As previously discussed, deceptive trade practices can lead to companies dealing with business litigation. Regulations are set to ensure that businesses follow certain guidelines when it comes to consumers purchasing or using their products or services. If it is believed that a company is misleading or luring consumers through false advertisement, this can result in a deceptive advertising practice claim.
The Federal Trade Commission recently brought an enforcement action against the department store chain Lord & Taylor under its new native advertising guidelines. Lord & Taylor was charged with using deceptive advertising practices in their recent social media campaign. According to preliminary reports, this campaign included 50 personalities wearing the same paisley dress on their Instagram account.
It was discovered that that Lord & Taylor failed to reveal that it paid the endorsers involved up to $4,000 each to wear the dress and use specific hashtags related to the company and its label. Additionally, the department store chain failed to disclose sponsorship of featured placements in Nylon magazine and its Instagram page.
While Lord & Taylor indicated that they were not trying to deceive consumers, the campaign reached over 11 million Instagram users and the dress subsequently sold out. Lord & Taylor cooperated fully with the FTC inquiry. Under the terms of the settlement, the company must launch a monitoring program and report to the FTC periodically.
Under current regulations, if companies use any sponsorship, payment or incentive that ultimately leads to a media mention in traditional or social media, the company is required to disclose this. When business is accused or charged with deceptive practices, it is important to fully understand the matter and how to address it. Such a matter could result in fines, therefore, it is important to understand how best to remedy this business matter.
Source: Retaildive.com, “FTC brings action against Lord & Taylor over deceptive ads,” Ian P. Murphy, March 16, 2016