False Advertising and Misleading Ads in Competing Businesses
Engaging in advertising that misleads or is likely to mislead other traders is a criminal offence. For those businesses that are facing complaints or subject to regulatory scrutiny, it is important to address these matters promptly with extreme care. Publishing advertising that overstates a products characteristics, condition or nature is prohibited.
Any business that engages in commercial marketing whether through brochures, sales emails, flyers, social media, or internet comparison sites must adhere to the Business Protection from Misleading Marketing Regulations 2008 (‘the Regulations’), which were introduced alongside the Protection from Unfair Trading Regulations 2008. Together, these regulations regulate most aspects of UK advertising law.
The Regulations protect businesses, particularly those in retail, advertising, and marketing, by ensuring that any claims made are accurate, clear, and fair. They prohibit advertising that misleads traders as well as comparative advertising that does not comply with specific conditions.
John Veale of KANGS outlines the nature of the Regulations and the involvement of investigating authorities such as Trading Standards.
The Relevant Law
Business Protection from Misleading Marketing Regulations 2008 provide as follows:
- ‘Advertising’ means any form of representation which is made in connection with a trade, business, craft or profession in order to promote the supply or transfer of a product.
- ‘Comparative advertising’ means advertising which in any way, either explicitly or by implication, identifies a competitor or a product offered by a competitor.
When does advertising become misleading?
Section 3(1) of The Business Protection from Misleading Marketing 2008 states that advertising is misleading if:
- in any way, including its presentation, deceives or is likely to deceive the traders to whom it is addressed or whom it reaches; and by reason of its deceptive nature, is likely to affect their economic behaviour; or
- for those reasons, injures or is likely to injure a competitor.
‘Misleading’ extends to far more than outright lies or falsehoods and the Regulations provide that when determining whether an advert is misleading, account shall be taken of an extensive range of considerations including the:
- characteristics of the product;
- availability of the product,
- whether it is fit for purpose,
- anticipated uses of the product,
- geographical or commercial origin of the product.
- price or manner in which the price is calculated,
- conditions on which the product is supplied or provided,
- attributes and rights of the advertiser.
Comparative Advertising
Comparative advertising, which compares the products or services of one business with those of one or more competitors, has always been permitted in law, provided it is carried out fairly and honestly.
The Regulations permit comparative advertising, provided a number of conditions are met, including the following:
- it is not misleading,
- the comparison is of products meeting the same needs or intended for the same purpose,
- the comparison of one or more material, relevant, verifiable and representative features of those products, including price, is objective,
- it does not create confusion among traders between the advertiser and a competitor or between trade marks, trade names, other distinguishing marks or products of the advertiser and those of a competitor,
- it does not discredit or denigrate the trade marks, trade names, other distinguishing marks, products, activities or circumstances of a competitor.
Personal Liability of Company Directors and Other Officers
Where the offence committed by the body corporate can be proven to:
- have been committed with the consent or connivance of one of its officers or
- be attributable to negligence on the part of that person
that person is also guilty of the offence and may be punished accordingly.
In addition to a potential fine or imprisonment that person may become the subject of director disqualification proceedings under the Director Disqualification Proceedings Act 1986.
Potential Defences
Anyone faced with proceedings commenced under the Regulations may be able to prove a defence where the commission of the offence was due to:
- a mistake,
- reliance on information supplied to him by another person,
- the act or default of another person,
- an accident, or
- another cause beyond his control,
and that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence by himself or another person under his control.
Innocent Publication
In any proceedings against a person for an offence arising from engaging in advertising which is misleading, it may be a defence for that person to show:
- he is a person whose business it is to publish or to arrange for the publication of advertising,
- he received the advertising for publication in the ordinary course of business and
- he did not know and had no reason to suspect that its publication would amount to an offence.
Penalties Upon Conviction
If a person has engaged in misleading advertising, they can be convicted of an offence and shall be liable before a:
- Magistrates’ Court: a fine not exceeding the statutory maximum; or
- Crown Court: a fine, imprisonment for a term not exceeding two years or both.
Additionally, an officer of the company may be barred from acting as a company director, or other officer, by virtue of the Director Disqualification Proceedings Act 1986.
How Can We Assist?
It is essential for those responsible for companies engaged in competitive commercial advertising to ensure strict compliance with the Regulations outlined above.
The consequences of a finding of personal liability against company officers who fail to carry out proper due diligence or act negligently may be severe, including a substantial fine, director disqualification, or even imprisonment.
Businesses dealing with allegations of misleading advertising, obtaining early legal advice is crucial to assess whether an offence has been committed, determine whether a defence is available, and decide how best to respond to Trading Standards or any threatened court action.
The team at KANGS regularly assists clients facing civil or criminal proceedings arising from allegations of misleading advertising. If we can be of assistance, please do not hesitate to contact our team using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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