Many sites put up privacy policies without giving them much thought. Once up, they are often forgotten about even if the policy is later changed. This can lead to disaster as one recent case showed.
For this to get you in trouble, however, the false statement must give you an advantage over competitors, to wit, your competitors admit they give visitor information to others. Making the determination in court is a question of fact, which means a jury will decide. Regardless, it is a risky proposition.
Getting rid of the technical legal jargon, the use of the Lanham Act in relation to privacy policies on sites is all about privacy. Between phishing, email and other online scams, many people are nervous about providing their personal information to sites. Along with this heightened public awareness comes a new unique selling position for sites - assuring privacy! Simply put, more people are likely to use a site that does not share their information with third parties than one that admits it does. If false assurances are given, the advantage is gained without merit, which is where a claim under the Lanham Act comes in.