False Advertising Exposed

April 14, 2016

Advertisers stand on shaky ground when they disparage competitors. The ground caved in for one company that was accused of spreading false information about a competitor’s products.

A West Michigan court ordered Stoller Enterprises, of Houston, to pay $44.5 million to competitor LidoChem, of Hazlet, N.J., for allegedly telling farmers that LidoChem’s products included poison that would harm crops.

An interesting point about the case: The “false advertising” at issue in the court case was spread not through paid media spots, but mainly through word of mouth.

The case began when an Ottawa County farm, convinced by Stoller that LidoChem products harmed the farm’s crops, sued LidoChem, according to local news reports. LidoChem ended up suing Stoller for spreading “false and malicious rumors” intended to harm LidoChem’s business relations in the Midwest.

Lawyers for LidoChem cited the Lanham Act’s protections against false advertising and claimed LidoChem lost sales because of Stoller’s actions. The U.S. District Court for the Western District of Michigan agreed and hiked an earlier jury’s award of $12 million to $44.5 million to cover damages and fees.

If that is not enough to give pause to businesses that like to make claims without full substantiation, then perhaps this will: Later news stories told of how Stoller’s insurance company refuses to pay any part of the judgment because the court ruled Stoller’s claims were made intentionally.

If you ever encounter a business that you feel is acting inappropriately in the marketplace or misleading consumers, please notify the BBB by filing a complaint or report the issue via BBB's Scam Tracker so we may investigate the situation further.