Facts: L’Oreal USA was charged by the FTC for falsely advertising their Genefique and Youth Code product lines. L’Oreal said that their products worked down to the genetic level and implied that their products directly impacted customer’s genetics. L’Oreal had no scientific data to back these claims and had been using them in advertising their products for over three years. L’Oreal made such statements that Genefique was clinically proven “to boost genes’ activity,” which was not backed by studies.
Issue: L’Oreal was lying to their customers about the effectiveness of their products. This could be considered deceptive advertising since L’Oreal is making their product out to be something it is not, which may cause financial or physical harm to their customers. L’Oreal had scientific backing to make these claims and made broad stroke statements that greatly increased the perceived quality of their product.
Rule: The rule here focuses on deceptive advertising as defined and reviewed by the Federal Trade Commission. In order to prove deceptive advertising the FTC must review three things: 1) Is the ad truthful? 2) Do they have evidence to back up claims? 3) Is the ad unfair or likely to cause harm to a customer? The FTC reviewed these stipulations and decided to charge L’Oreal.
Application: This case seems to be an obvious example of false advertising. The claims by L’Oreal cannot be seen as puffing as they are not vague as they specifically reference genetic changes. Also these exaggerations would not seem obvious to customers, as it would make the product seem of better quality. In terms of the three items to prove deceptive advertising, the ad was clearly false and there was no scientific studies that backed L’Oreal’s claims. Also, the ad was unfair because it influenced customers to buy their product for genetic solutions to their skin products, which was not the case. Instead of looking for actual genetic solutions, customers were tricked into using L’Oreal’s product.
Conclusion: L’Oreal settled with the FTC and agreed that they would not make any more claims about genetics with their products unless backed by scientific studies. Also, L’Oreal agreed to not misrepresent any scientific data.
Facts: Lumosity Labs, the company that is most known for the website Lumosity, was making false claims about the power of Lumosity’s brain training program. Lumos claimed that Lumosity could not only help in daily activities throughout the day but also claimed it could help in the ability to ward off mental deterioration and current mental conditions. Lumos claimed to have scientific evidence that Lumosity could have these effects. They made these claims on many websites and television commercials. They also used GoogleAdWords like memory, cognition, and Alzheimer’s disease to drive customers to the Lumosity website. Lumos also had people on commercials that were given prizes without stating that these were prizewinners on the commercials.
Issue: Lumos Labs was lying to its customers when they made claims that Lumosity could help their daily life in terms of work and could prevent/help mental deterioration. Lumos deceived customers with deceptive advertising, including TV ads and website ads. Lumos also made Lumosity out to being a possible solution to mental deterioration by saying science backed their claims and by selecting Google key words that were connected to mental deterioration.
Rule: The rule here is the same as the one in the L’Oreal case and the FTC must prove all three stipulations of deceptive advertising. In this case FTC did find Lumos guilty of deceptive advertising.
Application: This case again was an obvious case of false advertising. Lumos made claims about Lumosity’s ability to prevent mental deterioration without any scientific backing. In terms of the three conditions of false advertising, Lumosity was guilty of all three. First, their claims about Lumosity’s ability to prevent mental deterioration and to help current mental struggles were not true. Second, there was no scientific evidence to back up these claims. Finally, the ads could clearly cause customers harm because customers could be tricked into using Lumosity instead of getting actual help for possible mental deterioration or future mental disabilities. Lumos went out of its way in advertising and in their use of Google keywords to deceive customers.
Conclusion: Lumos agreed to a settlement with the FTC for deceptive advertising. They were forced to pay $2 million to the FTC and had to inform auto-renew customers about a fast option to cancel their subscription. Also, they could no longer make similar claims about Lumosity without scientific evidence.
Facts: DeVry University claimed that their graduates who were actively seeking jobs in their field were employed within six months of graduation. They statistics proved this was not true and DeVry was falsifying this statistic by using people who were not working in their field. Also, DeVry claimed that their graduates had a 15% higher income, one year after graduation, than all bachelor’s degree graduates from all colleges & universities. This also had no statistical backing and was a false claim by DeVry. The FTC charged Devry with deceptive advertising.
Issue: DeVry knowingly falsified statistics that made their graduate seem more successful than other colleges. DeVry knowingly included individuals in their stats that were not part of the group. DeVry also lied about the potential income for DeVry graduates. This deception may have led people to enroll in DeVry hoping for better results and a better job expectation. This may have forced individuals to take on debt from a college that did not perform as well as it advertised. The FTC claims that DeVry is guilty of deceptive advertising and they owe debt to their graduates in debt.
Rule: This case must follow the same three standards of proving deceptive advertising as the previous two cases.
Application: DeVry knowingly lied to graduates in order to get higher attendance rates. By saying that they were more successful in getting graduates jobs immediately than they actually were they gave false expectations to enrollees. This caused many enrollees to take on student debt that they most likely would not have openly taken in on otherwise. By claiming that they were going to make more than they actually were when they graduated, they convinced enrollees that the student risk was less of a risk than it actually was. In terms of the three standards of deceptive advertising: 1) these statements were not true 2) they were not supported based upon the statistics on their graduates 3) they caused harm to students by having them take on debts that they should not have.
Conclusion: DeVry agreed to a settlement with the FTC for $100 million. Most of this money was for debt relief for students who were enrolled at DeVry. The rest will be distributed to students harmed by DeVry’s deceptive advertising.