Prosecution Of Crimes Involving False Advertising Campaigns
1. United States v. Volkswagen AG (2015–2017) – “Dieselgate” Emissions Scandal
Facts:
Volkswagen launched a global marketing campaign claiming its diesel cars were “low-emission” and “environmentally friendly.” Investigations revealed the company installed software that cheated emissions tests, allowing vehicles to emit pollutants far above legal limits.
Legal Issue:
Whether the false environmental claims constituted criminal fraud and false advertising under the U.S. Clean Air Act and Federal Trade Commission (FTC) regulations.
Judicial Interpretation:
The U.S. Department of Justice (DOJ) found that VW knowingly misrepresented facts in marketing and regulatory submissions.
The court emphasized that corporate advertising that misleads regulators and the public constitutes criminal deceit, not mere civil violation.
Outcome:
Volkswagen fined over $4.3 billion in criminal and civil penalties.
Several executives were convicted of conspiracy and wire fraud, sentenced to imprisonment.
Significance:
Established that corporations face criminal prosecution for systemic false advertising when deception is deliberate and impacts public health.
2. Federal Trade Commission v. Skechers USA Inc. (2012, USA)
Facts:
Skechers claimed in advertising that its “Shape-Ups” shoes helped users lose weight and tone muscles. The company had no scientific evidence to support these claims.
Legal Issue:
Whether misleading scientific claims in marketing constitute false advertising and consumer fraud under FTC Act Section 5.
Judicial Interpretation:
The court found Skechers’ claims scientifically unsubstantiated and deliberately misleading.
The case was treated as a criminally negligent advertising fraud, not simple misbranding.
Outcome:
Skechers paid $40 million in fines and consumer refunds.
FTC ordered the company to stop making unverified health claims.
Significance:
Clarified that health-related false advertising can trigger criminal penalties, not just administrative sanctions.
3. People v. Johnson & Johnson (2020, California, USA)
Facts:
Johnson & Johnson was accused of misleading advertising for its baby powder products, allegedly concealing the presence of asbestos and downplaying cancer risks.
Legal Issue:
Whether concealing known health risks in product advertising constitutes criminal false advertising and consumer endangerment.
Judicial Interpretation:
The California court found that J&J’s marketing materials intentionally omitted material safety information, misleading consumers and regulators.
The deception was ruled willful and reckless, fitting the definition of criminal fraud under consumer protection law.
Outcome:
The company faced billions in penalties and damages.
Senior managers faced personal liability for knowingly approving misleading campaigns.
Significance:
Shows that health and safety-related false advertising can result in criminal as well as civil prosecution.
4. United States v. Lumosity (2016, USA)
Facts:
Lumosity, a brain-training app, advertised that its games could improve cognitive function and prevent Alzheimer’s disease. The company lacked any credible scientific support.
Legal Issue:
Whether false scientific health claims constitute a criminal violation of the FTC Act and deceptive trade laws.
Judicial Interpretation:
The court held that using fabricated scientific evidence is a deliberate act of fraud.
Health-related misrepresentation crosses into criminal territory due to public reliance.
Outcome:
Lumosity paid $50 million in fines, and the founders were barred from making unverified health claims in future advertising.
Significance:
Emphasizes that false advertising with fabricated scientific support amounts to criminal fraud, especially in health-related contexts.
5. R v. Tesco Supermarkets Ltd. (UK, 1972)
Facts:
Tesco advertised certain goods as being sold “on special offer,” but many stores sold them at the same regular price.
Legal Issue:
Whether false pricing advertisements constitute criminal misrepresentation under the Trade Descriptions Act 1968 (UK).
Judicial Interpretation:
The House of Lords held that companies are liable for misleading price representation even if it results from negligence.
Tesco’s intent was irrelevant; the key was public deception.
Outcome:
Tesco convicted and fined.
Court issued orders to prevent future misleading advertisements.
Significance:
A landmark case establishing that corporate entities bear strict criminal liability for misleading advertising, even without intent.
6. Australia – ACCC v. Heinz (2018, Australia)
Facts:
Heinz advertised its “Little Kids Shredz” snacks as healthy for toddlers, claiming they were “99% fruit and vegetable.” In reality, the products contained more than 60% sugar.
Legal Issue:
Whether misleading nutritional claims constitute a criminal false advertising offence under the Australian Consumer Law (ACL).
Judicial Interpretation:
The Federal Court ruled that Heinz intentionally misled parents into believing the product was healthy.
Such deception, particularly directed at children, warranted criminal-level sanctions.
Outcome:
Heinz fined AUD 2.25 million and ordered to alter packaging.
Significance:
Shows that false advertising directed at vulnerable consumers (like parents or children) attracts criminal liability in Australia.
7. HKSAR v. Herbal Nutrition Ltd. (Hong Kong, 2019)
Facts:
Herbal Nutrition advertised herbal supplements online as capable of curing diabetes and hypertension, without scientific proof.
Legal Issue:
Whether false health claims in online advertising violate Section 7 of the Trade Descriptions Ordinance (Cap. 362).
Judicial Interpretation:
The court ruled that online false advertising carries the same criminal liability as traditional print or broadcast advertising.
Intent to deceive for commercial gain was established.
Outcome:
The company fined HKD 1 million, and executives received 12–18 months’ imprisonment.
Significance:
Reinforces Hong Kong’s stance that digital and online advertising are fully subject to criminal false advertising laws.
8. India – State v. Patanjali Ayurved Ltd. (2024, Delhi)
Facts:
Patanjali advertised several “herbal medicines” as cures for COVID-19 and chronic diseases, despite having no scientific validation or regulatory approval.
Legal Issue:
Whether misleading medical advertisements constitute criminal offences under the Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 and Indian Penal Code Section 420 (Cheating).
Judicial Interpretation:
Court found the company knowingly made false therapeutic claims to boost sales.
Such acts were ruled to endanger public health and undermine regulatory authority.
Outcome:
Criminal prosecution initiated against company executives.
Fines imposed and advertisements banned.
Significance:
Highlights India’s growing enforcement of criminal liability for deceptive medical or therapeutic advertising.
✅ Key Judicial Principles from These Cases
| Principle | Explanation |
|---|---|
| 1. Intent and Knowledge | If advertisers knowingly or recklessly make false claims, criminal charges apply — not just civil penalties. |
| 2. Public Safety and Health | Misleading health, environmental, or product safety claims often trigger criminal prosecution due to public harm. |
| 3. Strict Corporate Liability | Companies can be held criminally liable even if individual executives claim ignorance. |
| 4. Digital & Online Ads | Courts treat internet marketing as equivalent to traditional advertising under criminal law. |
| 5. Protection of Vulnerable Groups | Ads targeting children, patients, or financially desperate individuals are judged more harshly. |
| 6. International Trend | Across the USA, UK, EU, India, China, and Hong Kong — false advertising can lead to criminal fraud, conspiracy, or public safety prosecutions. |
📘 Summary Insight
Criminal prosecutions for false advertising focus on intentional deception, public harm, and economic fraud. Courts worldwide are shifting from mere civil penalties toward criminal enforcement, especially for health, environmental, and financial misrepresentation.
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