Deceptive advertising

The goal of advertising is to raise a company's market capitalization and encourage investment and profit growth. In the United States, advertising expenditures totaled $223 billion in 2018 and are projected to reach $240.68 billion in 2019. The significance that organizational leaders place on advertising in their quest for expansion and sustainability is supported by this statistic. Businesses use clever and flexible tactics, such as creative advertising, to attract customers and boost sales in a competitive market.

Businesses advertising operations are unlikely to hurt customers inasmuch as they permit saving on search costs and promote a better match between tastes and consumption options when the quality of an item on sale can be checked prior to purchase (the so-called search goods). However, a lot of times, such as with experience goods, product quality cannot be thoroughly verified before consumption. In these situations, advertising could have a negative side: mediocre companies might use marketing channels to persuade customers to make poor purchases. These actions fall under the category of misleading or deceptive advertising, which is defined as any explicit or implicit claim that may mislead consumers by causing them to believe anything before making a purchase. The world's antitrust and competition policy authorities are well aware of such a significant threat.

References

Author: Claudio Mameli