False advertising is an act of deliberately misleading a potential client about a product, service or a company in general by reporting false or misrepresenting information or data in advertising or other promotional materials. False advertising is a type of fraud.
False advertising is often a crime. In some countries advertising practicies (including "truth in advertising") are regulated by a government authority (FTC in the USA), in others the advertising industry is self-regulated and professional associations combat false advertising.
To decrease their legal liability for false advertising, many companies cover their tracks using small print.
Some different methods used in false advertising
Going Out of Business/Bankruptcy sales
By utilizing advertisement with titles such as "Going out of business", "Closing store", "Liquidation sale" or "Bankruptcy sale" a message of urgency and "dumped" prices is conveyed - where in reality the business has no plans on closing its store or going out of business. Some cities in the U.S now requires permits for these types of advertisements to combat the false advertising.
False Price Comparison
By comparing a sale price to a regular price for the same product, advertisers can inflate the "regular" price in order to create the impression that the sale price is very low. The intent is to mislead consumers into thinking that they are saving money by purchasing the "on-sale" item or service.
Misrepresentations
Utilizing words such as descriptive terms or location terms to increase the perceived value of a product. An example would be advertising "Maine Lobsters" when in actuality the lobster is from the Pacific ocean.
Buy 1, Get 2 Free
This type of false advertising concludes that more is better. By increasing the price of a fire cracker, for example, to five times its original marginal profit-based price, a 5-for-1 "special" sale is offered while still keeping the same profit line. In other cases the free product is of lower quality than the originally purchased item.
Bait and switch
An offering of a service or product at a very low price with no intention to sell said service or product as advertised. This is accomplished by lowering standards on the advertised product -- such as guarantees, credit terms, quality either verbally or actual degrade in standards. Another method is to offer a "limited quantity" deal. Once the consumer is lead up to this point, sales personnel will try and coax a consumer to purchase the more expensive, real product.
False Labels
The use of labels with statements concerning quality, indentity, quantity, manufacture or origin that are misrepresented or false. Another method of false labeling is hiding or destroying a label indicating the product's origin (i.e. "Made In Taiwan" or "Made in Botswana").
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