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 San Jose Business & Commercial Law Blog

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Advertising blunders that cost well-known companies millions

Regardless of the type of business you run here in California, you need to get your name out there in order to draw in customers. This makes marketing and advertising a vital part of nearly every business since word of mouth alone may not be enough to expand your customer base and make your business a success.

The problem is that if you fail to exercise caution, you could end up facing allegations of false advertising. In the alternative, you may suspect that a competitor's product claims are false. Understanding this issue could be as simple as learning from other major companies who ended up in trouble for false advertising.

These companies paid millions for their advertising mistakes

In a competitive market, every company looks for an edge that makes them stand out from the competition. However, the following companies went too far and paid the price:

Kellog: This cereal giant once made claims that its Rice Krispies cereal boosted children's immunity and that its Frosted Mini-Wheats increased intelligence. Both claims proved false and cost the company millions of dollars.

Volkswagen: This car company claimed that its diesel vehicles were environmentally friendly and had low-emissions. These claims turned out to be false when regulators discovered the car company cheated on its emissions tests. This cost VW billions of dollars.

Dannon: The yogurt company claimed that its Activia yogurt contained special bacterial ingredients that assisted with the regulation of digestion and boosted the immune system. Advertisements used words like "scientifically and clinically proven," which turned out to be false. Dannon paid millions for this advertising error.

New Balance: The tennis shoe maker once claimed that its shoes helped wearers burn calories. It ended up paying millions for this false claim.

Red Bull: The highly popular catch phrase of the company indicating, "Red Bull gives you wings," faced challenges by consumers. Obviously, consumers did not grow wings from drinking the product. Additional claims that the energy drink could improve mental acuity also got the company in trouble as well. It also paid out millions for its claims.

These are just a few of the companies who ended up paying for false advertising. Some pharmaceutical companies, cosmetics companies and others have also gone too far in their advertising and paid the price.

The impact of false advertising

These false advertising campaigns created an unfair advantage for the companies who used them. Whether your company ends up accused of false advertising, or you believe that a competitor crossed the line in its marketing, you may need to understand your legal rights and find out what legal options you have. The future of your company depends on the outcome of litigation in this area. With so much at stake, it may be beneficial not to attempt to face this challenge alone.

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