Federal Regulation of Warranties and advertising

Advertisements for goods are also express warranties. Accurate advertising is a basis for full information, and full information is a cornerstone for competitive markets. In addition to the UCC protections for buyers, federal and state governments regulate the content of ads.

In 1914, Congress passed the Federal Trade Commission Act, which authorized the Federal Trade Commission (FTC) to prevent “unfair and deceptive trade practices.” Congress passed the Wheeler-Lea Act of 1938, which clarified and expanded the FTC’s power by authorizing it to regulate “unfair and deceptive acts or practices” whenever the public is being deceived, regardless of any effects on competition. The FTC has challenged unsubstantiated or ambiguous advertising claims and has reviewed and eliminated deceptive techniques in television ads.

13-2c Content Control and accuracy

The FTC has regulated the accuracy of ads in several ways. First, the FTC challenged certain types of price claims. If an ad announces “50% off,” the prices must actually be half the original prices charged for the products or services prior to the sale; that price cannot be inflated to cover the markdown. If an ad quotes a “normal” price, that price must reflect what most sellers in the area are charging.

The FTC has also challenged the accuracy of ads. Claims that goods are “100% wool” are not only the basis for express warranty recovery but also

Time Magazine stated the Chemical Mace is “for police the first, if not the final, answer to a nationwide need—a weapon that disables as effectively as a gun and yet does no permanent injury.” . . . The effectiveness is the result of a unique, incapacitating formulation (patent pending), projected in a shotgun-like pattern of heavy liquid droplets that, upon contact with the face, cause extreme tearing, and a stunned, winded condition, often accompanied by dizziness and apathy.

At approximately 1:40 a.m. on Septem- ber 22, 1968, while Mr. Klages was on duty, two unknown individuals entered the motel office, requested a room, and announced a stickup. One of the intruders took out a gun and directed Mr. Klages to open the safe. Using the cash register as a shield, Mr. Klag- es squirted the mace, hitting the intruder “right beside the nose.” Mr. Klages immediately ducked below the register, but the intruder followed him down and shot him