Hilchos Choshen Mishpat

Volume II : Number 31

Truth In Advertising

Question:

Reuven, who owns a store, is interested in launching a major advertising campaign to attract new customers. He would like to clarify which advertising and publicity tactics are permissible according to Halacha, and which are forbidden.

For example:

A. Is he permitted to use "loss leaders", i.e. drastically lower the price of certain items, in the hope that buyers will come to his store to purchase these items, and also purchase other items for their full price, earning him a handsome profit?

B. Is he permitted to try to persuade customers to purchase a certain item in his store, when he knows that a newer model of this item with a higher quality is available in a competitor's store for the same price?

C. Is a store owner permitted to polish his merchandise so that it shines, in order to attract customers?

D. Is he permitted to use mirrors and decorations to catch customer's eyes, so as to entice them to purchase an item that they may not have otherwise, or in a quantity that they may not have purchased otherwise?

Answer:

1. We should preface our answer by quickly summarizing the prohibition of Geneivas Da'as - misleading another person (literally - "stealing their knowledge", which we discussed in depth in last week's class):

   * The Torah forbids us from misleading anyone, whether Jew or non-Jew, as it says (Vayikra 19:11) "Lo Signovu - you shall not steal".

   * This prohibition applies in any situation in which a person misleads his fellow human being, whether in business or in any other situation.

   It is forbidden to mislead them by telling them something, acting in a certain way, or placing misleading advertisements in newspapers or in public areas. (1)

   * It is forbidden to mislead someone even if you do not stand to gain monetarily from this deception. It is considered Geneivas Da'as even if the person thinks that you have honored them or done them a favor, when you actually have not. (2)

   * Even in situations where a merchant has transgressed the prohibition of Geneivas Da'as, if the merchandise sold did not cost 16% more than what an identical item is sold for in other stores in that area, the sale is not considered void. If it has been sold on credit, the buyer is still obligated to pay the entire amount that he agreed to pay to the merchant, despite the fact that the merchant may have transgressed this prohibition. (3)

   We will now discuss the answer to our specific questions:

2. A. A store owner is permitted to advertise to convince customers to purchase his merchandise. He may use any means that he wishes to attract their attention, such as loud noises, lights, colors, and music, as long as the information that he is telling them is accurate.

3. This is permitted even if it is clear to everyone that the customer only purchased the item because he was attracted by the loud advertising, even though he may have been able to get the same item of better quality at a cheaper price in a nearby store.

4. B. Similarly, a store owner, manufacturer, or importer may convince buyers to buy a certain item from themselves by extolling its features to them, despite the fact that he knows that his competitor sells a better item for a cheaper price. However, he may not say something that is not true, such as "This is the best item on the market!", or that his competitor's item is inferior to his.

   A merchant must inform a potential customer of any defect that he is aware of in an item, if it is possible that the customer would not purchase the item if he were aware of the defect. (4)

5. C. A merchant may not advertise that his prices are the lowest in town, if this is not true. Similarly, a merchant may not claim that he is making less profit on an item than he actually is, in order to convince the customer that he is getting the rock bottom price.

6. D. A store owner is permitted to discount certain items to attract customers to his store, in the hope that they will also purchase items that are not on sale. However, the store owner cannot advertise that his store is the cheapest in town, and everything is on sale, and present these certain discounted items as an example, if other items that are being sold in his store are not cheaper than anywhere else.

   However, as we state above, if a store owner did improperly advertise in the above mentioned manner and mislead the customers, the sale is not void, unless the customer specifically stipulated that he is only purchasing the item on condition that all information presented by the store owner is accurate. In such a case, the sale would be void. (5)

7. E. Merchants are permitted to distribute samples of their product to entice customers to buy from them. However, under no circumstances are they permitted to advertise, or even hint, that their competitor's product is inferior to their own. (6)

8. F. A merchant may not polish a pre-used item to make it look as if it is new. However, he obviously may do so if he informs the customer that it is used, and charges accordingly. He may, however, polish a new item to a shine in order to attract the eye of the customer. This is permitted even if the merchant knows that if not for the polish the customer would not have purchased the item. (7)

Sources:

(1) This is based on the Tosephta in Bava Kamma (7:3), the Gemara in Chulin (94a), the Rambam in Chapter 18 of Hilchos Mechirah, and the Shulchan Oruch, Choshen Mishpat (228:6-7).

(2) This is stated in the SM"A there (7).

(3) This is stated by the Taz there (332:4).

(4) This is stated in the Gemara in Bava Metziah (60b), the Shulchan Oruch (Choshen Mishpat 228:9-10), and in the SM"A there (15). The Halachic principle involved here is that it can only be considered Geneivas Da'as if there is something misleading about the merchant's words or actions, in any manner. This is forbidden since he is providing information that is completely or partially false, and therefore we can say that he has "stolen the knowledge" of the customer.

On the other hand, if all of the information provided by the merchant to the buyer is accurate, and the merchant just makes a major effort to persuade the buyer to purchase the item from him rather than from his competitor, or he employs some means of attracting the buyer to his product rather than his competitors, he has not misled the customer at all, and this can not be considered Geneivas Da'as. The buyer has allowed himself to be convinced to purchase the item, and no inaccurate information has been used to entice him to do so.

This is especially true in societies where such practices are commonly employed. Since every buyer knows that each merchant will extol his own merchandise in the hope of convincing the buyer to purchase from him, and will not tell him that his competitor's item is better than his, it is with this awareness that the potential buyer agreed to read the advertisement or listen to the sales pitch. This is similar to the Halacha stated by the SM"A there (16) that a butcher is permitted to soak his meat in water before selling it so that his meat will look better, in such societies where it is well known that this is common practice.

(5) See the Ta"z in Choshen Mishpat 332:4.

(6) Shulchan Oruch, Choshen Mishpat 228:18.

(7) This is stated in the Shulchan Oruch there (9), and in the SM"A there (15).

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This week's class is based on a column by Rabbi Tzvi Shpitz, who is an Av Bais Din and Rosh Kollel in the Ramot neighborhood of Jerusalem. His Column originally appears in Hebrew in Toda'ah, a weekly publication in Jerusalem. It has been translated and reprinted here with his permission and approval.

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Please Note: The purpose of this column is to make people aware of Choshen Mishpat situations that can arise at any time, and the Halachic concepts that may be used to resolve them. Each individual situation must be resolved by an objective, competent Bais Din (or Rabbinic Arbitrator) in the presence of all parties involved!