Originally published 10-12-2015. Updated 12-03-2020.
“Lose an average of 30 pounds without dieting or exercise!” While most reasonable people may know that claims like this are bogus, and there is no “magic pill” to battle the bulge, many Americans fall for these deceptive and unsubstantiated claims day after day making it the #4 no-no in our 12-part series on causes of advertising failure.
In this article we’re going to outline reasons why making unsubstantiated claims is false advertising which is not only illegal, it’s harmful to your credibility, creates a bad reputation for your brand, and leads to a significant loss in customer loyalty.
Making a claim that your service or product does things that cannot be backed up by fact, is a surefire way of getting caught in a web of lies. The fact of the matter is, it’s dishonest to make false claims, and will only temporarily deceive your customers. They’ll find out first hand if your product or service actually promises what it preaches.
Moreover, making false claims can land you in hot water. In fact, in New York, 19 companies were forced to pay $350,000 in penalties for misleading practices. Besides exposing your brand to potential fines, perhaps more detrimental is that you’ve lost a great deal of credibility in the eyes of your customers who may turn around and share their negative experience with your product all over social media and review sites.
This backlash creates a bad reputation for your brand, ultimately affecting your bottom line. Take for example the recent scandal involving the world’s largest automaker, Volkswagen, and their rigging of diesel engine emission tests in America and Europe.
The car giant was found to have falsified U.S. pollution tests on 500,000 diesel engine vehicles by installing "defeat devices," software to make the cars appear cleaner than they were, a serious violation of the Clean Air Act. In actuality, these “eco-friendly cars” would pump out as much as 40 times the allowed level of nitrogen oxides, making them one of the dirtiest cars on the road.
Volkswagen’s decision to make these unsubstantiated claims has led to a recall on 500,000 vehicles, potential criminal investigations, their CEO resigning, a 30% plummet in stock, and hundreds if not thousands of individual lawsuits. The company has already set aside $7.3 billion in preparation for accrued fines.
Flagrant corporate misbehavior captures headlines. And if you turn on the news you’re bound to hear updates on this scandal every hour, on the hour. Volkswagen’s name will now join the ranks of infamous companies like Enron, and BP who’ve made major ethical mistakes and are now paying the price.
Not only does this scheme massively affect Volkswagen’s bottom line (in theory, U.S. authorities could impose up to $18 billion in penalties for breaching the emission limits), it smears their reputation. Many customers who have these cars, and have been loyal customers are now boycotting their brand.
Imagine bringing your sick child to an advertised “world class” pediatrician. The office building and waiting room seems seedy, and during the consultation you start to question his medical education. Upon arriving home, you google his name to find out he’s been sued before for malpractice, and never graduated from med school. You’re now angry and frightened that you so easily exposed your daughter to his practice. While things like this are uncommon, they do happen.
It’s important and legally necessary to be able to back up your claims with factual proof. Under Section 5 of the Federal Trade Commission Act, the modern doctrine of advertising substantiation is based on the theory that unsubstantiated advertising is deceptive. It states:
“An advertisement is deceptive if it contains a representation or omission of fact that islikely to mislead a consumer acting reasonably under the circumstances, and thatrepresentation or omission is material to a consumer’s purchasing decision…”
In a 2007 civil complaint: United States v. Bayer Corporation, it was alleged that Bayer marketed their One-A-Day WeightSmart multivitamin and dietary supplement with unsubstantiated claims that, among other things, One-A-Day WeightSmart helped prevent some of the weight gain associated with a decline in metabolism in users over the age of 30. As a penalty, Bayer agreed to pay a $3.2 million civil penalty and agreed that it would no longer make unsubstantiated claims regarding the benefits, performance, efficacy, safety or side effects of any dietary supplement, multivitamin or weight-control product.
The court order prohibits Bayer from making any claim about the performance of any dietary supplement, multivitamin or weight-control product unless, Bayer has “competent and reliable scientific evidence” to support such claims. “Bayer is required to abide by a longstanding court order to back up claims it makes about the products it sells,” remarked Assistant Attorney General Stuart F. Delery for the department’s Civil Division. “The Department of Justice will not tolerate companies that seek to gain an unfair advantage over their competitors by promoting to consumers unsubstantiated claims about the health benefits of their products.”
Reputation management is critical to the success of your brand. Therefore making erroneous claims will eventually come back to bite you in the bottom line. It’s important to create content that is factual and reliable so that your potential customers know what they are buying, and get exactly what they pay for.
Content creation is the key to brand management. A great way to share more information about your product or service is to point customers to your website content or blogs where they can read up more on your brand. Not only will this drive traffic to your website, increasing your SEO rankings, you’ve provided information about your product or service, and now have an educated customer able to make an intelligent purchasing decision. For some help with this, check out three content creation steps for a winning reputation.
The moral of the story is: be able (and prepared) to back up your claims; it’s one of the biggest, and most widely referenced advertising best practices. In the long run, creating false allegations will only negatively affect your ROI, your brand’s reputation, customer loyalty, and could land you with some serious fines from Uncle Sam. As a smart business owner or manager, remember the golden rule: honesty is the best policy.
The 12 Causes of Advertising Failure courtesy of Roy H. Williams , author of The Wizard of Ads & Secret Formulas of the Wizard of Ads.