Before the age of email spam was the age of postal mail advertisements. Regulations for the former trace the legislative history of the latter, with most regulations restricting email spam based off of regulations for mail spam. In spite of the digital age, paper mailing advertising strategy is still used today, often on the elderly, who may be more susceptible to paper rather than digital documentation.
Whatever the format, misleading or fraudulent marketing practice is barred. The law’s consensus is that marketing documents must be truthful and cannot contain information that is false, in an effort to solicit business. Abuse of this law opens up the advertiser to potential liability.
In Commissioner of the New Jersey Department of Banking and Insurance v. First Jersey Insurance Agency, decided last month, a New Jersey Appeals Court had to look at this issue of abuse in advertisements. First Jersey Insurance Agency (“First Jersey”) mailed postcards in August 2013 that said that there were pending increases to Medicare coverage and promoted the availability of a plan to supplement these costs. Recipients could then fill out their information on the postcards and return it to First Jersey for more information.
An order by the Department against First Jersey claimed three violations of untrue, deceptive or misleading advertising that was intended to get the recipients to take some kind of action. Specifically, insurance producers are required not to make any misleading representations or incomplete comparisons of any insurance policies or annuity. In its review of the Department’s action, the Appeals Court found that the advertisement, though truthful in part, was deceptive in stating that coverage would increase 30%. The Court also found that these statements were made to persuade the consumer to call First Jersey.
In assessing penalties, the Court applied a 7 part test, focusing on the nature of the recipients of the mass mailing. In short, these were people who would not have regular knowledge to assess whether the statements made in the advertisement were true. First Jersey was fined a $100,000 penalty for the deceptive mailings, which the Appellate Court upheld.
In New Jersey, some government agencies have legal authority to protect consumers and individuals. They can ensure that advertisements cannot be misleading and impose penalties if they are. In this case, the deceptive mailings tried to convince individuals to take certain action; First Jersey was trying to get a response to its solicitations. The Appellate Court upheld the agency decision that this violated consumer laws. Sometimes, government gets it right.