By: Mark Sanborn
Senior Product and Regulatory Counsel
The Federal Trade Commission (FTC) recently issued news of an advertising enforcement action based on the little-known, but frequently cited concepts of “net impression” and “implied misrepresentation” in advertising.
What is “Net Impression” of an Advertisement?
For many years, the FTC has clearly stated in enforcement actions, guidance, and other material that an advertisement can violate federal UDAP standards even if it includes truthful details if the overall “net impression” of the advertisement is misleading.1 This net impression takes into account implied statements that may influence how consumers interpret the advertisement. Namely, a claim that absent additional information would mislead a consumer acting reasonably under the circumstances about a material fact, violates the law.2 The FTC has noted that this could apply to ads that are “deceptively formatted” so that the identity of the advertiser is unclear, or make it appear that the advertisement is a news story.3 Or it could be an ad with an endorsement where the identity of the advertiser is unclear. There is also guidance suggesting that disclaimers that contradict a deceptive claim are ineffective and create a deceptive “net impression.”4
However, despite the FTC’s emphasis on the importance of net impressions, concrete examples illustrating what they mean by the term are surprisingly scarce.
What is an “Implied” Claim?
A related concept in federal advertising law is that an advertisement can violate federal standards either expressly or implicitly. Express claims are obvious, but what is an “implied claim?” In general terms, the FTC has stated that “express claims directly state the representation at issue. Implied claims are any claims that are not express. They range on a continuum from claims that would be ‘virtually synonymous with an express claim through language that literally says one thing but strongly suggests another to language which relatively few consumers would interpret as making a particular representation.'”5 The FTC also states that evaluating whether an implied claim constitutes a misrepresentation (whether it misleads consumers acting reasonably under the circumstances regarding material information) requires an evaluation of the context in which the claim is made.6
But what does that mean in the real world?
In a 1992 case involving Kraft, Inc., the FTC addressed misleading advertising for Kraft Singles cheese slices. The company’s advertisements claimed each slice was made from five ounces of milk and stated that as a result they were concentrated with calcium. The FTC alleged that this presentation implied that each finished cheese slice retained the full five ounces of milk. However, the reality was that 30% of the calcium was lost during processing, a fact Kraft allegedly failed to disclose in their advertisements. The FTC deemed this omission and the resulting implication to be deceptive.7
A more recent FTC hypothetical example comes from the FTC commentary to the CARS Rule, involving a somewhat convoluted scenario about discounted coffee. In this scenario, a dealership’s advertisement shows a car with a consumer standing next to it holding a cup of coffee, accompanied by the statement, “10% discount available before 10 a.m.” According to the FTC, such an advertisement can mislead reasonable consumers into thinking that the car is available at a 10% discount, among other possible misinterpretations.8 Thus potentially making an implied representation that is misleading.
In another recent example, a September 2024 FTC blog post offers a fresh take, this time involving a seafood restaurant.9 The FTC describes how a waterfront restaurant, through its décor, menu language, uniforms, and social media imagery, creates the impression that it serves fresh, locally caught seafood. The restaurant doesn’t explicitly make this “local” claim, but phrases like “Eat local” and “We catch ’em,” combined with posts of fishermen and fishing boats, lead customers to believe they’re dining on local catch. If, in reality, the restaurant is serving farmed or frozen seafood imported from overseas, it could be violating FTC guidelines on misleading advertising. The FTC emphasizes that businesses must be truthful about the origin of their products to avoid deceiving customers and to maintain fair competition with establishments that are honest about their offerings.
Now, here’s the fun part. The tone of this blog post suggests it might be based on a real-world incident, yet it’s unclear whether it references an actual case or a fictionalized example. The post kicks off with a dramatic “Gather around to hear about the restaurant that tricked people,” which feels more like storytelling than a legal hypothetical. Despite the vivid, almost cinematic, descriptions of the restaurant, its staff, and even its Instagram posts, there’s a conspicuous absence of any specific details—no restaurant name, no dates, no enforcement actions, nothing. It raises the question: has the FTC itself crafted the net impression of a real-life enforcement case? Maybe they’re giving us a live demonstration of how net impressions work, or maybe someone at the FTC recently re-watched Inception and decided to craft a net impression within a net impression, leaving us to wonder if we’re dealing with reality or just another layer of clever fiction.
So What Do I Need To Know?
The bottom line here is that dealers need to be aware that advertising compliance is more than just ensuring that the right disclaimers are in the language at the bottom of the ad. You must review the entire advertisement in its context and think about whether a consumer would be mislead, not by the specific words used, but by the overall impression they get from what you show and say, or don’t say.[us_separator show_line=”1″][vc_column_text css=”%7B%22default%22%3A%7B%22font-size%22%3A%220.8em%22%7D%7D”]1 FTC “Policy Statement on Deception’’ 103 F.T.C. 174 (1984) (appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 183 (1984)), https://www.ftc.gov/system/files/documents/public_statements/410531/ 831014deceptionstmt.pdf.
2 FTC “Policy Statement on Deception’’ at 2.
3 See https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf
4 See https://www.ftc.gov/news-events/news/speeches/regulatory-enforcement-your-website-who-will-be-watching#N_12_
5 89 Fed. Reg. 634, quoting Kraft, Inc., 114 F.T.C. 40, 120 (1991) (quoting Thompson Med. Co., Inc., 104 F.T.C. 648, 788 (1984), aff’d, 791 F. 2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987)).
6 89 Fed. Reg. 612.
7 Kraft, Inc. v. F.T.C., 970 F.2d 311, 315 (7th Cir. 1992)
8 Id.
9 Mind Your Net Impression When Seafood is Not Wild, Fresh-Caught, or Local, Fed. Trade Comm’n (Sept. 18, 2024), https://www.ftc.gov/business-guidance/blog/2024/09/mind-your-net-impression-when- seafood-not-wild-fresh-caught-or-local. (Archived at: https://perma.cc/2K93-QQ5E).[/vc_column_text]