Puffery and Misrepresentation – Know Where to Draw the Line to Keep Your Online Business in Business!

    July 10, 2003

Those of us with online businesses know about the “itchy finger” syndrome only too well. Grab the surfer’s attention within the first 20 seconds or forget it.

Spend any time at all learning about marketing online and you’ll be dazzled by the vast array of experts out there, all making their invaluable knowledge freely available to you. That’s one of the greatest boons of the internet. The sheer volume of information that’s just waiting there, for the taking.

And so you take advantage of all of this free information and being the sponge that you are, absorbing everything you can, you soon learn that the way to make a sale is to employ the AIDA principle. Attention. Interest. Desire. Action. Especially action.

According to the AIDA principle, the first step to making the sale is to grab the reader’s attention. There are techniques for doing this. Using certain co-called ‘irresistible’ words in the headline of a classified ad is a surefire way to get prospects’ attention. You’ve read about them, by now. They’re words like YOU, SECRET, REVEALED, EXPOSED and so on and SO ON.

Once the headline captures the reader’s attention, these ads are designed to go on to stir the interest and arouse the desire of the reader for whatever it is being sold. The well drafted internet classified ad focuses on the benefits to the reader of the product in question, and closes with a call to action.

So, all you have to do to make the sale is use words that are going to get your reader’s attention, incite their interest, arouse their desire and prompt them to action. Not quite as easy as it sounds but the theory is simple enough. Internet Marketing 101 right? Well, let’s follow that up with a little Contract Law 101 too, OK?

In contract law, there is a concept known as “puffery”. Puffery is a self-evident exaggeration of the properties of the thing being advertised and is not intended to be taken literally. For example, “Put a tiger in your tank – buy Shell”. No one is seriously going to think that if you put Shell gasoline in your car that, hey presto!, you’re going to find a real live tiger in your tank. Well, OK, maybe a nut would, but the law in this area is concerned with what the reasonable person would believe, not the nut.

The law recognizes that advertisers use puffery to get the attention of prospective customers. So, if someone goes to court wanting to sue Shell for breach of contract because, although they put Shell in their gastank, they’re still tigerless, the court’s going to throw the case out because the “tiger in the tank” slogan was a mere puff, a self-evident exaggeration.

Puffery abounds on the internet as it does in advertising offline. The internet brings a tricky new dimension to this area of the law, though. The internet is still in its infancy and tens of thousands of newbies come on line every day because they’ve heard all the get rich quick stories and they want their share.

The internet is not a level playing field as the offline world is. Offline, we all have broadly similar life experiences when it comes to judging what is a puff and what is not. On the internet, though, our online experiences can vary dramatically from one person to the next. Who is the “reasonable person” when it comes to the online environment? Is it the reasonable internet veteran or the reasonable internet newbie? Or is it some reasonable person in between?

Think about this. What do you think when you see an ad that says something like “You Can Make $50,000 In 60 Days!” Is this mere puffery? Remember, a puff is a self-evident exaggeration not intended to be taken literally. As obviously outrageous as the “$50,000 in 60 days” claim seems to you and me, it is not a SELF-EVIDENT exaggeration and it most definitely IS intended to be taken literally, otherwise why be so specific as to dollar quantum and time? Why not “Get Rich Quick!”?

Contrast this with “Turn Your Computer Into an ATM!” This IS an example of a puff. It is a self-evident exaggeration and is not intended to be taken literally. No-one seriously expects that their computer will turn into an ATM just because they purchase so and so’s new marketing ebook.

It is therefore obvious that whether a statement like “You Can Make $50,000 In 60 Days!” could possibly be considered a mere puff depends very much on how internet-savvy you are. Anyone who’s been online long enough soon learns that these sorts of claims are made everywhere you turn and are complete rubbish. So, you recognize them for what they really are when directed to the market that you’re a member of …. puffery.

But what if you’re NOT an internet veteran? What if you’re a newbie? You’ve heard all the claims about internet riches. That’s why you came online in the first place, to get your share of the action. The newbie hears the claim and believes it. Newbie forks over $160 to become a member of the program that’s going to make him $50,000 in the next two months. He has just signed up for your you-beaut XYZ Program in reliance upon that claim. Could he have a cause of action against you for precontractual misrepresentation?

Depending on the law applying in the jurisdiction where the contract was formed, you bet! (You do know that if you make an offer to sell someone something and they accept it by purchasing the thing from you you’ve just created a contract, right?) Maybe it wouldn’t be considered anything more than a puff in your jurisdiction (state or country). But how do you know where your purchaser is located? How do you know what the governing law of the contract is? Is it where the sale takes place? Where IS that, by the way, when it’s made electronically and buyer and seller are in different countries? Is it where the money goes to or where it comes from? Is it where the product is downloaded from or to? Very difficult, very UNSETTLED questions.

As an American, you may have just sold something to an Australian. Did you know that if your claim of fabulous riches is not a mere puff you may have just engaged in deceptive and misleading conduct under Australian law? Did you know that the courts of the U.S. can apply Australian law and vice versa?

Want to take the chance? I hope not. Don’t expose yourself or your business to this sort of liability. Don’t make outrageous claims. Sure, you can use puffery to get the attention of your prospects, but keep your audience in mind. If you’re marketing to experienced ‘net entrepreneurs you have some latitude here. If you’re marketing to absolute beginners, be careful. Tell it like it is and keep the puffery to a minimum. If you don’t, your online business could very well go up in smoke.

2000 Elena Fawkner

Elena Fawkner is editor of A Home-Based Business Online … practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com/