You Have Legal Recourse if You’ve been Defrauded by False Advertising

Advertisements are everywhere in our modern world. They vie for our attention no matter what kind of media we’re consuming. They are intended to dazzle and entice, to entertain and educate. Unfortunately, sometimes, they lie. Ads are designed to help a company’s products and services appeal to the general public, but some go too far. They engage in deceptive sales or business practices and commit fraud on a grand scale. However, they’re not likely to get away with it. You have legal recourse if you’ve been defrauded by false advertising.

In this Guide: 

• What Qualifies as False Advertising?
• Damages an Individual or Business May Recover
• What You Can Do About False Advertising

What Qualifies as False Advertising?

False advertising is the act of publishing, transmitting, or otherwise publicly circulating an advertisement containing a false claim or statement made recklessly or with intention to promote the sale of property, goods, or services. 

The Federal Trade Commission (FTC) is always on the lookout for incidents of fraud being committed on American consumers. False advertising is one of the FTC’s top concerns so many people can be affected in a relatively short time, especially false claims that can affect someone’s health. 

Generally, a business is prohibited from making false, misleading, or deceptive claims about a product’s price, quality or purpose. 

False Claims 

False claims are untrue statements about what a company’s product does, how it was made, or its full price.

Example case: Popular yogurt brand Dannon was found guilty of false advertising in 2010. The company claimed their Activia brand yogurt was “scientifically” and “clinically” proven to boost your immune system. In reality, no scientific evidence supported the claim, so a federal court ordered Dannon to pay out $45 million in a class action lawsuit. 

Misleading Claims

An advertisement makes a misleading claim when it gives a consumer an incorrect understanding of a product.

Example case: In 2009, Olay ran an ad campaign for their Definity eye cream. Advertisements featured a glamorous, wrinkles-free photo of Twiggy, a 60-year old model. However the ‘miracle’ of her youthful beauty was owed more to airbrushing the image than to eye cream. The ad was eventually banned. 

Deceptive Claims 

When an advertisement uses price inflation or fails to disclose pertinent information about its product, it makes a deceptive claim. 

Example case: Retail giant Wal-Mart was found guilty of false advertising in 2014, when it claimed to offer 12-packs of Coca Cola for $3.00. The retail chain actually charged $3.50 per 12-pack, then reportedly lied about the reasons for the price hike. Wal-Mart told customers it was because of a state sugar tax, which was untrue. Wal-Mart paid out $66,000 in fines.

The Colorado Consumer Protection Act 

While the FTC acts as a federal watchdog and enforcer against unfair and dishonest business or trade practices, there is no private right of action if you’re defrauded.

The Colorado Consumer Protection Act (CCPA) is a set of laws that intend to deter and punish businesses for engaging in unfair or deceptive trade practices at the state level. 

Most notably, the law provides for both public and private rights of action. Meaning, private citizens, like you, can bring an action to enforce the Colorado Consumer Protection Act.  

Practices Prohibited by the CCPA 

The list in C.R.S. 6-1-105 is more comprehensive, but, generally, Colorado businesses may not:

•     mislabel and sell used products as new.
•     falsely degrade the goods or services of another business.
•     fail to identify water or fire-damaged goods.
•     falsify a product’s source or certification.
•     pass off goods or services as those of another.
•     advertise goods or services without an intent to sell them as advertised.

Enforcing Colorado False Advertising Laws

Private rights of action are typically brought by consumers. These lawsuits focus more on getting compensation, also known as damages, that the consumer incurred as a result of the unfair acts or false advertising.

Public actions, by contrast, are typically oriented more towards stopping deceptive business practices and, if brought by a law enforcement agency, can include criminal punishments.

Damages an Individual or Business May Recover

If a person or business wins a Colorado Consumer Protection Act lawsuit, the damages will be equal to the greater of:

• $500;

• the actual damages incurred; or

• three times the amount of actual damages incurred if the defendant acted in bad faith as established by clear and convincing evidence.

See Colo. Rev. Statutes. § 6-1-113(2). 

In other words, how much you receive depends on your actual damages and, basically, how bad the false advertising was. 

If your actual damages were less than $500, you’ll receive a minimum of $500. If your actual damages were more than $500, you’ll be awarded the actual damages amount. Finally, you receive what’s called treble damages if the advertiser knew they were putting out a false ad. Treble damages is three times the actual damages. 

You can also be entitled to costs and attorneys’ fees in litigating the action as determined by the court. See C.R.S. § 6-1-113(2)(b). 

How Easy is it to Get Triple the Damages? 

Many plaintiffs bringing claims under the Colorado Consumer Protection Act push for treble damages. Obtaining treble damages under the CCPA defendant will be liable for actual damages or three times actual damages if the defendant’s conduct was done in bad faith; that is, the conduct was fraudulent, willful, knowing, or intentional. See also Vista Resorts, Inc. v. Goodyear Tire & Rubber Co. 117 P.3d 60 (Colo. App. 2004). 

What Can I Do About False Advertising?

 Hire an Attorney 

If you are seeking monetary damages against a business for false advertising in Colorado, a litigation attorney can help you build a strong case.

Report the False Claims

Consumers can report a business for false advertising on the Colorado Attorney General website. Filing a complaint won’t resolve your individual problem, but it helps the state to record and track complaints. The State of Colorado then might consider possible legal action.

Also, you can warn other consumers by filing a complaint with the Better Business Bureau. 

Don’t Let Dishonest Businesses Off the Hook

When you purchase a product or service, you should receive what was promised. If you’ve lost money or have been adversely affected by false advertising, you don’t have to take it lying down. An experienced litigation attorney can find specific laws tailored to your false advertising claim and build a strong case on your behalf. Don’t get embarrassed. Get compensated. Call 303-688-0944 for your case assessment.