Finance4U

How to Avoid It Ruining Your Brand Reputation


In the aftermath of a recent Dragons’ Den fiasco involving founder Gisele Boxer’s claims about her branded “ear seeds” curing her ME, the issue of false advertising has again come to the fore.

The incident sparked nearly 500 Ofcom complaints, despite Boxer receiving praise on the show and six offers of investment. The swift fallout is a perfect example of how unsubstantiated claims not only jeopardise business integrity, but also can have wider-reaching impacts on the reputation of partners and associates.

An accusation of false advertising or pseudo claims can be difficult to come back from, once your brand has been tarnished by one. In this article, we delve into the delicate balance between promoting and misleading, exploring how such practices can erode the trust crucial for sustaining long-term customer relationships.

What is false advertising?

Determining what constitutes false advertising can be tricky. It’s not always about blatant lies, as with the well-known Theranos scandal, which saw founder Elizabeth Holmes jailed in the US. 

It can also involve exaggerations, misleading claims, or failure to disclose important information. The different types of false advertising can consist of:

Exaggerated claims or entirely false statements

Avoid overhyping your product. Claims that are generally too vague, unsupported, or too grandiose can come under fire. These might include boasts that your product or service can help “everyone” or will solve “all your problems.” Exaggerations will not be considered trustworthy in the eyes of your customer, and could land you in hot water with an Advertising Standards Authority (ASA) complaint.

This also includes stating anything that is just outright false. No matter how well you think the lie is concealed, customers are savvier than you think, and the potential damage it could cause to your company if found out is rarely ever worth it.

Hidden fees

Hidden fees can be perceived as deceptive, and the practice (most commonly known as “drip pricing”) has recently become outlawed legally in the UK.

The legislation now mandates that all fees must be prominently stated in the headline price or presented at the beginning of the shopping process, eliminating the practice of concealing costs until checkout. 

Bait-and-switch tactics

If you’re advertising a specific product or deal, it’s also important to ensure that customers get exactly what they expect. In other words, don’t make it look like you’re selling a hat when really you’re selling a picture of a hat. 

Present a complete picture of your product, since omitting critical information or deviating from promises can cause aggressive chargebacks and refunds. Remember, you want to surprise and delight your customers, not surprise and upset.

Under UK law, customers would be entitled to a full refund under the Consumer Protection from Unfair Trading Regulations 2008.

Fake endorsements

Falsely claiming endorsements from celebrities or experts can backfire massively. 

It may seem harmless, but in a world where everyone’s personal brand is something they protect fiercely, you don’t want to bring anyone else’s reputation into your lies and risk a defamation claim. 

Omission of material information

While it can be extremely tempting, selecting only data that supports your claims while ignoring negative information counts as false advertising. This would certainly be frowned upon if and when it is found out – particularly if your product is health or food and beverage related.

A balanced description is always more trustworthy, even if your product may induce particular side effects or not be suitable for certain people.

For instance, if your product only has a short warranty or shelf life, it’s better to also just say that rather than have to deal with a barrage of angry customers and broken products further down the line.

Misleading visuals

As some brands have found out, you can’t promote a mascara by using models wearing false eyelashes.

But, misleading visuals are becoming a more complex issue than ever. As we enter the dawn of the artificial intelligence (AI) era, it’s tempting for brands to conjure up whatever visuals they need, in just a few prompts.

Using AI visuals to mislead or conceptualise, rather than showing the actual product and its impact, could give off the impression that your product or service is not legitimate. 

Nicki Minaj recently released AI generated promotional images for her new album, and received feedback from fans and critics alike saying that it cheapened her brand

Impossible claims

“We’re the #1 brand in the world!” – really? In the entire world? How would one even go about substantiating that? We’ve all wanted to say this in business, but it can really do more harm than good. 

Claims like this can bring unnecessary, negative and judgemental scrutiny towards your company as people will spend their time vying to prove you wrong, and trying to humble your sense of superiority, rather than believing you. 

It is far easier to be proven wrong in this case than right. For example, your website goes down one day? Can’t be the #1 brand in the world. Product out of stock? Surely behaviour that wouldn’t be expected of the #1 brand in the world.

Don’t put that pressure on yourself. As John Steinbeck once wrote in his novel, East of Eden: “Now that you don’t have to be perfect, you can be good.”

The consequences of false advertising

False advertising can have severe repercussions for your brand and business. Let’s talk about the most severe one first: brand damage.

Once trust is shattered, the customer exodus begins. No longer confident in your brand, your customers may swiftly turn to competitors, resulting in a substantial and immediate loss of market share

According to PwC’s future of customer experience report, 32% of customers will leave a brand after just one bad experience. And even when they love your brand, 59% will walk away after two bad experiences.

Trust, painstakingly built, can crumble in the face of false advertising, potentially causing lasting harm to your brand’s reputation as customers question your integrity.

Besides that, there are a few other key (potentially more serious) consequences. 

Participating in false advertising not only risks legal action, substantial fines and penalties. There is also the increased risk of regulatory scrutiny. Regulatory bodies (such as Ofcom’s involvement in the Gisele Boxer case), may cast a watchful eye on your business, subjecting it to heightened scrutiny and the looming threat of sanctions.

Legal repercussions:  case studies

  • Skincare company L’Oreal claimed their products were “clinically proven” and could provide customers with “visibly younger skin in just 7 days” without any actual studies in 2014. They were able to avoid a lawsuit, but the company was reprimanded and banned from use of the phrase by the US Federal Trade Commission.
  • Supplement company Airborne claimed their products “warded off germs” and boosted your immune system, leading to a £18.9 million lawsuit by the Center for Science in the Public Interest, which was settled out of court.
  • In 2009, Danone’s Activia yoghurt claimed that it was “proven to regulate one’s digestive system” – when it was really no different to any other kind of yoghurt. A class action settlement forced Danone to pay up to £35.4 million in damages

How to avoid false advertising: best practices

Presuming you’re not knowingly lying about a product, there are still things to avoid. As a good rule of thumb, you could ask yourself:

  • Is what I’m saying about my business or product defensibly proven to be true?
  • Am I able to prove this in any tangible ways?
  • What methods can I use to prove my claims?

Think about the product you sell and which method of proof would be the most effective for your product. For example:

  • If you sell a course or information product, you can provide a tangible number of people you’ve helped through the process. You can also include your own personal case study of how what you teach has improved your life in measurable ways that would stand up to scrutiny.
  • If you sell products through an ecommerce website, you might consider focusing on gaining a large number of positive testimonials or user-generated content to showcase the positive impact on customers. 
  • If you sell health-based products, this is a more regulated market and this is potentially where Boxer made her biggest mistake. A single, personal case study, especially when unverifiable, can land you in hot water. In this case, the best practice would be to check up on regulations of what you can and can’t promise to your customers for your specific product, showcase any health qualifications you have, and be sure to protect yourself legally with the appropriate business website and product packaging disclaimers.  

“I think I’ve been falsely advertising, what should I do?”

First of all don’t panic – but do act quickly. The situation may still be salvageable. A step-by-step action and emergency plan in this case may be to:

  1. Remove all instances of untrue, misleading or unverified comments from you on your website
  2. Back up any claims you have made with concrete evidence where you can
  3. If your pricing is misleading (for instance, if you’ve been drip pricing), remove and incorporate the final price on your first product page clearly for customers
  4. Remove any fake reviews (especially if they make any outlandish or conclusive claims)
  5. If the claims have already been widely viewed, it may be worth it to communicate with your customers and stakeholders, and note ways you are rectifying the situation. Own it – don’t blame it on your copywriter or a marketing agency. People will respect you much more for it. 

Conclusion

In business, honesty remains the best policy. Remember, the consequences of false advertising go beyond immediate financial setbacks; they can tarnish your brand’s image and credibility. 

So, tread carefully, be transparent, and you will be on your way to building a brand that customers can trust.

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