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Misleading product statements can lead to lawsuits

surfing.jpgPhoto credit: Mohamed Nahassi

Minnesota and Wisconsin are home to roughly hundreds of breweries, and residents in both states are likely to cite the local nature of these breweries as one of their top selling points.

If people learned that a local favorite was actually brewed in a different state, there could be considerable fallout for that company. That is the issue facing one producer of craft beer that positions itself as a Hawaiian beer, despite being brewed in other states. The company has been sued for misleading marketing.

Understanding misleading marketing

As noted by the Federal Trade Commission, advertising and marketing must be truthful and not an attempt to mislead consumers. It doesn't matter whether the advertising is on the product or on a billboard; if it can affect a consumer's buying decisions, it must not be misleading.

In the case of the "Hawaiian" brewery, reports state that the beer maker had phrases, maps and confusing statements about the brewery on the bottles that would lead a reasonable consumer to believe the product was from Hawaii. This belief could cause a person to pay more for the beer than if it was obvious the beer had been brewed elsewhere.

The price of deceptive practices

In cases where a company is cited for violations of truth-in-advertising laws, the consequences can be severe. In addition to the cost of litigation, financial penalties such as disgorgement of the wrongfully obtained funds, forfeiture of profits, and injunctions, the violations can also cause a major blow to the company's reputation. Under some circumstances, the fall-out can be enough to drive a company out of business.

How you can avoid a similar issue

Deciding how to market and advertise your company is a big decision for any Minnesota business owner, particularly if you want to expand into other markets. To steer clear of any legal disputes and/or violations of state or federal laws, it can be crucial to consult an attorney to avoid costly missteps.

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