Where's the beef? How Taco Bell defused a false advertising lawsuit at its inception by being prepared

Wednesday, May 18, 2011

As first appeared in the 'Inside Edge' enewsletter from www.insideindianabusiness.com

A California woman recently sued Taco Bell to stop it from saying that the filling for many of its tacos and burritos is “seasoned beef.” She asserted it had too little actual beef to be labeled as such. Very soon after filing her lawsuit, though, she voluntarily agreed to dismiss it. She did so without being paid any money by Taco Bell, and without forcing the company to make any changes to its products, ingredients or advertising. This was certainly a very favorable result for Taco Bell – not only because of the result, but also because of the avoidance of expensive protracted litigation.

Defending against a false advertising claim

At its core, this was a false advertising case. False advertising cases are notoriously difficult to defend. They often require companies to prove that language in their advertising is true, that consumers are not likely to be misled by it, and/or that the accused language was not material to consumers’ purchasing decisions. This often requires the development and analysis of technical research, complicated market surveys and studies, and the testimony of expert witnesses. In other words, these lawsuits often take time and money.

But in Taco Bell’s case, the opposite was true. How did Taco Bell accomplish this? The answer has to be because of their understanding of false advertising law and advance preparations. Through such, Taco Bell was able to immediately disprove the plaintiff’s allegations in their infancy.

Prepared with the substantiated truth

Taco Bell understood the importance of being prepared – when asked why the plaintiff dismissed her suit, Taco Bell’s CEO stated “we gave them the facts, which we could have given them three months ago before this was filed, and when they saw the facts they withdrew the lawsuit. It’s that simple.” In other words, Taco Bell was immediately able to demonstrate that its advertising statements were, in fact, true.

Business owners should hold to the same rule that Taco Bell apparently followed here: Never make a claim in an advertisement that is not already supported by evidence that you have in-hand.

Indeed, having the necessary substantiation of claims made in your advertisements is required by law. The Federal Trade Commission (FTC), which is congressionally authorized to prohibit “unfair or deceptive acts or practices,” requires all advertisers to have a reasonable basis for making objective claims before those claims are disseminated in an advertisement. A company cannot make a claim and then, when challenged, attempt to seek out or develop the evidence it needs to demonstrate that the claim is, in fact, accurate. The company must already have this evidence.

How much substantiation is required?

The FTC requires advertisers to possess at least the level of substantiation expressly or impliedly claimed in the advertisement. So, for example, if an advertisement claims that a product is designed for household use, then the advertiser must have test results and/or other data that demonstrates that a product is, in fact, appropriate for household use. As a general rule, the more an advertisement promises, the more the advertiser must be able to prove. This is particularly true for health or safety claims. For these types of claims, the FTC typically requires advertisers to provide competent and reliable scientific evidence demonstrating that the claim made in the advertisement is true.

Advance preparation and substantiation of claims made in your advertising will serve as a proactive tool that can be used to prevent and/or preempt litigation. To learn more about these topics, please contact us.

 
 
 

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