Reasonable consumer

“Reasonable consumer” is used in more than one setting, and its meaning depends on the context. In consumer protection, it means a consumer acting reasonably under the circumstances.1 Source: In re Novartis Corp., Opinion of the Commission Whether a statement is deceptive depends on how a reasonable member of the audience it reaches would interpret it, and when the marketing targets a group such as older Americans, young people, or financially distressed consumers, the reference point is a reasonable member of that group.2 Source: CFPB, Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) Examination Procedures (Sept. 2023)

A claim does its work in the mind of the person reading it, so the law measures a claim there rather than in the seller’s drafting. The Supreme Court’s principle that “Laws are made to protect the trusting as well as the suspicious” sits underneath the standard, and the Commission relied on it in the Intuit matter to hold that consumer skepticism does not excuse misleading claims.15 Source: In re Intuit Inc., Opinion of the Commission The same reasoning explains why a correct qualification is not assumed to cure a misleading claim: the Policy Statement recognizes that in many circumstances reasonable consumers do not read the entirety of an ad or are steered away from the qualifying phrase by the seller.16 Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984) It also explains why a consumer’s mistaken background belief does not make the consumer unreasonable when the claim is one the consumer cannot check. In ECM BioFilms the Commission reasoned that biodegradation claims are credence claims consumers cannot verify for themselves, so it is not unreasonable for consumers to have mistaken ideas about a biological process they have almost certainly never observed.17 Source: In re ECM BioFilms, Inc., Opinion of the Commission

The standard also protects sellers from liability for outlandish readings. The Policy Statement’s own example is the few who believe that all “Danish pastry” is made in Denmark, and it answers that advertising Danish pastry made in this country is not an actionable deception.18 Source: FTC Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984) Anchoring liability to the reasonable reader keeps the rule from reaching readings no ordinary shopper would take, while the significant-minority and multiple-meaning rules keep a seller from escaping because many other shoppers read the claim correctly.

A finding that a claim misleads a reasonable consumer can lead to an order that reaches beyond the specific ads found deceptive. In the Intuit matter the Commission explained that its authority is “not merely to halt the actual violations found but also to take such reasonable action as is necessary to prevent the recurrence of those and related violations.”53 Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission The Intuit Final Order terminates in twenty years.54 Source: In re Intuit Inc., Docket No. 9408, Opinion of the Commission ECM BioFilms shows the same reach: the Commission’s order barred ECM from repeating its misuse of ASTM D5511 or similarly misusing other testing protocols, which the Commission said prevents ECM from using the same or similar avenues to repeat its deceptive conduct.55 Source: In re ECM BioFilms, Inc., Opinion of the Commission

In federal court the money can be large. Section 13(b) of the FTC Act permits a panoply of equitable remedies, including monetary equitable relief in the form of restitution and disgorgement, as well as asset freezing, accounting, and discovery to aid in providing redress to injured consumers.56 Source: FTC v. Gugliuzza, Memorandum of Decision of the District Court (OnlineSupplier) In FTC v. Gugliuzza the district court held Mr. Gugliuzza liable for restitution of $18.2 million, using a finding that at least half of the consumers who ordered were misled as its floor.57 Source: FTC v. Gugliuzza, Memorandum of Decision of the District Court (OnlineSupplier) In the IWorks matter a court found unreimbursed consumer injury of $280,911,870, as reflected by the company’s sales records.58 Source: I Works Amended Findings of Fact and Conclusions of Law In a memorandum supporting a temporary restraining order in the Triangle Media matter, the FTC argued that once it invokes a court’s equitable powers, the court’s authority includes an asset freeze to preserve assets for eventual restitution to victims.59 Source: FTC, Memorandum of Points and Authorities in Support of Ex Parte Motion for Temporary Restraining Order (Triangle Media)

Individuals can be reached too. In IWorks the court stated that an individual is liable for monetary relief when the individual knew the corporation or its agents engaged in dishonest or fraudulent conduct, the misrepresentations were the type upon which a reasonable consumer would rely, and consumer injury resulted.60 Source: I Works Amended Findings of Fact and Conclusions of Law In CFPB enforcement, the statute quoted in the court’s opinion in the CFPB’s case against Nationwide Biweekly Administration gives a court jurisdiction to grant “any appropriate legal or equitable relief” for a violation of Federal consumer financial law.61 Source: CFPB v. Nationwide Biweekly Administration, Inc., et al., Opinion and Order (quoting 12 U.S.C. § 5565(a))