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When Should “Puffery” in Advertising and Debt Collection Letters be Supported by Appropriate Factual Evidence and Other Corroborating Information?
By Elizabeth C. Yen

Advertisements often include clearly exaggerated or overstated claims, sometimes called “puffery” (from the verb “puff” – to use exaggerated praise). One court has said that “puffery” is “an exaggeration or overstatement expressed in broad, vague, and commendatory language. Such sales talk, or puffing, as it is commonly called, is considered to be offered and understood as an expression of the seller’s opinion only, which is to be discounted as such by the buyer.” Another court has described “puffery” as “an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying.” For example, a car dealer might advertise that it offers the “best” deals in town – consumers are expected to take this type of hyperbole with a grain of salt. This is a vague statement, and there is no clear way to objectively measure how one deal might be better than another deal (given multiple different variables, such as the dealer’s sticker (cash) price, required downpayment, condition of the car, total time needed from initial visit to delivery of the car, the dealer’s warranties, and so forth). A Connecticut court has held that a used car dealer may describe a car as being in “mint” or “very good” condition without crossing the line from simple puffery to giving the buyer a warranty about the car’s performance or condition.[1] These types of “puffing” statements offer the seller’s rosy opinion about the general quality of the seller’s merchandise, contain no specific representations or promises, and should not be relied on by consumers. Similarly, a business may advertise that it offers “superior quality” or “fast, fair and friendly service” – without more specifics, consumers should not rely on these types of vague and clearly subjective statements.

Even in the debt collection context, courts have acknowledged that collection letters might contain statements that should be recognized by consumers as “puffery.” For example, general statements that a debt collector will continue with collection efforts until the debt is paid or until satisfactory payment arrangements are made have been characterized by one court as puffing – a general, nonspecific statement designed to create a certain mood (of urgency), without communicating anything concrete and without overwhelming or detracting from the more specific information and disclosures contained in the same debt collection letter.

More finely tuned and specific statements, however, may leave the world of “puffery” and require factual substantiation. In addition, an advertisement or debt collection letter might include statements that are truthful and factually accurate, but that nonetheless might tend to mislead or confuse consumers. For example, the Federal Trade Commission recently commissioned a survey of consumers focused on advertisements claiming that certain windows could help consumers save “up to 47%” on their heating and cooling bills. (See http://www.ftc.gov/os/2012/06/120629bristolwindowsreport.pdf.) Based on this survey, the FTC has concluded that most consumers believe the phrase, “up to,” at least in the context of energy savings, refers to a typical or expected result, and not an outlier or unusually favorable result. In essence, the survey suggests that the average consumer may overlook the literal meaning of the words “up to.”

Interestingly, the survey also indicated that a very clear and conspicuous footnote in the advertisement, along the lines of “The average Bristol Windows owner saves about 25% on heating and cooling bills,” did not cause a statistically significant number of consumers to believe that they might not personally receive savings of closer to 47%. Apparently a typical consumer, reading the advertisement, felt optimistic and believed s/he would experience above-average savings. (Given the inherent nature of “average” savings, it might be reasonable for a consumer to believe that 50% or more of the owners of the advertised windows could experience above-average savings.) Consequently, the FTC has advised certain businesses that advertise energy-related cost savings of “up to” a certain percentage (or amount) to advertise a percentage (or amount) that reflects a result that “all or almost all consumers are likely to achieve” under normal circumstances.[2] This might effectively require a hypothetical “up to 47% savings” advertisement (as qualified by an “average savings of 25%” footnote) to be revised, to instead disclose savings of “up to” a certain percentage that is less than 25% (because the advertised “up to” percentage of savings would need to be achievable by “almost all” consumers).[3]

Another possible approach to putting certain “up to” claims into clearer context for the average consumer might be to clearly disclose that the advertised “up to” amount or percentage is not typical. By way of analogy, FTC staff surveyed advertisements for weight loss products in 2004, and noted that 29% of the surveyed advertisements included qualifying statements along the lines of “Results not typical” or “Results are extraordinary and may not represent the results of the average person.” (See http://www.ftc.gov/os/2005/04/050411weightlosssurvey04.pdf.)

The FTC is using consumer survey data to help determine whether certain advertising claims are likely to mislead the average consumer, even though the literal, specific advertising claims might be supported by objective, empirical evidence and strict application of grammar rules. Similarly, in some debt collection cases, courts are allowing plaintiffs to introduce survey data to help demonstrate that certain statements in collection letters (even if literally true) are false, deceptive or misleading in their overall context to unsophisticated consumers.

The Consumer Financial Protection Bureau has also been conducting consumer surveys on a variety of issues, including (for example) the efficacy of various model forms and disclosures. For example, the Bureau recently announced its plan to conduct telephone surveys of credit card holders who will be receiving a new short-form credit card agreement from Pentagon Federal Credit Union during the fourth quarter of 2012 and the first quarter of 2013 (a short-form agreement modeled on the Bureau’s prototype, copy available at http://www.consumerfinance.gov/static/cc/kbyo_cc.pdf), [4] The Bureau also has announced its intent to be “data driven” and to undertake “evidence-based” analysis,[5] and to gather data about financial trends (both positive and negative) that are relevant to consumers. Given the Bureau’s authority to regulate a wide range of financial services practices that could potentially be considered unfair, deceptive, or abusive (including financial services advertising and debt collection practices), one should not be surprised if the Bureau were to decide to conduct or commission consumer surveys about certain advertising or debt collection practices, in an attempt to determine whether certain practices might have the unintended result of causing some consumers to make financially ill-advised, or less than fully informed, economic choices.

There is a great deal of regulatory and judicial guidance about certain specific types of advertising and debt collection practices. In the advertising context, there are very specific (and detailed) Truth in Lending and Truth in Leasing requirements, Federal Trade Commission comparison price advertising guides, guides about advertising warranties, “free” offers, and the use of testimonials and endorsements (just to give a few examples). Debt collection letters are also very heavily regulated (and the subject of frequent litigation) at the federal and state levels. However, setting aside specific statutory and regulatory disclosure requirements and prohibitions, how should one review nonspecific, general “puffing” statements in advertising or debt collection letters for overall accuracy and any possible tendency to accidentally confuse or mislead consumers? Statements made to consumers should not only be literally accurate and factually defensible - they should also include enough information to help an unsophisticated consumer put everything into better overall context. Unsophisticated consumers might be less inclined to question more specific claims or statements, especially if they are not very knowledgeable about the product or service being described. Unsophisticated consumers might also believe that they will have better-than-average experiences with an advertised product or service. One should not overlook the important difference between an imprecise, vague “puffing” statement that might be discounted by consumers of average intelligence, and more specific factual statements (including statements with numbers, amounts, dates, time periods, or other measurable and quantifiable specifics) that might be interpreted (and relied upon) by consumers in unintended ways (for example, by discounting or ignoring important qualifiers, including phrases such as “up to” and words such as “average”).

Elizabeth C. Yen is a partner in the Connecticut office of Hudson Cook, LLP. Elizabeth can be reached at 203-776-1911 or by email at eyen@hudco.com.

[1] However, in view of a Connecticut used car dealer’s statutory obligation to disclose whether a used car offered for retail sale meets minimum safety requirements for legal operation on public highways, advertising a used car in Connecticut as being in “mint” or “very good” condition might be considered an implied warranty that the car’s mechanical condition meets legal requirements for safe operation on public roads.

[2] See, e.g., http://www.ftc.gov/opa/2012/06/uptoclaims.shtm, http://www.ftc.gov/opa/2012/02/windows.shtm, http://www.ftc.gov/opa/2012/08/windows.shtm and http://www.ftc.gov/os/caselist/1023171/120518winchesterdo.pdf.

[3] For comparison purposes, the Consumer Reports July 2012 home window buying guide indicates that “If you now have old-fashioned single-glazed windows, replacement windows might save you from 10 percent to 25 percent a year for heating and cooling.” See www.consumerreports.org/cro/home-windows/buying-guide.htm.

[4] See 77 Fed. Reg. 57560 (September 18, 2012).

[5] See, e.g., the Bureau’s draft Strategic Plan for 2013-2018, copy available at http://www.consumerfinance.gov/strategic-plan/.

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