A Massachusetts producer places an advertisement stating that a participating life policy pays 'guaranteed annual dividends,' even though the policy's dividends are not guaranteed. Which unfair trade practice has occurred?

Why B is correct

M.G.L. c. 176D, § 3(2) reaches advertising that is untrue or misleading and designed to induce the purchase of insurance, and M.G.L. c. 175, § 181 prohibits the misrepresentations used to make the sale. Representing non-guaranteed dividends as guaranteed is a textbook misleading sales statement, and the Massachusetts Division of Insurance treats exaggerated or guaranteed-value claims in insurance advertising as false advertising. The practice concerns the accuracy of the sales message, not the disposition of claims, competitors, or premium.

Why the other options are wrong

• A) Defamation under M.G.L. c. 176D, § 3(3) requires maliciously critical statements about a competitor's financial condition; nothing here disparages a competitor.
• C) Rebating under M.G.L. c. 175, § 182 involves giving the purchaser something of value not specified in the contract; a misleading advertisement promises nothing of value.
• D) Boycott, coercion, and intimidation under M.G.L. c. 176D, § 3(4) involves forcing or restraining a party's actions; an advertisement merely misleads.

Memory hook

Calling dividends 'guaranteed' buys a false-advertising charge — the sales pitch must match the contract.