Deceptive Advertising and Consumer Fraud?

Deceptive Advertising & Misleading Advertising and The Consumer Fraud Act


The basic concept underlying The Consumer Fraud Act pertaining to misleading or deceptive advertisements is that it attempts to prohibit advertising that is either deceptive or misleading or that has the capacity to mislead. The New Jersey Consumer Fraud Act prohibits advertisements that might be true but have the capacity to mislead. There are also prohibitions against specific types of advertising statements or certain phrases. THE PRIMARY ISSUE IS WHETHER THERE IS THE CAPACITY TO MISLEAD. THE CONSUMER FRAUD ACT ATTEMPTS TO REDUCE BUSINESSES' ATTEMPTS TO MISLEAD AND DECEIVE. THE ACT ATTEMPTS TO LEVEL THE PLAYING FIELD SOMEWHAT. IT IS REMEDIAL LEGISLATION FOR THE CONSUMER'S BENEFIT.

Another basic concept of the prohibitions of deceptive or misleading advertising is that consumers can potentially waste much of their time chasing down false or misleading advertisements, as well as spending money on those periodicals or publications in which those advertisements are contained. Both the advertisers and the state want credibility and the advertisements produced in this media. As an example, there are certain terms or phrases that the state deems to be inherently misleading such as “dealer cost,” “floor plan,” “inventory price,” “factory invoice,” “wholesale” or “at no profit.” Other terms, such as “guaranteed discount,” “guaranteed lowest prices” or “we will beat your best deal” are also not permitted.

Examples of advertisements that would not be proper:

We are having a sale and all the prices are listed at “dealer cost”

There are extensive regulations prohibiting deceptive advertising. These apply specifically to dealerships and other businesses. The following apply to car sales only. If these are used the dealer has violated the Consumer Fraud Act if there has been an ascertainable loss.

Unlawful AND deceptive advertising practices

  1. Any media used to make an advertisement misleading or hide the advertisement;

  2. A listing of prices that does not indicate that there are deductions in the price for items such as rebates;

  3. All disclaimers, time limits and modifiers must be clearly stated and not hidden in some footnote smaller than ten-point type;

  4. Advertising that items are free when the purchase price is increased to offset the "free" item;

  5. Dealer must disclose if he/she knew or should have been aware if the car had more than $1,000 in repairs;

  6. Cannot use the terms "Public Notice," "Public Sale," or "Liquidation" unless permitted by the Court;

  7. Cannot use terms which imply that the advertiser has a special relationship with the manufacturer, such as "Authorized Sale," "Authorized Distribution Center Factory Outlet," or "Factory Authorized Sale";

  8. Other terms that are considered misleading such as "dealer's cost," "floor plan," "inventory price," "factory invoice," "issue," "wholesale" or "at no profit";

  9. Cannot use "guaranteed discount," "guaranteed lowest prices," or the advertiser clearly discloses the manner in which the guarantee will be performed in a footnote;

  10. The use of the statement "we will beat your best deal," or similar term or phrase, if a consumer must produce a contract that the consumer has signed with another dealer or lessor in order to receive the better deal;

  11. Cannot use the statements "lowest prices," "lower prices than anyone else" or "our lowest prices of the year," unless the dealer can prove they are true.

2005 Attorney General suit for false advertising against Ramsey Auto Group