Ethics in Business (Part 4)

Deceptive advertising continued…

Specifically, the complaint alleges that Duracell and Proctor & Gamble violated certain State consumer protection laws and engaged in deceptive conduct and/or false advertising by misleading consumers about the benefits of the battery life for these premium-priced batteries and claiming that these batteries lasted “Up to 40% Longer in Toys.” Duracell and Proctor & Gamble allegedly concealed and misrepresented material facts regarding the battery life of the Duracell Ultra Advanced batteries and the Duracell Ultra Power batteries, when the battery life of these batteries would not last any longer than the lower-priced Duracell batteries.

As a result of defendants’ deceptive marketing scheme, consumers purchased Duracell’s Ultra Advanced and Ultra Power batteries based on the false belief that these batteries would last a significant amount of time longer than traditional alkaline batteries and paid significantly higher prices with no meaningful additional benefits. The Duracell Ultra Power battery is a disposable, rather than rechargeable, battery that was previously sold using the name Duracell Ultra Advanced batteries.

While claiming to last 40% longer in Toys and being “ideal for high-drain devices,” consumers are reporting that the Duracell Ultra Advanced batteries and Duracell Ultra Power batteries are failing to last materially longer than Duracell’s other alkaline batteries.

2. ROBERT TITZER

“Your Baby Can Read” program, Robert Titzer

Many babies at 9 months old are just starting to stand up. Some take their first steps. But, reading? At 9 months? Really?

The Federal Trade Commission doesn’t think so.

The agency has filed a complaint against the man behind the “Your Baby Can Read” program, Robert Titzer. The FTC accuses him of false and deceptive advertising for promoting his program in ads and product packaging as a tool to teach infants as young as nine months to read.

The “Your Baby Can Read” program used a combination of videos, flash cards and pop-up books and was advertised extensively on television, YouTube, Facebook and Twitter. It cost about $200 and was sold nationwide at retails stores, including Walmart and Babies R Us.

The company Your Baby Can and its president and chief executive until March 2010, Hugh Penton Jr., also were named in the complaint. Both have agreed to settle the charges, the FTC said. The settlement imposes a $185 million judgment — equal to the company’s gross sales since 2008 — but most of it would be suspended due to the company’s failing financial condition.

The company, based in Carlsbad, Calif., announced earlier this year that it was going out of business. It cited the high cost of fighting complaints alleging that its ads were false.

Titzer, an educator with a doctorate in human performance from Indiana University, developed the program and appeared in many of the ads promoting the Your Baby Can Read videos and program. He was billed as a “recognized expert in infant learning.”

According to the FTC, Titzer and the company said they had studies to back up their claims. But the agency says those studies were flawed.

Boston-based Campaign for a Commercial-Free Childhood filed a complaint about “Your Baby Can Read” with the commission in April 2011. The advocacy group has led a series of campaigns against what critics call the “genius baby” industry.

CCFC’s director, Susan Linn, called the FTC action “an important victory for children and families and for anyone who believes that advertisers should be held accountable for deceiving consumers. There is simply no evidence that screen media is beneficial for babies.”

MANIPULATIVE ADVERTISING                                                                

1. PONZI SCHEME IN NIGERIA

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves.

In Nigeria today, we know that Ponzi scheme has taken over the social media through their consistent advertisement. Some (e.g Opay Investment) even hide under other brands to do their advertisement

The recent Ponzi schemes scam made use of door-door advertisements offering huge
financial returns whilst unsuspecting and vulnerable consumers were lured in to
the scheme. While it might be difficult to ascertain financial decisions made
as a result of advertising and pressure, there is a need for the law to concern
itself with these difficulties and protect vulnerable consumers.

“Kellogg said Mini-Wheats could make you smarter”.

2. Kellogg

In 2013, Kellogg was in even more trouble. The company agreed to pay $4 million for false advertising claims it made about Frosted Mini-Wheats. The cereal company had falsely claimed that the Mini-Wheats improved “children’s attentiveness, memory and other cognitive functions,” according to Associated Press. The ad campaign claimed that the breakfast cereal could improve a child’s focus by nearly 20%.

In its defence, Kellogg said that the ad campaign ran four years previously and that it had since adjusted its claims about the cereal. Kellogg also noted that it “has a long history of responsible advertising.”

People who consumed the cereal during the time the ad ran (January 28, 2009 to October 1, 2009) were allowed to claim back $5 per box, with a maximum of $15 per customer, according to Associated Press.

Reference

1. DURACELL BATTERY (Last Forever):   Duracell Batteries False Advertising Lawsuit | Leading National Law Firm. Gilmanlawllp.com; https://gilmanlawllp.com/consumer-protection/duracell-batteries-mislead-consumers/
2. ROBERT TITZER:   Dispatch.com; https://www.dispatch.com/story/business/2012/08/28/ftc-your-baby-can-read/23751277007/
3. PONZI SCHEME IN NIGERIA: Ponzi Scheme | Investor.gov; https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme
4. Kellogg:        18 false advertising scandals that cost some brands millions. Business Insider; 18 False Advertising Scandals (businessinsider.com)