false claim about the efficacy of the plaintiff's product, or even defames or insults the plaintiff's product or company in some significant way. Companies suing each other for false advertisement stands as one of the primary deterrents to false advertising, as losing such a case is undoubtedly damaging for the defendant.

A losing defendant will likely be required to pay some kind of compensation to the plaintiff, and will also likely at the very least have to retract the entire false ad campaign, costing that company a tremendous amount of money. Furthermore, the very presence of the lawsuit will likely do much to hurt the credibility of the defendant company. To find out more about how the prevention of false advertising is brought about by the deterrence posed by other companies, follow the link.

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