The Federal Trade Commission (FTC) has recently released the results of an FTC-commissioned study which shows that when an advertisement proposes savings resulting from product performance of “up to” a certain amount, many consumers believe that they will save the maximum stated. This combined with an FTC enforcement action for which the study was undertaken suggests the Commission may treat “up to” performance claims as misleading unless the claimant has evidenced that most consumers will achieve the high end of results under normal circumstances, even if disclaimers explain otherwise.
In the study, subjects were shown one of three ads for “Bristol Windows” which promised energy savings – the first promised savings “up to 47%” with no disclosure, the second promised savings of 47%, and the third promised savings “up to 47%” but included a disclosure that most consumers received actual savings of “about 25%”.
Over two-fifths of participants (45.6%) in the study who viewed the first ad, which promised savings “up to” 47% and did not contain a disclosure, said that the ad stated or implied that they would actually achieve savings of 47%, not “up to” that amount. Only 26.3% of consumers viewing the same ad mentioned the “up to” qualifier. Even among participants who viewed the third ad, which promised savings “up to” 47% and contained a disclosure that typical savings was only 25%, 36.5% of respondents said the ad stated or implied that they would save 47%, without mentioning the qualifier.
The study was conducted in connection with FTC charges against five replacement window sellers that each made various claims about the energy savings consumers could see after installing their windows. The Commission issued a final order in May against Winchester Industries, one of the window manufacturers charged and the manufacturer of Bristol Windows. Among other things, Winchester Industries was required to stop using ads that guaranteed a specific percentage of energy savings unless the specific circumstances under which such savings could be achieved are “clearly and prominently” disclosed and in close proximity to the claim. Furthermore, Winchester may only make such claims if all or almost all of consumers in the specified circumstances are likely to achieve the stated energy savings.
In light of the case and study, advertisers should be careful in making performance-based “up to” claims. While the FTC said in the consent order that the Winchester Bristol Windows complaint and consent order should not be interpreted as a general statement on how “up to” claims will be addressed by the Commission in other circumstances, its press release for the study results stated that the FTC released the study to “help guide advertisers to avoid the use of misleading ‘up to’ claims” and that “advertisers using these claims should be able to substantiate that consumers are likely to achieve the maximum results promised under normal circumstances.” Accordingly, the FTC does seem to be saying that to avoid consumer misperception, only typical performance results should be advertised, particularly when there is a significant difference between potential and typical results, even if disclaimers are included that typical results are substantially less. The FTC’s study indicates that even explaining that variance in a disclaimer is not effective in preventing an impression by consumers that the better result will be achieved, and the overall consumer impression is what matters to the FTC. Accordingly, atypical “up to” performance claims may be found to be misleading notwithstanding a disclaimer and should be avoided.
The FTC news release regarding the final order against Winchester can be found here. (link to: http://www.ftc.gov/opa/2012/05/windows.shtm). The full decision and order against Winchester Industries can be found here. (link to: http://www.ftc.gov/os/caselist/1023171/index.shtm). For more information on the study, including a link to the full-text version, click here. (link to: http://www.ftc.gov/opa/2012/06/uptoclaims.shtm).