California is not forgiving Liberty Mutual for misleading consumers

A screen shot of one of the misleading television ads [Source: YouTube]

A screen shot of one of the misleading television ads [Source: YouTube]

Marketers can learn a valuable lesson from Liberty Mutual Insurance today, but it’s one that is hopefully taught in most Marketing 101 classes: review your advertisements for all regulatory compliance or it could cost you big time. In Liberty Mutual’s case it’s to the tune of $925,00 in penalties in California, not to mention the very real damage to its reputation and brand.

The Riverside County District Attorney’s office announced today in a press release that a consumer protection lawsuit against the Boston-based insurance company has resulted in a settlement. The civil complaint alleges violation of California’s false advertising laws by failing to disclose to consumers in the ads that “accident forgiveness” was in fact not available in the state yet countless advertisements had been running in California for over two years. State law requires that all advertising must clearly and conspicuously disclose any material facts that viewers need to avoid being misled. It is alleged in a complaint filed in the case that the disclaimers in the Liberty Mutual ads were unlawful because these ads could convey “an overall impression that California consumers would receive this benefit as part of Liberty Mutual car insurance,” which was not true.

The advertising campaign was launched in 2014 with great fanfare by the insurer. In a press release about the campaign launch Liberty’s CMO said “In a category where trivial humor can often distract from substance, we saw an opportunity to talk honestly with consumers about providing the right protection for what they value most in their lives.”

Well that backfired. I wonder how many other states will follow California’s lead?

The ads were created by Liberty’s AOR Havas Worldwide New York and Optimedia, part of Publicis Groupe, handled media planning and buying. Under the terms of the judgment, which will be entered without admission of liability, Liberty Mutual will be subject to an injunction requiring full compliance with California’s advertising laws in its “Accident Forgiveness” advertising, including clear and conspicuous disclosure of the fact that such programs are not available in California.

So who’s to blame here? The agency? Liberty’s Marketing team? Liberty’s legal team? I’d say all of the above. In a highly regulated industry like insurance, marketing leadership needs to always review everything for legal compliance – that’s marketing 101.