We try to post on this page “up to” 5 times a week. So what does that mean to you – that we always post 5 times a week, that most of the time we post 5 times a week or that we post anywhere between 1 and 5 times per week? If you answered “always post 5 times a week” then maybe you participated in a recent FTC mall intercept survey as well. Several months ago we blogged about the FTC’s settlement with several window manufacturers’ “up to” energy savings claims. The settlement required that the companies not make such claims unless “all or almost all” consumers are likely to achieve the maximum savings. At the time the FTC stated in its analysis of the proposed settlement that “the FTC’s complaint and the proposed consent order should not be interpreted as a general statement of how the Commission may interpret or take other action concerning representations including the words “up to” for other products or services in the future.”
Is the FTC rethinking its position now? Last Friday, the Commission released a report it commissioned in connection with the window complaints that studied how consumers interpret these type of claims. The study was designed to investigate the consumer “take away” for one of the window company’s ads that touted “up to 47% savings” in energy costs. The study found that almost half (not up to half) of consumers interpreted the ads as communicating that a typical user would realize savings of about 47%. In addition, the study found that consumers exposed to a “non-up to” version of the same ad interpreted the ad in about the same way. The study’s authors conclude that the use of an “up to” qualifier does not weaken the ad’s impression on consumers. The Commission’s press release on the survey states that “the FTC believes the report will help guide advertisers to avoid the use of misleading ‘up to’ claims. It reinforces the FTC’s view that advertisers using these claims should be able to substantiate that consumers are likely to achieve the maximum results promised under normal circumstances.” In other words, maybe the FTC’s consent order against the window manufacturers actually was intended to be a general statement regarding “up to” claims for other products and services.
So what is an advertiser to do? Certainly there are some things that are troubling about the survey – for example, many consumers appear to have either not noticed or simply ignored the use of “up to” as it is otherwise hard to explain how they could find that an “up to 47%” claim is the same as a “47%” claim. And even a fairly prominent disclaimer in one test ad about what savings were achieved by the average consumer had little effect. Shouldn’t advertisers, at least in most circumstances, be able to rely upon the plain meaning of clearly conveyed words and disclaimers?
But perhaps most importantly, it’s not clear that the survey, and the Commission’s admonition, applies to pricing and other similar type “up to” claims. The claims and survey related to a performance claim and the press release talks about “maximum results.” Arguably consumers may not be able to readily measure how a product actually performs and how close actual performance is to the promised maximum. However, pricing “up to” claims are often readily measurable. A consumer can see a retailer’s ad promising savings of up to 50% and then go into the store and readily observe that many items are only 20 or 30% off. Further, when they buy the product, unlike the windows in question, they likely know at the time of purchase what their actual savings are. Thus consumers may have a different understanding of pricing “up to” claims based upon their real world experience with such claims. (And we know there is lots of precedent on “up to” sales claims – we blogged last week about NAD cases reiterating their view that at least 10% of the good sold must be at the maximum savings and there are many state laws that speak specifically to such claims including the New York City rule requiring 15% of goods offered at the max savings and states including Illinois and Louisiana that require ads to show the spread of savings, e.g., 10-50% off).
Which brings us back to our original question of what’s an advertiser to do? Certainly efficacy or performance based “up to” claims should be made with caution. Unless and until the Commission provides further guidance companies may want to make sure that they prominently disclose the “up to” nature of the claim and that the promised maximum result is not an outlier and perhaps represents, as required under the window consents, what most consumers will actually achieve. Companies making pricing-related “up to” claims have perhaps a tougher decision about how to proceed but there is certainly at least an argument to be made that it may still be “business as usual” for such claims.