Mouth-Waterin' Treats Company wants to sell its candy in a normal-sized package labeled "Gigantic Size." NuFabrics, Inc, wants to advertise its sweaters as having "That Wool Feel," but does not want to specify on labels that the sweaters are 100 percent polyester. Can these firms market their products as they would like? If not, why not?

Answer 1

There are a number of federal and state laws that deal specifically with information given on labels and packages, including the Fair Packaging and Labeling Act of 1966 and the Wool Products Labeling Act of 1939. In general, the information on such labels must be truthful and complete (not a half-truth that would lead a consumer to a false conclusion). The information must be accurate and be conveyed in words that are understood by the ordinary consumer. Possible dangers from the products' use or misuse must also be included. Federal labeling and packaging rules are enforced by the Federal Trade Commission and the U.S. Department of Health and Human Services. There are other state and federal laws that prohibit unfair and deceptive advertising, including labels. These laws include the Federal Trade Commission Act of 1914. Deceptive advertising occurs if a reasonable consumer would be misled by the advertising claims. The Federal Trade Commission (FTC) can investigate a complaint, and if, after the investigation, it believes that a seller has engaged in deceptive advertising, it can send a formal complaint to the alleged offender. If the seller does not agree to a settlement, the FTC can conduct a hearing before an administrative law judge (ALJ). If the FTC succeeds in proving that a seller's labels or packaging (or other ads) are deceptive, it can issue a cease-and-desist order. The agency might also impose a counteradvertising sanction, requiring a seller to issue ads-in print, on radio, and on television-to inform the public about the misinformation. Other sanctions are possible.?