The use of "up to" claims in advertising can be a minefield for businesses, with legal standards surrounding their substantiation shifting and sometimes conflicting.
This article explores the recent clash between the FTC's approach to "up to" claims and a Ninth Circuit court ruling, highlighting the confusion and uncertainty that currently exists.
Last month, the Ninth Circuit determined that an "up to" claim reflected the upper limit of consumer expectations. This decision contradicted the plaintiff's argument that consumers should always expect the maximum amount advertised. However, this month, the FTC announced a settlement with Arise Virtual Solutions that takes a different stance.
Arise was accused of falsely claiming its gig workers could earn "up to" $18 per hour, while the average pay was actually $12 per hour. The FTC alleged that fewer than 1% of workers on the platform made the advertised amount.
The proposed settlement requires Arise to provide written materials substantiating that the claimed earnings are "typical" for similarly situated consumers. The settlement doesn't define "typical", but it clearly sets a higher bar than the Ninth Circuit's standard, leading to confusion about how it aligns with previous FTC guidelines.
Commissioner Ferguson, who voted in favour of the settlement, expressed concern about the FTC's inconsistent approach to "up to" claims. He highlighted three different standards used over the years:
1. 1983: "Up to" claims could be substantiated if an "appreciable number" of consumers could achieve the maximum result. The term "appreciable number" was left undefined.
2. 2012: Advertisers using "up to" claims for energy savings needed "competent and reliable scientific evidence" to prove that "all or almost all consumers" would achieve the maximum savings.
3. 2012: The FTC stated that advertisers using "up to" claims should be able to demonstrate that consumers are "likely to achieve" the maximum results under normal circumstances.
These differing standards, according to Ferguson, represent a "monumental shift" in the FTC's approach, leaving businesses confused about the correct standard to follow.
However, Chair Khan argues that the FTC's position hasn't changed, maintaining that "up to" claims are evaluated based on whether they are "likely to mislead reasonable consumers under the circumstances." This assessment, she claims, depends on the specific context.
Unfortunately, this leaves businesses in a difficult position. While cases like Arise, where the percentage of consumers achieving the advertised amount is extremely low, are relatively straightforward, most cases fall somewhere in the middle and require careful analysis.
The lack of clear and consistent standards for substantiating "up to" claims creates a challenging landscape for businesses. As the FTC's approach remains in flux, companies need to proceed with caution and consult legal expertise to ensure compliance with evolving regulations.