CALIFORNIA FALSE ADVERTISING LAW (FAL)

California's False Adverting law ("FAL”)[1] is the most prominent California legislation specifically focused on false and deceptive advertising.[2] The law includes general prohibitions[3] as well as a wide range of specific offenses relating to the advertising of particular goods and services, including a somewhat eclectic mix of items from caskets to vending machines.[4]

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What Conduct Is covered?
 

The FAL generally prohibits untrue or misleading advertising.[5] Like California's UCL, the FAL was drafted as a comprehensive, adaptable consumer protection law, however, the FAL is limited in scope to false and misleading advertising.[6] Note that "advertising" is construed in the broadest possible sense, such that basically all representations, written, oral and pictorial, are covered.[7] A perfectly true statement can give rise to a false advertising action under the FAL if is it likely to deceive a reasonable consumer under the circumstances of its delivery.[8] And in some circumstances failure to include material information (fraud by omission) violates the law.[9]

 

Mere puffery is not actionable under the Act, but those statements must be vague, subjective, and of a type not typically relied on by consumers of the products at issue.[10]

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A Comparison of California’s FAL (§ 17500) and UCL (§ 17200)

Any violation of § 17500 will, by its nature, constitute a violation of the UCL (under its "unlawful" and its "fraudulent" prongs), but the converse is not necessarily the case.[11] This makes sense, in that the broader UCL statute encompasses unlawful and unfair business practices that may have nothing to do with advertising goods or services.[12]

 

Both statues require only a likelihood of deception to establish an actionable misrepresentation.[13] Both statutes rely on the same standards for materiality.[14] And both statutes rely on the "ordinary consumer of the target population" standard for determining reasonableness.[15] However, unlike an action under the UCL, a business cannot be found to have violated California's FAL unless there is proof that the business knew or should have known that its statements were untrue or misleading.[16] The UCL does not have a corresponding scienter requirement.[17] Thus, for example, proof that a business has broken the law becomes a per se violation of § 17200, under the UCL's "unlawful" prong.[18]

 

Actions under the UCL can reach back to damages incurred up to 4 years prior to a complaint being filed[19], with the potential to encompass older violations under the doctrines of delayed discovery and continuing violation.[20] In contrast, the FAL does not have its own statute of limitations provision. Thus, the general 3-year statute applies found at California Code of Civil Procedure § 338 (h). This seldom matters in practice, as most actions are brought under both the UCL and FAL, and most violations of the FAL also violate the UCL, making a 4-year statute of limitations the norm.

 

Who must comply?

 

Section 17500 provides that it applies to "any person, firm, corporation or association, or any employee thereof" who directs false or misleading advertising to California residents, or disseminates false or misleading ads from California to a resident of any state.[21] The Act does not apply to government entities.[22]

 

How Is It Enforced?

 

Just like the UCL, actions for violations of the FAL can be prosecuted by public prosecutors (like the California Attorney General, District Attorneys or City Attorneys) or by private individuals. Private "persons" under the FAL have standing to bring actions under the Act of they have suffered a loss or deprivation of money or property sufficient to qualify as an injury in fact, and that economic injury was caused by the false advertising at issue in the case.[23] Just as is the case for California's UCL, competitors also have standing.[24]

 

FAL Remedies

 

The restitutionary remedies under Sections 17203 (the UCL) and 17535 (the FAL) are identical and interpreted in the same way.[25] Unlike § 17200, the FAL provides public prosecutors with option to pursue misdemeanor criminal charges for violations of the Act.[26] It so charged, violations are punishable by criminal fines and jail time up to 6 months.[27]

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[1] California Business and Professions Code §§ 17500-17606.

[2] Nationwide Biweekly Admin. v. Sup. Ct., 9 Cal.5th 279, 305 (2020).

[3] See Cal. Bus. & Prof. Code §§ 17500-17509.

[4] See, e. g., Cal. Bus. & Prof. Code §§ 17530.7 (caskets); 17531.1 (unassembled children's toys); 17533.9 (tear gas); & 17570 (vending machines).

[5] Chapman v. Skype, Inc., 220 Cal.App.4th 217, 226 (2013).

[6] See Bus. & Prof. Code § 17500; Kwikset v. Sup. Ct., 51 Cal.4th 310, 320 (2011).

[7] See, e.g., Williams v. Gerber Products. Co., 552 F.3d 934, 938-940 (9th Cir. 2008); Chern v. Bank of America, 15 Cal. 3d 866, 875-76 (1976).

[8] People v. Overstock.com, Inc., 12 Cal.App.5th 1064, 1079 (2017).

[9] See Hodsdon v. Mars, Inc., 162 F.Supp.3d 1016, 1023 (N.D. Cal. 2016); In re: Vizio, Inc., Consumer Privacy Litigation, 238 F.Supp.3d 1204, 1231 (C.D. Cal. 2017).

[10] See, e.g. Hadley v. Kellogg Sales Co., 273 F.Supp.3d 1052, 1081 (N.D. Cal. 2017). 

[11] See Kasky v. Nike, 27 Cal.4th 939, 950 (2002).

[12] See, e.g., Candelore v. Tinder, Inc., 19 Cal.App.5th 1138 (2018) (UCL action based on aged-based pricing discrimination in violation of Unruh Civil Rights Act).

[13] Kasky, 27 Cal.4th at 951; Williams, 552 F.3d at 938.

[14] See In re Toyota Motor Corp., 790 F.Supp.2d 1152, 1169 (C.D. Cal 2011).

[15] Lavie v. Proctor & Gamble Co.,105 Cal.App.4th 496, 507 (2003); Chapman v. Skype Inc., 220 Cal.App.4th 217, 226 (2013).

[16] See Cal. Bus. & Prof. Code § 17500.

[17] Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 591 (9th Cir. 2012).

[18] VP Racing Fuels, Inc. v. Gen. Petroleum Corp., 673 F.Supp.2d 1073, 1081 (E.D.Cal.2009).

[19] Bus. & Prof. Code § 17208.

[20] Aryeh v. Canon Bus. Solutions, Inc., 55 Cal. 4th 1185, 1196-98 (2013).

[21] See Cal. Bus. & Prof. Code § 17500.

[22] People for Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Bd., 125 Cal.App.4th 871 (2005).

[23] Veera v. Banana Republic, LLC, 6 Cal.App.5th 907, 916 (2016).

[24] See Bus. & Prof. Code § 17535.

[25] People ex rel. Harris v. Sarpas, 225 Cal.App.4th 1539, 1548 (2014).

[26] See Cal. Bus. & Prof. Code §§ 17500 & 17534.

[27] Id.