The Mises Institute monthly, free with membership
September 1995
Volume 13, Number 9
"Puffery" in Advertising
Donald J. Boudreaux
Want to please a lawyer? Find a long-established legal rule
that minimizes disputes. Then
propose that this rule be radically changed. Such thrill seeking
seems to be the motive behind a
recent proposal to make advertisers liable for "puffery."
The national Conference of Commissioners on Uniform State Laws
is considering amending the
Uniform Commercial Code to ease the way for suits against
advertisers who use puffery. Because
all states, save Louisiana, have adopted the UCC, this proposal
will make nearly every firm in
America the target of costly litigation.
"Puffery" consists of promotional claims that no one out of
diapers takes literally. Your two-year
old might believe that polar bears enjoy sipping Coca-Cola. But
you know better. Because
two-year-olds make no spending decisions, advertisers have always
been free to enliven their ads
with harmless hyperbole.
Under existing UCC law, the burden of proof rests on
plaintiffs asserting that particular
advertising claims are factually misleading rather than mere
puffery. If the Commissioners'
proposal becomes law, however, every advertising claim will be
presumed to be part of the
agreement between the seller and buyer. Buyers will be presumed
to have relied upon even the
most obviously absurd advertising exaggerations.
The burden of proof will then be on defendant advertisers to
prove that a reasonable person
would not be misled by the challenged advertising claim. Because
lawyers will easily find
reasonable-looking plaintiffs to testify that they were misled by
this or that advertisement,
advertisers who make any claims beyond dry factual statements
risk severe litigation losses.
Advertisers are now liable for harms caused by genuinely
misleading advertising. For example,
Coca-Cola would be liable to consumers for damages caused if it
advertises that Coke cures
cancer. Reasonable consumers might be fooled into drinking more
Coke only because of its
alleged medicinal properties. But, by definition, puffery does
not mislead reasonable consumers.
Besides, puffery entertains. We all know that Dave doesn't
actually cook hamburgers at Wendy's.
We all know that toy rabbit powered by a single Eveready battery
will not keep going, and going,
and going. Even if puffery's only function is to
entertain, that would be sufficient reason not to
discourage it.
But puffery does far more: it informs consumers as well as
promotes product quality. Before a
consumer can buy a product, the consumer must be made aware of
the product. One function of
advertising is to create such awareness. In this age of vivid
video images and electronic sounds,
sellers must compete hard for consumers' attention. Puffery is
one benign means advertisers use
to grab that attention.
Puffery enables an advertiser to grab consumers by their
collars and say "Hey, have I got a great
product for you!" If firms are discouraged from placing in their
ads all but the most dry factual
claims, consumers will be forced to spend more of their own time
and resources discovering
which products are available.
One consequence will be diminished product innovation. Because
consumers are more familiar
with established products than with new products, puffery is
pivotal to the marketing of new
products. Fewer resources will be devoted to product innovation
if firms encounter greater legal
risks in bringing new products to consumers' attention. As fewer
products are introduced onto the
market, established products face less intense competition.
Product quality declines.
Advocates of this change in UCC law insist that no real change
is in the offing. Northwestern
University law professor Richard Speidel, a member of the
committee drafting the new law,
contends that there is "not a change in substance at all" from
the existing UCC. Really? Would
Speidel make this claim if, say, a Constitutional amendment
removed the burden of proof from
prosecutors and placed it on criminal defendants? Moreover, if
the proposed change has no
substance, why bother with it?
Lawyers will be the big winners from any movement away from
the existing uncontroversial
legal treatment of puffery. With legal change comes greater legal
uncertainty, and with greater
legal uncertainty come more legal disputes. Demands on already
over-burdened courts will grow.
Imagine the billing hours lawyers will run up debating whether or
not Chevrolet really is the
heartbeat of America. Under the misleading banner of helping
consumers, lawyers will reap big
bucks cleaning up a mess that lawyers themselves are trying to
create.
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Donald J. Boudreaux, a former Mises Institute student, teaches economics and law at Clemson University
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