Reference no: EM131390751

Sears formulated a plan to increase sales of its top-of-theline Lady Kenmore brand dishwasher. Sears's plan sought to change the Lady Kenmore's image without reengineering or making any mechanical improvements in the dishwasher itself. To accomplish this, Sears undertook a fouryear, $8 million advertising campaign that claimed that the Lady Kenmore completely eliminated the need to prerinse and prescrape dishes.

As a result of this campaign, sales rose by more than 300 percent. The ‘‘no scraping, no prerinsing'' claim was not true, however; and Sears had no reasonable basis for asserting the claim. In addition, the owner's manual that customers received after they purchased the dishwasher contradicted the claim. After a thorough investigation, the Federal Trade Commission (FTC) filed a complaint against Sears, alleging that the advertisements were false and misleading. The final FTC order required Sears to stop making the ‘‘no scraping, no prerinsing'' claim. The order also prevented Sears from

(1) making any ‘‘performance claims'' for ‘‘major home appliances'' without first possessing a reasonable basis consisting of substantiating tests or other evidence;

(2) misrepresenting any test, survey, or demonstration regarding ‘‘major home appliances''; and

(3) making any advertising statements not consistent with statements in postpurchase materials supplied to purchasers of ‘‘major home appliances.''

Sears contends the order is too broad, because it covers appliances other than dishwashers and includes ‘‘performance claims'' as well. Explain whether Sears is correct.