After years of education, tons of work experience, sweat, blood, and tears, you have created an amazing business-growth package that you want to sell to small business owners in order to help them increase their profits. You are eager to share your hard-earned advice to help others. In your enthusiasm, you make a statement in your advertising that your product is the “best in the business” or “it is guaranteed to increase profits”. After doing so, you start to wonder if these types of statements open you up to any legal issues? If so, how can you protect yourself?
If you have made such a statement in your advertising, it may be considered puffery, a guarantee, or even false advertising.
If you have made a big statement about your product’s excellence that turns out to be false, is it automatically false advertising? Not necessarily! Some statements might be considered “puffery”. Puffery is statement that no reasonable person would believe, and thus you won’t be legally held to it.
While a statement you make may truly only be puffery, that doesn’t mean every customer will always see the difference between puffery and a guarantee. That might lead to you still having to deal with going through the court system, so it is best to avoid puffery to save yourself the trouble.
A guarantee is “a promise to make something good if it has some defect”. A business may choose to give their customers a guarantee or may inadvertently do so when they cross the line between puffery and guarantee. For example, LL Bean says 100% satisfaction guaranteed, which is why they will accept returns of their products at any time for any reason. This is a choice by the company to guarantee their products. On the other hand, if your advertising states “your income will double if you use my product”, you may inadvertently have created a guarantee to your customers for doubled income that you merely meant as puffery.
Puffery vs. Guarantee
The line between puffery and a guarantee may seem thin, but it is important. In general, a guarantee can be measured or quantified in some way while puffery cannot. The more generic the claim, the more likely it will found to be puffery. The more quantifiable the claim, the more likely it will found to be false advertising. For example:
- Puffery: “The best in the business!”
- Guarantee: “Guaranteed to increase your profits by 25%.”
A statement that goes beyond mere puffery may also be found to be false advertising. Under the Lanham Act, the standard for determining whether a statement may be considered “false advertising” is:
- Defendant made false or misleading statements as to his own products (or another’s);
- Actual deception, or at least a tendency to deceive a substantial portion of the intended audience;
- Deception is material in that it is likely to influence purchasing decisions;
- The advertised goods travel in interstate commerce; and
- A likelihood of injury to plaintiff.
So if you say that if any business follows your business-growth method they are guaranteed to double their profits no matter what, and an interstate customer buys your product and does not double their profits, you may possibly be on the hook for false advertising.
How Avoid Puffery, Unintended Guarantees, and False Advertising
The first (and easiest) way to avoid these advertising pitfalls is to be extremely careful about what you say and how you say it. You can describe your product or service adequately and effectively without over exaggerating. Make sure that all of your communications with customers is as clear and honest as possible. This simple step may well save you a big legal headache in the long run.
Beyond initial caution, two additional ways to guard against any claims that a guarantee exists or you used false advertising include:
A disclaimer is a statement that denies something. This can mean denying a certain liability, denying a claim, denying that a certain outcome will occur, etc. It is an easy way to put customers on notice of what they should and can expect from you and your product.
In writing a disclaimer, you must use clear and concise language, making sure to lay out each parties’ expectations, especially what is being guaranteed or not, and any further explanation to avoid deception.
Just as important as the language you use is the placement of the disclaimer. It must be placed where your customers are sure to see it. The best location will depend on your business but might include at the bottom of all correspondence (e.g., letters, e-mail, invoices), on the front page of your website, or in a signed agreement (e.g., contract, estimate).
Whether you utilize disclaimers in other areas of your business or not, a signed agreement is a very safe method of guarding against a puffery or false advertising claim. Simply include a section clearly delineating what each party should expect from the arrangement. This way if there is ever a question down the line, you have it in writing and signed by all parties what was guaranteed or not and no deception occurred.
By including a disclaimer and/or signed agreement spelling out all expectations and guarantees, or lack thereof, you may easily avoid an angry customer seeking compensation for what they took as a guarantee or a false advertising lawsuit.