33 Pages Posted: 2 Dec 2020
Date Written: 2020
Advertisements of many goods and services feature testimonials from consumers who have had atypically positive experiences with them. However, substantial evidence suggests that consumers often erroneously assume that advertised atypical results are typical. Thus, the Federal Trade Commission (“FTC”) requires advertisements of atypical results also to disclose the typical results. However, the FTC has created an exception for advertisements featuring atypically positive opinions regarding a product. The exception exists because the FTC assumes that consumers believe that advertised opinions only necessarily represent the opinions of the people expressing the opinions, not the typical consumer opinion regarding the product. To test the FTC’s assumption, we conduct two controlled experiments. We find evidence that, contrary to the FTC’s assumption, consumers often believe that an advertised opinion is the typical consumer opinion. In addition, we find evidence that requiring these advertisements to also disclose the typical consumer opinion would cause consumers to greatly discount advertised atypical opinions.
Keywords: advertisements, atypical, consumer, Federal Trade Commission, FTC, opinions
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