Whether you’re an entrepreneur or work for an advertising agency, chances are you’ve worked really hard to create a product or service that works and now you’re working even harder to market it to the right user. In marketing, you try hard to present the very best about your product, and while you can get away with a certain amount of bragging, what you can’t do is deceive people in any way into buying your product. Here are four high-profile examples of what not to do…
1 – Failure to Disclose Hidden Fees or Surcharges
Capital One paid $210 million in damages a few years back for misrepresenting the credit monitoring and payment protection add-ons they offered to customers. The case also discovered that the company was especially aggressive when marketing to consumers with poor credit scores. More recently, American Express, Bank of America and T-Mobile were penalized for similar situations where they failed to fully disclose sign-up fees, processing charges, and taxes related to customer transactions. Moral of the story? Offering customers products and services while conveniently leaving out the costs associated is not cool. Oh, and it could cost you millions in fines and legal fees!
2 – Misleading Product Labels
Most people can rely on their common sense when making a judgment over whether or not potato chips are a healthy, 100% all-natural food. Unfortunately, that’s not a valid defense in a courtroom setting – a reality Frito-Lay learned the hard way. The popular snack food brand argued that a reasonable consumer would not possibly mistake their label of “Made with All-Natural Ingredients” to mean all that all of the ingredients were natural, to which the court responded that the “all-natural” label was ambiguous and a reasonable consumer could in fact interpret “all-natural” to mean all the ingredients were natural. You can’t argue with that logic.
3 – Misrepresenting a Product as Healthy, Organic or Nutritional
Coca-Cola’s VitaminWater product is perhaps the most-notable case of a brand positioning a food item as healthy while it didn’t offer any real nutritional value. The soft drink company branded the beverage as a health tonic despite the fact that some varieties contained up to 33 grams of sugar (most soft drinks contain anywhere from 30-40g), not to mention dyes and chemicals used for taste and coloring. While Coca-Cola argues that “no consumer could reasonably be misled into thinking VitaminWater is a healthy beverage,” the case is not yet closed. Organizations acting on behalf of consumers have encouraged people to get involved and fight against products like VitaminWater because, well, vitamins are healthy and sugary, chemically-flavored water is not.
4 – Bait & Switch
Everyone loves Costco, mostly because of their free in-store samples, but also because of the quality and quantity of products they offer at wholesale prices. Unfortunately, the luxury brand Michael Kors no longer shares the sentiment. The well-known fashion company recently went after the wholesaler for advertising the brand’s handbags at extremely discounted prices. They argued that not only were the purses not available at the $99 price Costco had advertised, but they weren’t available from Costco at all. Michael Kors accused Costco of the good ol’ bait in switch – including a Michael Kors purse in their advertisement for $99 handbags, and then providing a much less expensive product once the customers actually got into the store. The good news for Costco lovers: the case was dismissed and no samples were withheld in the process.
How do you keep from becoming the next unfortunate business on this list? Check in next week to learn about the specific rules the FTC has put in place to protect consumers and to keep marketers honest. Some are common sense, but some are more tricky – in fact, you could already be breaking a few of these rules and not even know it!