Smoke and Mirrors – U.S. Tobacco Companies Ordered to Issue Corrective Statements

A federal district court judge in Washington DC recently ordered tobacco companies to issue corrective statements saying they lied to consumers about the dangers associated with smoking. This decision stems from a lawsuit brought against the tobacco companies in 1999 pursuant to the Racketeer Influenced and Corrupt Organizations Act. In 2006, as part of the case, the presiding judge ruled that the largest tobacco companies lied about and otherwise concealed from consumers the negative effects of smoking for decades. This ruling lead the judge to direct the tobacco companies to issue the corrective statements, which fall into five categories, through various media outlets including television and the internet. The tobacco companies were ordered to pay for the costs associated with making the corrective statements available to the public.

The judge’s ruling, which is reminiscent of a public shunning, emphasizes some extremely important lessons for any company advertising to the U.S. public. While the tobacco industry may be an extreme example, issuing false or misleading advertising to consumers opens a company up to a whole host of potential negative legal ramifications. One of the more common results of false and misleading advertising is being named in a class action lawsuit purportedly brought on behalf of consumers who purchased the good or product. In addition to this, however, a company may face regulatory sanctions, criminal penalties or be hit with a unique order issued by a judge who is less than pleased by its actions. In order to avoid becoming ensnared in any of these legal issues, a company must be vigilant to ensure the information in its advertising campaign is both truthful and accurate.