Is it legal to make false advertising claims but give the correct info in small print?

Question

2 Terabyte Solid State Drive - only $20!

(product is actually a 100 gigabyte hard disk drive)

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Would that ad be legal?

Answer 1

Hypo

A quick factual analysis: You don’t mistype 200 gigabytes to 2 terabytes. That needs a “mistyping” of 200 to 2 and the words “gigs” to “tera”. No typo, that’s obvious.

A reasonable person wouldn’t put the incorrect data quantity there in an honest mistake either since every reasonable person has a within -50% to + 100% sense of the price of things. One intending to sell and cognizing a difference in excess of that would do a double take on the price in such a case. Even if the price increase is not linear with the storage capacity of a hard drive, we are still talking about 2 and a half 3 times the price difference at best. It cannot happen in negligence. It might happen in reckless disregard, but knowing and intentional action appears more likely than not putting the onus on the advertiser to prove that is not the case affirmatively.

Law

In any case, the scope of uniform false advertising and unfair business practices acts of U.S. states typically require good faith actions and reasonableness in that they punish those not only who knew their advertisement is false, but those who should have known by the exercise of reasonable care, one summary example from California:

“It is unlawful for any person, firm, corporation or association, or any employee thereof with intent directly or indirectly to dispose of […] personal property […] or anything of any nature whatsoever or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated […] from this state before the public in any state [including this state], […] in any … manner or means whatever, including over the Internet, any statement, concerning that […] personal property […] or concerning any circumstance or matter of fact connected with the proposed […] disposition thereof, which is untrue or misleading, and which […] by the exercise of reasonable care should be known, to be untrue […] or for any[one] to so make or disseminate or cause to be so made or disseminated any such statement as part of a plan or scheme with the intent not to sell that personal property […] so advertised at the price stated therein, or as so advertised. Any violation of the provisions of this section is a misdemeanor punishable by imprisonment in the county jail not exceeding six months, or by a fine not exceeding two thousand five hundred dollars ($2,500), or by both that imprisonment and fine.” (Cal. Bus. & Prof., § 17500)

EDIT 1 — Not 200 gigs to 2 terabytes, but 100 to 2

I just noticed we’re not even talking about 200 GB “mistaken” to 2 TB, but 100 GB to 2 TB. It’s not apples to oranges, but an apple to soccer balls. Good luck to whoever wants to get on to the lower end of § 17500 claiming no knowledge, but reckless disregard.

EDIT 2 — Hypo of disclaimer elsewhere

In case where the correct information somewhere else is included in the advertisement, that both give rise to the presumption that actual knowledge of the untrue or misleading nature of the advertisement existed in the advertisers mind. On another note, in case a buyer's exclusive decision metrics relate to the storage capacity and the price, the statement of the storage capacity also creates both an implied warranty of fitness and an express warranty. (Lane v. C.A. Swanson Sons, 130 Cal.App.2d 210, 278 P.2d 723 (Cal. Ct. App. 1955) [“the label on the can coupled with the representation in the newspaper ads that the contents contained no bones, constituted an express warranty”], (Cal. Civ. Code §§ 1791.1, 1791.2, et seq.; U.C.C. (UCC § 2-313(1)(b)) ["[a]ny description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description."])

In other words, the buyer is not imposed any statutory or common-law duty to read further in the advertisement unless a reasonably cognizable indication is made that the storage-capacity statement is, well, false. For example, an internationally well-understood indication of the incompleteness of the a statement is the inclusion of an asterisk (less often a footnote number) behind the specific information or statement that needs further relating.

Other than common sense, Brady v. Bayer Corp., 26 Cal.App.5th 1156, 1172 (Cal. Ct. App. 2018) provides the same:

“Nothing in law or logic suggests consumers will take such a belt and suspenders approach[]: You cannot take away in the back fine print what you gave on the front in large conspicuous print[; in fact,] Under Commercial Code section 2316[,] any disclaimer ha[s] to be conspicuous.”

Accordingly, even asterisk may not be sufficient as a matter of law, and an action based on an asterisk notice of disclaimer may potentially proceed to trial for the factfinder to decide if they would be put on reasonable notice that, as a matter of their good-faith duty, would have to look further on an advertisement to find that the storage capacity information was simply false.

Answer 2

It could be legal. Both products actually exist (can be ordered on Amazon, from different vendors), so both are reasonable prices for the product. A vendor might have mistakenly put the wrong drive information in the headline, but the correct information in the body of the ad. Errors do not give rise to false advertising claims, but one they have been alerted to this situation, they have to fix the ad. (Or, if this is a misplaced shelf tag in the store, put the correct tag on the shelf). A deliberate ploy to attract customers via a "great deal" headline would be illegal "bait and switch". If the ad does not at all indicate that the product is a 100 GB HDD, which is what they shipped, then that is a breach of contract. The most likely remedy would be cancelling the contract (refunding the money), which is a typical "term of use" condition for online sales.