Imagine that you are the owner of a company that sells used manufacturing equipment.
Over the years, you have sold a couple pieces of a certain type of equipment to a company, so when that type of used equipment came into your inventory, you called up the company and told them what you knew about that used equipment, including specifications.
You offered to sell the equipment “as is.” The company inspected the equipment and bought it, only to realize later that a specification that you described over the phone was inaccurate.
If this transaction occurred in Wisconsin, you may have committed “false advertising” under Wisconsin Statute §100.18.
In order to prove false advertising under the statute, a plaintiff must show the following: (1) that defendant made an advertisement to the public relating to the purchase of merchandise; (2) that the advertisement was untrue or deceptive; and, (3) that Plaintiff sustained a monetary loss because of the advertisement. Tietsworth v. Harley-Davidson, 270 Wis.2d 146 (2004).
A violation of §100.18 is a particularly serious legal claim, because a successful plaintiff is entitled to an award of compensatory damages and actual attorneys fees.
Can the seller avoid liability by arguing: “This law should only apply to consumer transactions, and this was a business transaction?” No. Section 100.18 does not exclude business transactions from its scope. Stoughton Trailers v. Henkel Corp., 965 F.Supp. 1227, 1236 (W.D. Wis. 1997).
Can liability be avoided by arguing: “I didn’t produce an advertisement about that equipment; I just made a phone call and talked about it?” No. A verbal communication can be an “advertisement.” Grube v. Daun, 173 Wis.2d 30, 57 (1992).
Can liability be avoided by arguing: “I didn’t advertise to ‘the public’ because I just made one call?” No.
One person can constitute “the public.” State v. Automatic Merchandisers, 64 Wis.2d 659, 664 (1974).
Can liability be avoided by arguing: “I sold the equipment ‘as is,’ so the responsibility to check out the equipment was on the buyer?” No.
By enacting §100.18, the legislature chose to provide remedies for false advertising that did not exist at common law and allocating risk by contract is “either irrelevant to, or inconsistent with that legislative choice.” Kailin v. Armstrong, 252 Wis.2d 676, 709 (Ct.App. 2002).
Section 100.18 can be a trap for the unwary seller and a powerful weapon for a wronged buyer.
The takeaway for sellers is to be careful about what you say or write when selling a product.
Contact your FOS attorney if you have any questions about this law.