How to Protect Against Comparative Advertising Lawsuits

Advertising injury liability insurance protects businesses that advertise their products and services against potential legal risks stemming from their actions, claims, or statements. Lawsuits can happen even though, as an advertiser, you may not find your message offensive or believe your claims are proven facts; others may not agree. If advertising for your goods and services causes an injury to a third party, it can result in lawsuits claiming:

• Libel.
• Slander.
• Invasion of Privacy.

Advertising Injury Liability: Risk Factors

As a business owner, you must know your advertising risk factors. For example, a competitor claims your statements or actions hurt their business by comparing their products or services to yours using false claims. They sue you for defamation and trademark infringement.

Define Comparative Advertising

Comparative advertising comparing products or brands are in TV commercials, magazine articles, billboards, radio spots, newspaper articles, webpages, social media posts, emails, and even free samples. Types of comparison advertising include:

• Side-by-side comparisons.
• Blind tastings.
• Product reviews.

Legitimate comparative advertising aims to help consumers make better purchase decisions. Honest evaluations help consumers learn about differences between similar items.

Legal Comparative Advertising

Comparative advertising is generally considered illegal when it is misleading. However, you can legally use competitive comparisons to promote your product’s benefits and features. These tips help keep your comparisons legal:

1. Include the name of the competing product.
2. Make sure the comparison is relevant.
3. Don’t exaggerate the differences.
4. Avoid negative statements like “this one is better.”
5. Be clear about the limitations of each product.
6. Always disclose if the information came from a third party.

Federal Law Governs Comparative Advertising

According to FTC rules, comparative advertising is legal under federal law if it is truthful and doesn’t mislead consumers. As such, companies cannot be held liable for comparing themselves honestly. However, they must disclose all information regarding their products and ensure that comparisons are fair.

False advertising claims about misleading and deceptive products include false promises or misrepresenting facts. For example, saying, “This product is better than that one,” without disclosing what makes it better, might be considered false advertising.

Examples of False Advertising

• Health care products that claim a drug can cure cancer when it only treats the side effects associated with chemotherapy.
• Untruthful food product claims that it contains less fat than the competition.
• A financial product claims it offers a lower interest rate than others when it doesn’t.

Actions or statements you make that are negative or deceptive are considered a claim. For example, if your company is sued for defamation or trademark infringement, it will cost you thousands of dollars in legal fees. Ensuring you have comprehensive advertising injury liability coverage is your best defense.

About Dickstein

Advertising injury liability insurance can help protect you when a product causes an injury. For example, we use our expertise at the Dickstein Associates Agency to create a customized policy to protect you from advertising injury and safeguard your business and assets. As your local independent agent, we source the marketplace for your business’s most comprehensive coverage and competitive rates.