Misleading advertising refers to any false or misleading representation that is made to the public by a person in the course of business. The representation may be about the nature, character or performance of a product, such as size, type of contents or weight. It also includes warranties, statements, or guarantees that are not based on adequate and proper tests. Misleading advertising is prohibited under Section 37 of the Act, which requires that advertisements be clear and unambiguous.
All methods of making representations, including printed or broadcast advertisements, written or oral representations, audio-visual promotions and illustrations, are covered by the prohibition. The Act refers to representations made “to the public.” A representation to just one person can constitute a representation to the public. It should also be noted that it is not necessary to prove that any person was in fact misled; all that is required is that the representation is capable of misleading.
The Act proscribes “misleading in a material respect.” “Material” does not refer to the value of the product to the purchaser but, rather, the degree to which the purchaser is affected by the representation in deciding whether to purchase the product. A representation is considered to be material if it leads a person to a course of conduct that, on the basis of the representation, he or she believes to be advantageous.
A clear example of misleading advertising is an advertisement which describes a pair of shoes which was “Made in Taiwan” as “English Handmade”. Through the use of an expression associated with a long history of quality shoes, the merchant had made a misrepresentation as to the type of shoe that was being sold. Another example of misleading advertising occurs when a merchant makes a promise to a consumer to deliver an item in a certain number of days and does not fulfil this promise.
Failure to disclose information which is material to the consumer’s purchasing decision will also amount to misleading advertising. A merchant’s refund policy, for example, is deemed to be material information and therefore a merchant who fails to disclose his refund policy before a consumer makes his purchase is in breach of Section 37(1)(a) of the Act.
The FTC recommends therefore, that all merchants display their refund policy prominently in their business places. It is not enough that the said policy might be endorsed on the receipt that customer receives, because by the time the customer receives the receipt, the purchase would have already been completed.