Puffing goes on in the auction business every day.
Auctioneers (and sellers utilizing auctioneers) talk to bidders, and represent in marketing materials, opinions about the property being sold which are often exaggerations.
Puffing is an exaggeration of facts as one would expect from any person trying to sell something, where the bidder (or buyer) cannot hold the salesperson to those opinions as fact.
Misrepresentation is rather an outright lie and/or puffery which contains no basis in fact.
For instance, let’s take a look at a bright red 2007 Chevrolet Corvette with 28,504 miles selling next in a car auction:
- “What a stunning automobile … look at that color!” would generally be considered puffing.
- “This car is in the same condition it was when it rolled out of the factory!” would generally be considered misrepresentation.
All states have laws which address penalties for those misrepresenting property offered for sale.
As well, the United States has Federal laws which are largely the same, and govern interstate commerce of such. This Federal law is known as Title 15, Chapter 22, Subchapter III, § 1125:
United States Code TITLE 15, CHAPTER 22, SUBCHAPTER III
§ 1125. False designations of origin, false descriptions, and dilution forbidden
(a) Civil action
(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
Auctioneers should use extreme care in cases of puffing (which is perfectly legal) so that their puffing does not become — or be perceived — as misrepresentation (which is actionable/illegal).
Puffing commonly becomes misrepresentation in one of three ways:
- The opinion expressed is not actually the opinion of the representor.
- It is implied that the representor has facts to base the expressed opinion.
- One of the parties should have known facts on which such an opinion was based.
Let’s take our 2007 Chevrolet Corvette again, and say the auctioneer says:
- “I love this car! And, GM never made a better engine than this 6.0 liter V8!”
This statement would be considered puffing, unless:
- The auctioneer doesn’t really love this car (and has said, on record, he dislikes 2007 Corvettes.)
- The comment on the engine implied to bidders that the auctioneer had/has inside information on GM engines, in excess of what the general public has access — and he has no inside information, nor access.
- The auctioneer has sold 1,000’s of Corvettes over his career, and should know which engines are the best — and this 6.0 liter V8 isn’t.
Puffing in the auction business is not going away. And, because it is so prevalent, most auction bidders consider it the normal way business is conducted. Yet, care must be exercised as more lawsuits are being filed in the United States alleging misrepresentation than ever before.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.