Advertising Claims & Compliance Fines of the Fortune 500
Updated: Mar 4
A Safety Net for the World's Most Recognized Brands
As the institutions that shape global commerce, the Fortune 500 have a responsibility to their customers and respective industries to set the tone for conduct and transparency.
When these corporations cut corners and consequently, spend millions of dollars in settlement fees, loyal customers become disenchanted by the optics. The largest companies in the country have all the resources and revenue they need to never have a breach in regulatory compliance. And yet, they still do.
After missteps in false or misleading advertising, Fortune 500 businesses can expect to take a financial hit along with negative attention from the press. For smaller businesses, one regulatory violation could create an uphill battle too difficult to overcome. When long-term perception is impacted by a false advertising claim, businesses no matter how large have a lot of work to do to earn consumer trust back.
Marketing and legal teams don’t have to be left alone to manage the future reputation of their brand. Red Marker’s AI-powered marketing compliance software is a safety net. Anyone involved in the content review process is given the tools they need to properly mitigate risk against deceptive and false advertising using custom rules and requirements. Red Marker is applicable to a number of heavily regulated industries and could save millions in fines and avoid losses from diminished brand reputation. It’s a no-brainer for compliance-conscious brands.
Misrepresenting data for cereal sales
The FTC ordered Kellog to halt advertising of Mini-Wheats cereal in 2013 that used misrepresented data findings in order to boost sales. The advertisement claimed that Mini-Wheats could improve children’s attentiveness by 20 percent when in reality the clinical study showed that only 1 in 9 children were more attentive. On top of a 4 million dollar settlement, Kellogg signed an FTC order acknowledging that they would be fined up to $16,000 per violation in the future. For every box of cereal or commercial that promoted the misleading wording, the order was violated.
Tim Blood, who represented the plaintiffs in the class-action lawsuit, said that marketing departments sometimes run with risky messaging like this despite the best wishes of the legal department.
With Red Marker, marketing and legal teams contribute to content within the same workflow. To ensure inter-departmental alignment, the software supports numerous file types and an API to offer deeper integrations with 3rd-party project management and content creation tools. Using machine learning and natural language processing, Red Marker analyzes content for high-risk phrases, notifies users when content breaches the rules embedded as requirements, and offers real-time suggestions on how to adjust to satisfy compliance needs.
Misleading advertising in the automotive industry
Due to a false advertising campaign to promote 550,000 “clean diesel” vehicles, Volkswagen USA was ordered to repay buyers more than $9.5 billion. VW promoted vehicles equipped with an illegal “defeat device” as a low-emission and environmentally friendly vehicle that would have a high resale value. When the car was in test mode, this equipment acted as a kill switch to mask high nitrogen oxide emissions. After investigations began in the US, regulators in the UK, Italy, France, South Korea, Canada, Germany followed suit.
As this high-profile campaign was being developed, compliance checks from Red Marker can trigger any instances of deceptive claims, especially those regarding emission and EPA standards. Additionally, the global impact of this campaign could have been better assessed by analyzing claims against regulations set by non-US trade bodies that operate under geo-specific standards.
Amazon’s deceptive pricing
Amazon settled a $2 million false advertising dispute for using “reference pricing” of products. In this case, the current price of products was shown alongside a higher price known as a “was price.” This “was price” or “list price” was not reflective of the market price and the methodology to determine that price was not disclosed to consumers.
As part of the settlement, Amazon added a hyperlink to provide details on how the reference price is determined. With Red Marker, marketing and legal have complete oversight of their web content. They can scan thousands of web pages to flag for high-risk content on other sites they need to monitor and can download detailed reports to ensure the presence of critical compliance elements like disclosures and disclaimers. Additionally, Red Marker users can leverage external data to retrieve information on current products and pricing to adjust their content.
Accessible, Automated Compliance Software
Even Fortune 500 companies need extra support within their legal and compliance processes. The great news is that software like Red Marker allows marketers and legal professionals to confidently promote their offerings using less time and resources. Although applicable for companies in any industry, those in heavily regulated industries that seek more oversight on their marketing and promotional content can turn to machine learning capabilities to keep their brands protected from risk.
For companies who aren’t comfortable with what they have to lose, they need a safety net that can keep up with growing content and regulatory demands. Automated marketing compliance technology like Red Marker alleviates compliance burdens for companies executing marketing campaigns at any scale.
Interested in trying it out for yourself?
Book a demo to discover how using Red Marker can result in smarter and faster legal review of your company's marketing content.