Tuesday, September 04, 2007

Advertising Claims on Insurance Referral Website Not Puffery

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Advertising claims on insurance referral website operated by MostChoice—stating that the referral service was “Better Than NetQuote.com” and “All the leads are . . . customers requested”—were not mere puffery, the federal district court in Denver has ruled.

Thus, competitor NetQuote sufficiently alleged a Lanham Act Section 43(a) false advertising claim against MostChoice, the court determined.

Factual Statements

Although a simple statement that one’s products are better than a competitor’s likely would be nonactionable puffery, NetQuote correctly characterized the bulk of MostChoice’s alleged statements as factual, according to the court.

NetQuote argued that the claims deceived existing and potential customers by contending that NetQuote sold an inferior product based in large part on bad leads.

In fact, NetQuote alleged that MostChoice hired Brandon Byrd in order to submit false leads to NetQuote. Both MostChoice and employee Byrd admitted that the latter submitted at least 394 fictitious leads.

Coverage of Lanham Act

Implied falsities fall within Lanham Act Section 43(a), the court noted. The statute encompassed more than literal falsehoods. Otherwise, clever use of innuendo, indirect intimation, and ambiguous suggestions could shield an advertisement from scrutiny precisely when protection against sophisticated deception was most needed, the court observed.

In this case, the complaint fairly could be construed to allege that MostChoice’s advertising claims implied that NetQuote’s leads generally were of poor quality. Nothing in the advertisements would have notified the readers that the reason NetQuotes leads were of poor quality was because of the false leads submitted by MostChoice. Thus, the allegations supported a claim for false advertising under the Lanham Act.

The decision is NetQuote, Inc. v. Byrd, Civil Action No. 07-cv-00630-DME-MEH, filed August 15, 2007. The opinion appears at CCH Advertising Law ¶62,627 and will appear at CCH 2007-2 Trade Cases ¶75,837.

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