Is this a case of "buyer beware" or bait and switch? In the circus-like atmosphere of "consumerworld," businesses and shoppers play tug of war between what is a legitimate advertisement in a competitive marketplace and what is misleading, unfair or just plain wrong.
Mackins, like most consumers, never complained to the Better Business Bureau (BBB), the attorney general or the Federal Trade Commission. She simply chose not to buy the product. Of the estimated 25 million consumers ripped off nationwide in a year, only about 8 percent ever make a formal complaint about fraud, scams or ripoffs, said Steve Baker, who directs the Midwest office of the Federal Trade Commission (FTC) in Chicago.
In 2007, the BBB of Minnesota received 25,818 complaints, with new-car dealerships, mortgage companies, banks, used-car dealerships and cell-phone services drawing the most complaints, said Lisa Jemtrud, trade practices manager of the Minnesota/North Dakota BBB. When companies run afoul of the bureau, it has three options:
• Change the company's public reliability report with the BBB.
• Send the violation to the state attorney general, postal inspector, department of commerce, local police or another agency.
• Alert the news media.
Last month in Golden Valley, more than 100 area businesses took part in an FTC-sponsored seminar on advertising ethics. Eileen Johnson, owner of Spirit Grove Photography in Roseville, wanted to learn about direct mail and gift cards, because she gives away such cards as an advertising promotion. She found out that although Minnesota does not allow gift cards with an expiration date, free gift cards are exempt from the new rule.
Larger businesses than Johnson's often work with an ad agency and have internal legal counsel, said Carolyn Williams, manager of legal compliance at Campbell Mithun agency in Minneapolis. "You try to push the envelope creatively but not legally," she said. Campbell Mithun also has an internal legal review to avoid any potential challenges by consumers or competitors.
Few consumers are likely to recall a misleading ad, unless they felt the sting personally. Few of us remember the 1993 Klondike Bar ads saying it was 93 percent fat free. Even fewer knew that the product was virtually fat-free only if you ate the ice-cream center and discarded the chocolate coating, according to the FTC.
Classified and online ads don't always set off alarm bells with consumers. That's why the FTC currently has more than 20 fake ads on the Internet, including a bogus diet remedy called "FatFoe." When anyone clicks on the ad, a pop-up screen indicates that "FatFoe is not a real weight product. The ad to which you responded is a fake, posted by the FTC to warn consumers about diet rip-offs." The weight-loss product that was guaranteed to work for everyone, without diets or exercise, is, duh, too good to be true.
When the BBB gets involved
The BBB secretly checked out the Furniture Clearance Center's $89 mattress sets and did not feel that the mattress could be considered a pillowtop. The bureau has asked the retailer to remove a reference to pillowtop in its advertising. Furniture Clearance Center owner Travis Vannatta said that he is considering doing so.
The BBB has taken issue with ads from many businesses. Most of its inquiries are generated by consumers, but about 5 percent are from competitors. Fifteen percent are initiated by the BBB without competitor or consumer input, said Lisa Jemtrud, trade practices manager at the BBB.
Every Friday the trade practices group examines newspaper, TV, radio and some Internet ads, checking for misleading or inaccurate claims, said Jemtrud. In the past the group has asked Haskell's, Ultimate Electronics and Master Pool and Spa to change advertising claims. In 2004, after a request by the BBB, the attorney general prevented Haskell's from using the "buy one bottle at regular price and get the second one for a nickel" language. The BBB had found that Haskell's "regular" prices were higher during sales than at non-sale times. Since then, Haskell's still calls it a Nickel sale, but the nickel signifies that each sale price ends in five -- $9.95, for example.
Customers no longer need to buy two bottles to get the sale price, said president Brian Haskell. Customers used to buy the first bottle for $12 and the second bottle for a nickel. Now they pay $5.95 for one bottle, so prices are about 7 cents lower, said Haskell.
Ultimate Electronics' ads say that it has the lowest prices. BBB sent out secret shoppers who discovered that on seven TVs, prices at Best Buy or Circuit City were lower on four of the seven TVs, thus weakening Ultimate's claim that "We shop Best Buy and Circuit City for you and adjust our prices to beat theirs so you know we have the lowest prices around."
Complaints can help keep them honest
When the BBB issued its report in February, senior vice president of marketing David Smith, who is no longer with Ultimate, said that his company checks competitors' online prices daily. Since then the BBB has done another round of price-checks, showing that Circuit City was still lower on one item, although Ultimate was lower on several others, said Barb Grieman, vice president of the BBB for Minnesota and North Dakota.
Ultimate's president, Jim Pearse, said that the company's intent is to continue to adjust prices to beat the competition and has no plans to change its advertising. "Prices on electronics change daily," he said.
Master Pool and Spa, based in St. Louis Park, has an unsatisfactory record with the BBB for the claim that the company has "15 manufacturers competing for your business" at trade shows. The BBB says the claim misleads consumers into thinking that 15 different manufacturers are competing for their business, when the main participant at the shows is Master Pool and Spa, not 15 companies.
The BBB and Master Pool disagreed about how to count manufacturers (spas vs. grills, gazebos, accessories and spas), but the company agreed to drop the language two years ago rather than fight, said Ross Erickson, president of Master Pool and Spa.
Most consumers are too embarrassed to complain or they just want to forget about the problem, said Baker, but he encourages consumers to send in their complaints.
"We need them to protect others and keep it from happening again."
Consumers or businesses with complaints about misleading ads can contact the Better Business Bureau (651-699-1111 or 1-800-646-6222, www.mnbbb.org), the Minnesota attorney general (651-296-3353 or 1-800-657-3787) or the Federal Trade Commission (1-877-382-4357 or www.ftc.gov and click on complaint form).
For more information about the latest findings on the Furniture Clearance Center, go to www.startribune.com/whistleblower.