*75% is only the author’s opinion. Actual likelihood may vary.
In the midst of one of the most brutal heat waves in recent history, the FTC has published a research study taking window manufacturers to task for, among other things, making aggressive “up to” claims regarding savings on air conditioning bills. (In case you were one of the millions sweltering without power, here is one of the ads that the FTC focused on in its report.)
According to the FTC, the key take-away of the study is that “when marketers use the phrase ‘up to’ in claims about their products, many consumers are likely to believe that they will achieve the maximum ‘up to’ results.” See FTC Press Release, June 29, 2012. Accordingly, the FTC warns that advertisers using these claims should be able to substantiate that consumers are “likely to achieve” the maximum results promised under normal circumstances.
The study examines consumers’ impressions upon exposure to print advertisements for Bristol Windows with an “up to” savings claim. Unsuspecting mall shoppers were intercepted by researchers and presented with one of three variations of the ad above: (1) “PROVEN TO SAVE UP TO 47%”; (2) “PROVEN TO SAVE 47%”; AND (3) “PROVEN TO SAVE UP TO 47%*” (with a conspicuous disclaimer: “The average Bristol Windows owner saves about 25% on heating and cooling bills.”). After examining the ads, the consumers were asked a series of questions to determine what messages the ads were communicating.
Here are a few of the conclusions that the FTC drew from the study:
- Between 36% and 45.6% of all respondents exposed to the “up to” version of the ad said that the ad stated or implied savings of 47% without mentioning the “up to” qualifier.
- Almost half of respondents exposed to the “up to” version of the ad indicated that half or more of Bristol Window users could expect to save about 47% on their heating and cooling bills.
- Approximately 43% of respondents exposed to the ad containing the disclosure indicated that, in their personal opinion, half or more of Bristol Windows users could expect to save about 47% on their heating and cooling bills.
The FTC has always been vigilant to fence in outrageous savings claims where the advertised results (e.g., up to 75% savings!) are unlikely to be realized by an “appreciable number of consumers under circumstances normally and expectably encountered by consumers.” See, e.g., Plaskolite, Inc., 101 FTC 344, 350 (1983). Of course, what constitutes an “appreciable number” is not always apparent. Decisions of the National Advertising Division, a self-regulatory association administered by the Better Business Bureau, might lead advertisers to believe that the appreciable number standard is easily met. In the context of “up to” claims comparing prices against a competitor (“save up to 75% off competitor’s prices), the NAD has interpreted “appreciable number” to require that the number of sales at the maximum savings comprise a “significant percentage” of all items in the offering and has held that 10% is a significant percentage. See, e.g., America West Airlines, Inc., NAD Case Reports, Dec. 1, 1994 (Case #3160).
However, any notion that the bright-line, ten-percent rule will ensure compliance with the “appreciable number” test in the wake of this recent study is, well, out the window. If anything, the FTC has recently signaled an intention to require an even stricter standard for substantiating “up to” claims. In the series of related cases in which the FTC commissioned the research study, the FTC settled with five replacement window sellers and, in the consent orders, required the companies to refrain from making “up to” claim unless they could ensure that “all or almost all consumers are likely to receive the maximum represented savings.”
Whether a judge would ever find an “up to” claim deceptive or misleading because the advertiser did not have proof that all or almost all consumers were likely to receive the maximum savings is debatable. It sure seems like such a standard is just a round-about way of outlawing up to claims altogether, and unless the FTC can prove that such claims are inherently deceptive, it seems likely that a court would not go so far as to prohibit “up to” claims. But in the meantime, advertisers should proceed with caution. If you cannot prove that consumers are “likely to achieve” the maximum results, you may want to stay away from “up to” claims.