Research · 5 min read
What Makes a Misrepresentation Material
Not every inaccuracy in an advertisement is actionable. The one that counts is the one likely to change what a consumer does — and the Commission presumes several categories are, health among them.
Key takeaways
- Materiality is the third element of deception, defined as a representation likely to affect a consumer's choice of or conduct regarding a product.
- The Commission presumes express claims are material, on the reasoning that a business's willingness to promote reflects a belief that consumers care.
- Materiality is also presumed where the seller knew or should have known the information was needed or the claim was false, and inferred where a seller intended an implied claim.
- Health and safety are named categories, alongside purpose, efficacy, cost, durability, performance, warranties, quality and findings by another agency about the product.
- Where no presumption applies, evidence can include a price premium for the represented feature, a reliable consumer survey, or credible testimony.
- The statutory definition at 15 U.S.C. 55(a)(1) carries the same word and adds an omission rule covering consequences of use under prescribed or merely customary conditions.
Answer first: materiality is the element that connects a false statement to a decision
The FTC's deception policy statement sets out three elements that underlie all deception cases. First, a representation, omission or practice that is likely to mislead the consumer. Second, the practice examined from the perspective of a consumer acting reasonably in the circumstances. Third, that the representation, omission or practice must be material.
The third element is defined by effect. A material misrepresentation or practice is one which is likely to affect a consumer's choice of or conduct regarding a product. In other words, the statement says, it is information that is important to consumers.
The statement then makes a link most readers miss. If inaccurate or omitted information is material, injury is likely. And later, in the same section: injury exists if consumers would have chosen differently but for the deception; if different choices are likely, the claim is material, and injury is likely as well. The statement's own summary of that relationship is that injury and materiality are different names for the same concept.
This is why the element is not a technicality. It is the point at which an untrue sentence becomes a consumer harm rather than a mere error.
The categories the Commission presumes are material
Rather than requiring proof of importance in every case, the policy statement lists categories treated as presumptively material.
The first is the simplest. The Commission presumes that express claims are material. The reasoning quoted in support is a Supreme Court observation the statement reproduces: in the absence of factors that would distort the decision to advertise, we may assume that the willingness of a business to promote its products reflects a belief that consumers are interested in the advertising. A seller's decision to say something is itself evidence that saying it moves people.
The second turns on the seller's knowledge. Where the seller knew, or should have known, that an ordinary consumer would need omitted information to evaluate the product or service, or that the claim was false, materiality will be presumed, because the manufacturer intended the information or omission to have an effect.
The third covers implied claims. When evidence exists that a seller intended to make an implied claim, the Commission will infer materiality. So an implied claim does not fall outside the element simply because it was never written down.
Health is on the list, by name
The statement then names subject matters rather than claim types. The Commission also considers claims or omissions material if they significantly involve health, safety, or other areas with which the reasonable consumer would be concerned.
It continues with a second layer. Depending on the facts, information pertaining to the central characteristics of the product or service will be presumed material. And it lists where materiality has actually been found: information concerning the purpose, the safety, the efficacy, or the cost of the product or service.
Then it extends the list further. Information is also likely to be material if it concerns durability, performance, warranties or quality. And one more category, easy to overlook on a health page: information pertaining to a finding by another agency regarding the product may also be material.
For anything sold on a health benefit, that assembly is close to exhaustive. Purpose, safety, efficacy, cost and another agency's finding about the product between them cover most of what a health offer says about itself.
What happens when no presumption applies
The presumptions are not the whole method. The statement describes the fallback: where the Commission cannot find materiality based on the above analysis, it may require evidence that the claim or omission is likely to be considered important by consumers.
It names three kinds of evidence that can serve. The fact that the product or service with the feature represented costs more than an otherwise comparable product without the feature. A reliable survey of consumers. Or credible testimony.
The first of those is a nice piece of reasoning to hold onto as a reader, because it converts a marketing question into an arithmetic one. If a version of the offer carrying a particular feature is priced above an otherwise comparable version without it, the price difference is itself evidence that the feature is important to buyers.
The statement's conclusion adds the general posture on proof. The Commission will not generally require extrinsic evidence concerning the representations understood by reasonable consumers or the materiality of a challenged claim, but in some instances extrinsic evidence will be necessary.
The same word, written into the statute
Materiality is not only a doctrine the Commission announced. For the advertising provisions that reach food, drugs, devices, services and cosmetics, it is in the statutory definition.
The deception statement notes the structure in its opening paragraph: Section 5 declares unfair or deceptive acts or practices unlawful, Section 12 specifically prohibits false advertisements likely to induce the purchase of food, drugs, devices or cosmetics, and Section 15 defines a false advertisement for purposes of Section 12 as one which is misleading in a material respect.
The codified text confirms the wording. Under 15 U.S.C. 55(a)(1), the term false advertisement means an advertisement, other than labeling, which is misleading in a material respect. The same paragraph then instructs what goes into that assessment: in determining whether any advertisement is misleading, there shall be taken into account, among other things, not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations, or material with respect to consequences which may result from the use of the commodity under the conditions prescribed in the advertisement, or under such conditions as are customary or usual.
That second half is a materiality rule for omissions, and it has two prongs. Facts material in light of the representations made, which is the ordinary case of a claim that needs qualifying. And facts material with respect to consequences from use — including use under conditions that are merely customary or usual rather than the ones the advertisement prescribed.
What a reader can do with this
The element is not something a reader determines. It is something a regulator or a court establishes on a record. But the categories are useful as a reading tool, because they identify which parts of a page carry the most weight in the analysis.
The presumptively material subjects are purpose, safety, efficacy and cost, plus durability, performance, warranties and quality, plus statements about a finding by another agency. Those are the sentences worth checking closely, and the ones worth asking a seller to put in writing.
The omission prong in the statute suggests a second habit. Alongside what a page says about consequences of use under the conditions it describes, there is the separate question of consequences under conditions that are customary or usual — which is to say, how the product is actually going to be used.
None of this is a determination about any company or any advertisement. Materiality is decided case by case, sometimes on survey evidence, and this page asserts no outcome for anyone.
Sources
- FTC Policy Statement on Deception — Part I Summary and Part IV, The Representation, Omission or Practice Must Be MaterialThe three elements of deception; the definition of a material misrepresentation as one likely to affect a consumer's choice of or conduct regarding a product; that if inaccurate or omitted information is material, injury is likely, and that injury and materiality are different names for the same concept; the presumption that express claims are material and the quoted Supreme Court reasoning about the willingness of a business to promote; the knew-or-should-have-known presumption and the inference of materiality for intended implied claims; the passage naming health and safety and listing purpose, safety, efficacy, cost, durability, performance, warranties, quality and another agency's finding; the three kinds of evidence available where no presumption applies; the statement in the conclusion about when extrinsic evidence is required; and the opening description of the relationship among Sections 5, 12 and 15.
- 15 U.S.C. 55 — Additional definitionsThe statutory definition of false advertisement as an advertisement, other than labeling, which is misleading in a material respect, and the accompanying instruction that the assessment take into account representations made or suggested by statement, word, design, device or sound, and the extent to which the advertisement fails to reveal facts material in light of those representations or material with respect to consequences which may result from use under the conditions prescribed or under conditions that are customary or usual.
Frequently asked questions
What does material mean in this context?
The FTC's deception policy statement defines a material misrepresentation or practice as one which is likely to affect a consumer's choice of or conduct regarding a product — in other words, information that is important to consumers. It is the third of the three elements the statement says undergird all deception cases.
Does the Commission have to prove importance every time?
No. The statement lists categories treated as presumptively material: express claims; omissions or false claims where the seller knew or should have known an ordinary consumer would need the information to evaluate the product; and implied claims where evidence exists that the seller intended to make them. Where no presumption applies, the Commission may require evidence that the claim is likely to be considered important by consumers.
Are health claims treated differently?
They are named. The statement says the Commission also considers claims or omissions material if they significantly involve health, safety, or other areas with which the reasonable consumer would be concerned, and it lists purpose, safety, efficacy and cost among the subjects where materiality has been found.
What kind of evidence can establish materiality when no presumption applies?
The statement names three: the fact that the product or service with the represented feature costs more than an otherwise comparable product without it, a reliable survey of consumers, or credible testimony. Its conclusion adds that extrinsic evidence is not generally required but is necessary in some instances.
How is materiality related to consumer injury?
The statement treats them as the same question. It says a finding of materiality is also a finding that injury is likely, that injury exists if consumers would have chosen differently but for the deception, and that injury and materiality are different names for the same concept.
Is materiality in the statute or only in the policy?
It is in the statute for the advertising provisions covering food, drugs, devices, services and cosmetics. 15 U.S.C. 55(a)(1) defines a false advertisement as an advertisement, other than labeling, which is misleading in a material respect, and directs that the assessment take into account the extent to which the advertisement fails to reveal facts material in light of its representations or material with respect to consequences from use under the prescribed or customary conditions.