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June 13th, 2011
Advertising Agency Settles Multi-State Attorney General Investigation
Advertising agency Action Integrated Marketing recently entered into a settlement agreement with ten attorneys general, resolving allegations that the advertising agency created advertisements that misled consumers about the origins of cars that it was advertising. As part of the settlement, the advertising agency agreed to pay $150,000.
According to the allegations in one of the complaints, Action Integrated Marketing misrepresented that the cars were from "…some source other than the dealers' normal used vehicle inventory by using such terms as, 'The Repo Joe Sale,' 'Bought from Independent Appraisers,'… 'Police Seized Vehicle Selloff.'" The attorney general group – consisting of the attorneys general from Washington, Georgia, Idaho, Illinois, Kentucky, North Carolina, Ohio, Oregon, Pennsylvania and Tennessee – alleged that, not only were the advertising claims untrue, but they created a false sense of urgency to purchase.
Significantly, the multi-state investigation appeared to be directed only at the advertising agency, and not at the advertising agency’s clients, i.e., the auto dealers. This investigation is an important reminder that advertising agencies, along with clients, may be held liable for false advertising claims. This may also signal increased interest by regulators – which had waned in recent years – in pursuing ad agencies for their participation in the production of false advertising.
This investigation is also a warning for ad agencies to review their in-house clearance standards and procedures. If you have any questions on formulating such standards or any other advertising matter, please contact Jeff Greenbaum at (212) 826 5525 or jgreenbaum@fkks.com or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
