Advertising deception can be a ground for a business lawsuit

Although there is an art to marketing, such as the so-called positive spin, any claims in advertisements must still comply with the standards established by the U.S. Federal Trade Commission. In general, the FTC prohibits deception, such as product claims that are not based in evidence. Companies that break that benchmark standard may find themselves in hot water, as the recent Well Fargo fiasco illustrates.

At a recent appearance on Capitol Hill before the Senate Banking Committee, Wells Fargo’s CEO apologized for the company’s failure to fulfill its duty of truthfulness to its customers. The questioning was over allegations that the company created up to 2 million fake accounts in the name of meeting aggressive sales goals.

The types of accounts included credit card and checking accounts. Customers may have found themselves with fees arising from the bogus accounts. The company has already been fined $185 million dollars for the scheme, and lawmakers continue to investigate the details. In particular, the recent Congressional hearing sought answers for why senior management did not remedy the deception sooner. The CEO admitted that he had learned of the scheme in 2013.

The story is an important reminder that a business may find itself facing potential litigation arising from a variety of operations. The parties in a business lawsuit may also range from disgruntled customers to employees to governmental entities or lawmakers. Accordingly, it is important to have a relationship with a law firm whose practice includes a variety of business services. Our law firm has helped business clients with a variety of legal needs.

Source: Washington Post, “Wells Fargo CEO pummeled on Capitol Hill over multiyear scam,” Renae Merle, Sept. 20, 2016