Study Guide: False Advertising

Definition: False advertising involves using misleading, incorrect, or deceptive statements in marketing to persuade consumers to buy a product or service.

Common Tactics in False Advertising:

1. Misleading Product Claims:

   • Claiming a product can do something it cannot.

   • Example: A supplement that claims to "cure" an illness.

2. Bait-and-Switch:

   • Advertising a product at an attractive low price to draw in customers and then pressuring them to buy a higher-priced item when the original item is unavailable.

3. Misrepresentation of Ingredients or Quality:

   • Making false claims about what a product contains.

   • Example: Claiming a product is "all-natural" while containing artificial ingredients.

4. False Comparisons:

   • Making misleading or inaccurate comparisons between products.

   • Example: Claiming an energy drink provides "10 times more energy than coffee" without scientific support.

5. Misleading Pricing:

   • Advertising incorrect discounts, falsely implying a better deal.

   • Example: A retailer lists a "discount" price that is actually the regular price.

6. Charm Pricing:

   • A psychological pricing strategy where prices ending in .99 appear cheaper (e.g., $10.99 perceived as $10).

7. Price Skimming:

   • Charging the highest initial price that customers will pay and lowering it over time (e.g., new tech products).

8. False Discounts:

   • Marketing a discount based on an inflated original price.

   • Example: A dress advertised at "50% off" with an always $50 original price.

9. Hidden Fees:

   • Disclosing additional mandatory fees only at the final checkout stage.

   • Example: A hotel charging a nightly rate plus a resort fee only revealed upon booking.

10. Price Comparison Fraud:

    • Misrepresenting a competitor's price as higher than it is.

11. Shrinkflation:

    • Keeping the same price while reducing the quantity or quality of the product.

    • Example: A cereal box that goes from 500g to 400g without a price change.

12. Overlapping Sales:

    • Continuously extending sales promotions to mislead customers into thinking they are getting limited-time offers.

13. Time-Limited Offers:

    • Marketing offers as limited-time deals when they run indefinitely.

14. Price Gouging:

    • Charging excessively high prices during emergencies when options are limited.

    • Example: Price hikes on essentials during natural disasters.

15. Predatory Pricing:

    • Temporarily lowering prices to outcompete rivals and then raising them once competition is diminished.

16. Price Fixing:

    • Colluding with competitors to maintain artificially high prices.

17. Drip Pricing:

    • Initially presenting a low price but gradually adding costs throughout the purchasing process, leading to a significantly higher final price.