FTC Targets Car Maker–and its Advertising Agency–for Deceptive Demonstration

Recent Happenings in APRM January 2014 The Supreme Court is Set to Label the Pom Wonderful LLC v. Coca Cola Co. Case FTC Targets Car Maker–and its Advertising Agency–for Deceptive Demonstration Self-Driving Vehicles: Full Speed Ahead on New Laws and Regulations California Court Proposes to Assess $6.8 Million Penalty Against Online Discount Retailer For Engaging in Commonly Used Pricing Claims [Crowell & Moring's Retail & Consumer Products Law Observer]

The Federal Trade Commission's efforts to combat privacy issues and scrutinize weight loss product claims have generated substantial buzz as of late. But for anyone thinking the FTC has eased off on traditional advertising issues, its recent settlement with Nissan North America, Inc. and TBWA Worldwide, Inc.should serve as a wake-up call.    

The Nissan Complaint

The FTC brought its complaint against Nissan and its advertising agency in connection with a television commercial depicting a Nissan Frontier pick-up truck scaling a steep sand dune with ease to rescue a stranded dune buggy. The commercial was styled as if someone had recorded the truck's ascent on a mobile phone, and included amazed gasps from onlookers as one might expect to find in a viral "YouTube" video. 

In reality, the truck was dragged to the hill top by cables, and was incapable of pushing the dune buggy over the hill. Additionally, the actual hill was not as steep as it appeared in the commercial. A subtitle at the start of the commercial stated: "Fictionalization. Do not attempt." Nonetheless, the FTC's complaint alleged that the advertisement falsely represented the performance capabilities of the Nissan Frontier truck.

If Your Company Is "Going Viral," Disclaimers Aren't A Cure-All

The FTC brought the complaint against Nissan and its agency even though the ad contained a disclaimer. Nissan's commercial is one of a recent wave of advertisements attempting to recreate the appearance (and shock value) of a viral video. This settlement should cause advertisers to pause before assuming that a disclaimer will cleanse deception from a fake demonstration or contrived "viral" video. By pursuing an "old fashioned" deceptive advertising claim, the FTC is affirming that normal substantiation and deception principles apply, no matter how cutting-edge the advertising campaign.

Ad Agencies Are At Risk

Notably, the FTC took action against the agency that created the ad, in addition to Nissan itself. This was an unusual move by the FTC, potentially spurred by particular evidence in this case. The complaint against TBWA notes that "[r]espondent knew or should have known that the representation . . . was, and is, false or misleading." The very nature of this kind of advertisement, where special effects were used to manipulate the image to appear like a real viral video of the product in action, might implicate the involvement of an ad agency more than a traditional advertisement where true product performance capabilities might only be known to the product maker.

As part of the settlement, TBWA agreed to avoid misrepresenting pick-up truck qualities or features in advertisements through the depiction of tests, experiments or demonstrations for 20 years. FTC's order has the potential to seriously impact TBWA's future in automotive commercials. When choosing between agencies, auto makers might be wary of engaging TBWA because it is likely to be under additional scrutiny, or because TBWA may be hesitant to create aggressive commercials out of fear of more serious FTC reprisal. 

Cutting edge advertising can attract attention, but advertisers and their agencies who opt for too much drama, without adequate disclosure, may find themselves attracting the FTC's attention.