California law seeks to protect both consumers and businesses from false advertising.
Like democracy, the commercial marketplace relies on trust in order to function; and maintaining a sufficient level of trust requires protection from unfair business practices, including false and misleading advertising. California's Unfair Competition Law is designed to protect both consumers and fair commercial competitors from such practices on the part of unscrupulous businesses.
Definition
Under California law, false advertising occurs when any business or business representative seeks to induce the public to enter into any obligation by making a statement about its own products or services, or the products or services of others, that is false or misleading and that the business knew, or should have known, was false or misleading. False advertising can take such forms as failure to disclose pertinent information; advertising claims based on flawed research; disparagement of the products or services of others; false testimonials or endorsements; and false offers for free products, rebates or contests.
Liability
False or misleading advertising in California is a misdemeanor punishable by imprisonment of up to six months or a fine of as much as $2,500, or both. Alleged violators also are subject to civil action seeking restitution or an injunction barring the illegal practice, or both.
Standing
Those with legal standing to sue for false or misleading advertising include private individuals or organizations acting in the interests of themselves or the public. Such actions may also be brought by California public prosecutors, including the attorney general and any district attorney or city attorney. Both private plaintiffs and public prosecutors bear the legal burden of proving that the advertisement was false or misleading.
Relief
Under California law, courts may issue injunctions barring specific advertising practices either temporarily or permanently. Besides prohibiting specific conduct, injunctions my require affirmative actions such as disclosure. Plaintiffs may also seek monetary restitution of any losses they incurred as a result of false or misleading advertising.
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