The use of deception in advertising is widespread. Deceptive advertising has been frequently used by firms (Burke et al, 1988), but a bigger question is whether it is in the firm's best interest to deceive the public through false, misleading ads. Presence of deception and its effect on the behavior of consumers has been the area of interest among advertisers and marketers. There have been cases of deceptive advertising within the industry and thus this subject has been of great concern for consumers and policy makers.
The subject of deception and correction has been discussed in various research papers, but research on understanding the effect of such claims on consumer behavior has appeared in journals only recently. Few studies have made an attempt towards defining and measuring deception. Policy professionals have taken a lead in classifying certain advertisements as "false "or "deceptive" or "misleading".
Deceptive Advertising and Brand Recall
Consumers are faced with a very large number of advertisements everyday in different media. This makes the job of the policy makers very difficult to judge the misleading nature of all such messages. The task can be made simpler if such questions are reserved only for critical cases; the majority of the work should concern itself not with the question whether an advertisement does mislead, but whether it has the capacity to mislead (Preston, 1977).
When consumers believe an advertisement to be true when it is actually false, consumers may be "harmed" (Attas, 1999). Individuals prefer their beliefs to be true, and if a consumer is misled by an advertisement, then the consumer may be tempted to buy the advertised product (Attas, 1999). More consumers are likely to buy the advertised product as a result of the ad claim because they believe it to be true.
Aaker (1974) was the first to formulate that advertisements can also mislead the consumer. According to him, deception is said to exist when "the output of the perceptual process (a) differs from the reality of the situation and (b) affects the buying behavior to the detriment of the consumer". A number of definitions have since then been offered by various regulatory agencies, associations, and legal bodies. According to the Federal Trade Commission's (FTC) Deceptive Policy Statement, an ad is judged as "deceptive", if there is a representation, omission, act, or practice conducted by a corporation that will or is likely to mislead a consumer.
The American Marketing Association (AMA) defines deceptive advertising as advertising intended to mislead consumers (1) by falsely making claims, (2) by failure to make full disclosure, or (3) by a combination of both. The AMA as well the FTC includes an omission of particular information to be deceptive, since excluding material information can lead a consumer to reach false or inaccurate beliefs about a product or service.
Determining whether an ad is misleading continues to prove difficult and controversial (Russo, Metcalf and Stephens, 1981). Various researchers have made many attempts to define deceptive advertising. Many of the definitions that have appeared in the literature have one thing in common; they all state that for an advertisement to be deceptive it must assert or imply something that is "objectively false" (e.g. Shimp and Preston, 1981).
Deceptive advertisements have an element of falsity in them (Russo, Metcalf and Stephens, 1981). Russo, Metcalf and Stephens have documented that falsity is referred to the claim-fact discrepancy. If the truth in advertisement is not the same as the fact then the advertisement is said to be false. A deceptive advertisement is defined as one that creates a false or incorrect belief about the product (Armstrong and Russ, 1975; Gardner, 1975; Jacoby, Jacob and Small, 1972). As has been pointed out by Gardner (1975), some claims made in the advertisements can be verified by testing the results with the claims. …