Big Name Brands Are Scam Artists Too: The Case Against L'Oreal, Nissan, Sony and Direct TV

Imagine skincare products that can turn back time by stimulating your genes or others that are scientifically proven to slim your body in just weeks. Envision a pickup truck so versatile it can rescue a dune buggy stuck on a steep sandy hill. Think how happy you’d be having unlimited access to websites, email, GPS navigation and other data-intensive services on your prepaid smartphone for just $45 a month and with no contract.

This may sound great. But it’s all bogus, according to recent false advertising cases.  

While you’d expect scammers to make false and misleading claims for the products and services they hawk in print, online, in television and radio ads and elsewhere, large, well-known companies engage in false advertising, too, judging by the actions federal and state regulators and even competitors have brought against such names as DirecTV, L’Occitane, L’Oréal, Nissan, Sony and TracFone.

This proves it’s best to be a skeptic before making a purchase and to question any claim that sounds too good to be true or that’s heavy in hype but light on details.

For instance, in March, the Federal Trade Commission charged DirecTV, the nation’s largest provider of satellite television services, with deceptively advertising a discounted 12-month programming package. Among the allegations, the agency said the company’s promotions in television, print, mail and online failed to clearly disclose that:

  • The package required a two-year contract;
  • The cost would increase by $25 to $45 per month in the second year;
  • Customers would face fees of up to $480 if they canceled before the end of the two-year period; and
  • The company’s offer of free premium channels for three months was a so-called negative option continuity plan, requiring customers to cancel to avoid automatic charges on their credit or debit cards.

The FTC said DirecTV’s marketing practices have been the subject of tens of thousands of consumer complaints and actions by the attorneys general in every state and the District of Columbia.

Price promotions that fail to disclose all of the little gotchas are just one type of false advertising you’ll likely encounter as companies try to separate you from your hard-earned money. Another common form of false advertising is the use of exaggerated and phony claims.

The same month it announced the DirecTV complaint, the FTC said it was sending more than 10,000 refund checks, totaling $416,000, to those who had purchased two skin creams marketed by L’Occitane. The agency said the company falsely advertised its Almond Beautiful Shape and Almond Shaping Delight skin creams as having body slimming capabilities.

In a similar case, the agency announced six months earlier that it had given final approval to a settlement with L’Oréal USA, which the FTC said had falsely claimed its Génifique and Youth Code products provided anti-aging benefits by targeting users’ genes. Génifique, the more costly of the two products, sold for up to $132 per container. The ads ran in print and on radio, television, Internet and social media.

Beauty products aren’t the only ones whose capabilities are sometimes exaggerated.

Nissan's Dune Buggy

Last year, Nissan North America and its advertising agency agreed to settle federal charges that they misrepresented the capabilities of the Frontier pickup truck in a television ad showing the vehicle rescuing a dune buddy stuck on a steep sandy hill. The video, which featured spectators looking on in amazement, was produced using special effects.

“In fact, the truck is not capable of pushing the dune buggy up and over the hill, and both the truck and the dune buggy were dragged to the top of the hill by cables,” the Federal Trade Commission said in a statement.

Sony Computer Entertainment America is yet another example of a prominent company facing charges that it misrepresented its product’s capabilities. The FTC accused Sony and its advertising agency of deceiving purchasers of its PlayStation Vita handheld gaming console by, among other things, misrepresenting its cross-platform gaming capabilities with the PlayStation 3.

In March, the FTC gave final approval to a settlement requiring Sony provide either a $25 cash or credit refund or a $50 merchandise voucher to customers who purchased a PlayStation Vita gaming console before June 1, 2012. 

In January, the FTC said that TracFone, the nation’s largest prepaid mobile provider, agreed to pay $40 million to settle charges that its print, online, broadcast and in-store advertising as far back 2009 made “hollow promises” that customers could get unlimited talk, text and data for around $45 a month. In reality, the agency said, millions of customers who exceeded certain undisclosed limits during a 30-day period found their service drastically slowed or cut. As a result, the FTC said, customers were forced to either cut back their phone use or buy additional minutes. Beginning in late 2013, TracFone began disclosing its policy in small type or in other ways the FTC said were inadequate. The plans were sold under different brands, including Straight Talk, Net10, Simple Mobile and Telcel America.

False advertising cases often are brought by federal and state regulators, usually in response to consumer complaints. But sometimes the allegations come from competitors who don’t like being put at a disadvantage because of a misleading claim made by a rival. Often those companies take their complaints to the National Advertising Division of the Advertising Self-Regulatory Council, an industry group administered by the Council of Better Business Bureaus.

In yet another case involving DirecTV, competitor Comcast recently challenged claims made in the satellite provider’s commercials featuring actor Rob Lowe. NAD concluded in April that DirecTV could not substantiate some of the commercial’s implied claims, including that DirecTV has better picture and sound quality and signal reliability than cable, and recommended changes to the ad.  

DirecTV had argued that the alter-ego Rob Lowe characters featured in the commercial were so exaggerated and outlandish that no reasonable consumer would conclude that the statement need tobe  substantiated, NAD said. Although it said it would use the NAD appeals process, the company yanked the ads, which it said were scheduled to end anyway.

If a company refuses to participate in an NAD advertising review or address any problems NAD finds, the group may refer the case to the FTC or other regulatory agency. It also issues press releases summarizing its findings.

What to Do

Don’t assume a glitzy ad is on the level just because it comes from a big, well-known company. Depending on the product or service, read the fine print that appears on the package, in the contract or purchase agreement, website terms and conditions or ad itself. If a claim seems too good to be true, ask questions and request the answers in writing.

Try searching the web for user and professional reviews about the product or service or the company offering it. Check the Better Business Bureau website for a report on the company. Sometimes you can find research that supports or dispels certain claims, for example that a product helps you avoid or treat a health problem.

If a company doesn’t deliver on its promises, complain or demand a refund. Using a credit card for your purchases can give you the option of challenging a charge for a misrepresented product or service.

If you can’t get satisfaction, complain to the appropriate federal and/or state consumer agency and to the Better Business Bureau.


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