Correcting Corrective Advertising: A Tool to Address Harm Caused by Dishonest Advertisers

Abstract

Businesses have incentives to lie to us—everyday consumers. By making their offerings appear more attractive than they actually are, false advertisers are able to gain an unfair advantage in the marketplace at the expense of consumers and competitors. Although legal and reputational risks accompany the benefits of engaging in such behavior, these risks are not as detrimental as one might intuit.

When the government takes action for false advertising, the false advertiser is likely to receive little punishment—often, no more than an order to stop making that false claim and to pay a penalty. In other words, the business must stop lying but does not need to tell its customers that they were lied to. Without more, in the usual case, a business can continue profiting from consumers whose purchasing decisions remain based on the discontinued claim. Accordingly, businesses considering false advertising have little to worry about on the “risk” side of the equation and a lot to gain on the “benefit” side.

Recognizing that ending a false claim does not end its harm, the Federal Trade Commission (FTC) has innovated remedies beyond simple fines and cease and desists. This Note focuses on the corrective advertising remedy, arguing that it has the potential to be a valuable consumer protection tool to correct harm and deter bad behavior. However, because the remedy is used rarely and unpredictably, its efficacy is compromised.

This Note examines the remedy’s history and the reasons behind its infrequent use. Because administrative efficiency concerns currently limit the remedy’s efficacy, the Note proposes strategies to make the remedy more efficient. Especially in light of AMG Capital Management v. FTC, a 2021 Supreme Court decision that severely impacts the FTC’s ability to obtain traditionally pursued equitable monetary relief for consumers, the FTC stands to benefit from refining its injunctive relief toolkit, including corrective advertising.

Keywords: Consumer Protection, Consumer Protection Law, Consumer Law, Corrective Advertising, Advertising, Marketing, Administrative Law, Federal Trade Commission, FTC, Law Review, Behavioral Economics