What Kinds Of Penalties Are Involved Against A Company That Runs A Deceptive Ad?

Penalties are considered on the nature of violation the company has done by using a deceptive ad.

Usually penalties could be as follow:

  1. Civil penalties
  2. Cease and desist orders
  3. Consumer redress
  4. Monetary compensation

A person or company that violates California Business and Professions Code 17500 is guilty of a misdemeanor. The offense is punishable by: Imprisonment in the county jail for up to six months; and/or, A fine not to exceed $2,500

Examples of false advertising are when:

  • A t-shirt company advertises that all of its t-shirts are “Made in the U.S.A.” when they actually come from another country.
  • A pharmaceutical company advertises that a product is “clinically proven” to have certain benefits when no such proof exists; and,
  • A beverage company advertises that its new flavored water is “calorie-free” when it actually has 100 calories per bottle.


A person or company that violates this section is guilty of a misdemeanor. The offense is punishable by:

  • Imprisonment in the county jail for up to six months; and/or,
  • A fine not to exceed $2,500.

A person or company guilty of false advertisement may also face a civil lawsuit and/or an injunction.


Luckily, there are several legal defenses available if a person commits a crime under this section. These include showing that an accused party:

  • was truthful in its advertising,
  • did not deceive, and/or
  • acted without knowledge.

A person accused of false advertising under BPC 17500 may challenge the accusation by raising a legal defense. A good defense can often get a California false advertising charge reduced or even dismissed. Please note, though, that is critical for an accused to hire an attorney to raise a defense on his behalf.

Three common defenses are:

  1. Truthful advertising,
  2. No deception, and/or
  3. No knowledge.

2.1. Truthful Advertising

A false or misleading advertisement has to be just that – false or misleading. Thus, the truth is a solid defense to this crime. As stated above, if an ad simply contains a truthful mistake, that error would not likely be considered a violation of the law. Further, some advertisements contain negative messages. But, if the messages convey the truth, the ad is not considered criminal.

2.2. No Deception

Please recall that California law says a member of the public must be deceived by an ad for that ad to be considered false or misleading. This is a very broad and subjective standard. Typically, therefore, a defendant can use the facts of a case to show that the advertisement did not deceive the public.

2.3. No Knowledge

Please recall that there can be no conviction for false advertising unless the accused knew, or should have known, that an ad was false or misleading. Thus, it is an acceptable defense for an accused to prove that he did not have this requisite knowledge.

There are three crimes related to false advertising. These are:

  1. Internet Fraud,
  2. Mail Fraud, and
  3. Mislabeling of Food.

4.1. Internet Fraud

Internet fraud is a blanket term that describes several different fraud crimes that all involve the use of the internet or computers. Some of these can be prosecuted under California law in California state courts. Others are federal crimes. Some are both California and federal crimes and may be prosecuted in either California or federal court.

The most common types of internet fraud categories include:

  1. Fraudulent schemes (carried out through email or the internet);
  2. “Phishing” (using email or the internet to obtain sensitive information like social security numbers or credit card information); and,
  3. Accessing a computer or computer data without permission.

Penalties for these frauds will vary depending on the type of crime, or fraud, committed. They can be charged as either a misdemeanor, felony, or a wobbler offense. The latter is an offense that can be charged as either a misdemeanor or a felony.

Further, the penalties for an offense will vary depending on the specific fraud committed. Possible penalties include:

  • Imprisonment for months, years, or even decades; and/or,
  • Fines up to several thousands of dollars.

4.2. Mail Fraud

Mail fraud, also known as postal fraud, is a serious federal crime. A person can be charged with mail fraud if the authorities believe that he used a United States post office or even a private mail carrier to send or receive any materials related to a scheme to commit fraud.6

A prosecutor has to prove three elements to show that an accused is guilty of mail fraud. These are:

  1. There was some scheme to commit fraud;
  2. The defendant used the mail to further the scheme; and,
  3. The defendant had the specific intent to commit fraud.7

The penalties for mail fraud can grow quite severe. They can include:

  • Up to twenty years in jail; and/or,
  • Fines up to thousands of dollars.8

4.3. Mislabeling of Food

Mislabeling of food is a crime in California under Health & Safety Code 114087 HS.

A prosecutor must prove three elements to convict a party of this crime. These are:

  1. A retail establishment presented food for human consumption;
  2. The establishment presented it in a way that misled or misinformed a consumer;9 and,
  3. The establishment acted either intentionally or with criminal negligence.10

Please note each of these elements involves some technical legal definitions and/or showings. This means defenses to this crime do exist.

Mislabeling of food is a misdemeanor in California. The penalties could include:

  1. The FTC (Federal Trade Commission) is the agency that regulates deceptive ads
  2. If a company runs an ad that is misleading, deceptive, or unfair, they can be charged with false advertising
  3. The penalties for false advertising include fines and/or imprisonment of up to 10 years
  4. There are two types of penalties - civil and criminal
  5. Criminal charges are harsher because it’s considered a federal crime punishable by law
  6. Civil charges aren’t as severe but they still carry consequences such as money damages or injunctions against future violations