US Man Loses ´Pants Down´ On Misleading Advertising Claim Against Dry Cleaners

Virtually everyone has at some stage had something lost or damaged at the dry cleaners. You can probably understand that it's quite frustrating when this happens. For me, it was a beautiful green jumper. I loved that jumper. I was livid when dry cleaners ruined it.

A US judge, Mr Roy Pearson, took his frustration one step further when a local dry cleaner, Custom Cleaners, lost his pants. Mr Pearson told the dry cleaners that the pants would cost $150 to replace. They paid him this. Then Mr Pearson did the obvious thing, and sued the Custom Cleaners for US$67 million. (That is not a typo. His method of calculating damages could occupy another whole article in itself.)

One of the bases of Mr Pearson's claim was that Custom Cleaners displayed a sign saying "Satisfaction Guaranteed" in their window. Mr Pearson was not satisfied. Mr Pearson argued that the dry cleaners did not live up to their promise to provide satisfaction. He made the claim under US statutory provisions which are similar to our own consumer protection provisions in the Trade Practices Act, which prohibit misleading or deceptive conduct.

Mr Pearson claimed that the "Satisfaction Guaranteed" sign constituted an unconditional, unlimited promise that each customer would be satisfied. The court disagreed. It said that the "Satisfaction Guaranteed" sign must be considered in the context of a 'reasonable' customer. As such, Custom Cleaners was only obliged to take steps to ensure the satisfaction of an objectively reasonable customer.

Not surprisingly, Mr Pearson was not a 'reasonable' customer. His claim was dismissed in its entirety.

If you think about it, most advertising involves a misrepresentation of some nature. Merchants use advertising to distinguish their goods and their prices from their competitors. In reality, there is generally little difference between goods. But an advertisement that says "Dry cleaning done, sometimes to your satisfaction, normally on the same day and generally without loss of your clothing" is not likely to get you very far.

As consumers, we learn to take advertising with a grain of salt. The question is then, how much latitude will regulators allow in your advertising before you fall foul of the law? Below are some tips for considering whether an advertisement might be going too far.

• courts allow a degree of puffery. It is accepted that promotion of your product involves that you 'talk it up'. A puff is an assertion that a reasonable reader would not consider to be strictly true

• in Australia, a test of 'reasonableness' of the interpretation of advertising is applied, as was done in the US in Mr Pearson's case

• the idea of puffery generally applies to statements that do not purport to be 'hard facts'

• ultimately, each advertisement will be considered on its own facts.

• recently an advertisement for a small one-bedroom unit which praised the unit's "sense of space" was found to be a mere puff

• in relation to a property, the statement "Max living style with min maintenance" was found to be a puff and not misleading

• in contrast, Optus advertising "No Risk Switch" in relation to an offer to switch mobile phone providers was found to be misleading. The advertisement indicated that if a customer switched to Optus but was not satisfied with the service in 10 days, they could leave Optus with no penalties. This was misleading because the consumer may incur further charges or penalties from their former mobile service provider.

On the whole, as an advertiser you are unlikely to have to pay up to people like Mr Pearson, who interpret your advertising unreasonably. The tricky part is deciding what is a reasonable interpretation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.