Are price comparisons in ads required to be honest?

Yes, price comparisons in advertisements are required to be honest. Advertisers must adhere to legal standards that prevent misleading or deceptive claims regarding prices.

Legal Standards

1. Truth in Advertising: The Federal Trade Commission (FTC) enforces truth in advertising laws, requiring that any price comparison made in ads must be truthful and substantiated. This means that advertisers cannot misrepresent the prices of their own products or those of competitors.

2. Clear Comparisons: When making price comparisons, advertisers should clearly state the basis for the comparison. For example, if comparing a product’s price to a competitor’s, the comparison must be relevant and based on similar products.

3. Avoiding Deceptive Practices: Advertisers cannot create a false sense of savings by selectively presenting prices. For example, advertising a product as 50% off without disclosing the original price it was sold at could be misleading.

Consumer Protections

- Enforcement Actions: The FTC and state attorneys general can take enforcement actions against companies that engage in misleading price comparisons, leading to fines and required changes in advertising practices.

- Consumer Complaints: Consumers who feel misled by price comparisons can file complaints with the FTC or other consumer protection agencies, prompting investigations into the practices of the company.

Example

For instance, if a retailer advertises a television for $500, claiming it is normally priced at $700, the retailer must ensure that the $700 price reflects a genuine previous price at which the TV was sold. If the TV was never sold at that price or if the comparison is misleading, the retailer could face legal consequences for deceptive advertising.