{"id":178495,"date":"2018-11-12T19:31:00","date_gmt":"2018-11-13T00:31:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2018\/11\/12\/puffery-huh\/"},"modified":"2018-11-12T19:31:00","modified_gmt":"2018-11-13T00:31:00","slug":"puffery-huh","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2018\/11\/12\/puffery-huh\/","title":{"rendered":"Puffery, Huh?"},"content":{"rendered":"

Puffery is an interesting legal concept.<\/p>\n

Basically it allows individuals and business to make claims that are not true, so long as it is in a context where the fact that is propaganda is clear.<\/p>\n

So, (sorry Kurt Russel) when a car dealer says that they have miles of cars, it’s OK, or when you say that a horror movie wopn’t scare you, it will f%$# you up for life, or that the beer you drink will lead you to hook up to the Swedish bikini team, it’s OK. (Also Joe Isuzu<\/a>) <\/p>\n

On the other hand, making specific verifiable misstatements, for example, claiming that your car gets 100 mpg when it get 12 mpg, is false advertising and fraud.<\/p>\n

It can be a fuzzy line sometimes, but when Wells Fargo asserts that promising not to spend every waking hour trying to figure how to rip off its customers also qualifies as puffery<\/a>, I take exception:<\/p>\n

If you\u2019ve ever wondered how businesses can get away with making transparently false or deceptive claims about themselves or their products \u2014 \u201cThe Best Tasting Juice in America,\u201d Wrigley\u2019s gum is \u201cfor whiter teeth, no matter what,\u201d etc., etc. \u2014 the answer is an all-purpose legal dodge known as the \u201cpuffery\u201d defense. <\/p>\n

Simply put, judges and regulators have ruled that when a business makes a claim that is either vague or so obviously inflated that people simply won\u2019t believe it, that\u2019s \u201cpuffery,\u201d and not actionable in court. <\/p>\n

Wells Fargo, which is struggling to rebuild its reputation for integrity after a string of scandals involving consumer rip-offs, is testing the limits of the \u201cpuffery\u201d defense. In a legal filing last week<\/a> aimed at getting a shareholder lawsuit dismissed, the company asserted that statements that the bank was working to \u201crestore trust\u201d among its customers and \u201ctrying to be more transparent\u201d about its scandals \u2014 statements made by its chief executive, Tim Sloan \u2014 were, well, just puffery.<\/p>\n

\u2026\u2026\u2026<\/p>\n

\u201cThis is just another example of corporate actors making statements to the market, and then trying to avoid liability for the representations they made,\u201d says Darren Robbins, the San Diego lawyer bringing the shareholder suit.<\/p>\n

If it sounds like a strange thing for a bank to say when it\u2019s trying to present itself as a paragon of rectitude \u2014 in essence, \u201cWe can\u2019t be sued because no one believed us anyway\u201d \u2014 just wait. It gets stranger.<\/p>\n

\u2026\u2026\u2026<\/p>\n

The lawsuit at issue concerns a scandal that erupted in public in July 2017, when it became known that for years Wells Fargo had been charging auto loan borrowers for unnecessary insurance on their vehicles. The lawsuit seeks class certification for all investors who bought the company\u2019s stock from Nov. 3, 2016 \u2014 when Sloan announced at an investors conference that he was \u201cnot aware\u201d of any undisclosed scandals in sales practices \u2014 through Aug. 3, 2018, the day before the bank formally disclosed the auto-loan issues in an earnings report.<\/p>\n

\u2026\u2026\u2026<\/p>\n

Regulators are justifiably furious. In April, the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency folded in the auto loan case with an investigation of improper fees Wells Fargo charged to mortgage applicants, and penalized the bank $1 billion for both<\/a>. It was one of the largest bank fines<\/a> in history. <\/p>\n

\u2026\u2026\u2026<\/p>\n

What about Wells Fargo\u2019s repeated assurances that it is moving heaven and earth to be more transparent and regain customers\u2019 trust?<\/p>\n

That\u2019s where \u201cpuffery\u201d comes in. The defense most commonly arises in connection with advertising, as when the Federal Trade Commission investigates whether an advertising claim is deceptive. Over the years, courts have given businesses ever more latitude to make extravagant claims.<\/p>\n

Ultimately, puffery has become defined as \u201cadvertising claims that ordinary consumers do not take seriously, as the Harvard Business Review observed a few years ago. But if that\u2019s so, then what\u2019s the point of advertising?<\/span><\/p><\/blockquote>\n

A couple of things here that are important to note:<\/p>\n