1

Some people can be made fools by misleading advertising.

I'd like to know the use of "made fools" in this sentence is grammatically correct.

3

Some people can be made fools by misleading advertising.

The sentence is grammatically correct but it is not really idiomatic. The usual phrase is to make a fool (out) of someone. I suppose you could say

Some people can be made fools of by misleading advertising.

However that is a little clumsy so I would simply say

Some people can be fooled by misleading advertising.

In conclusion, your sentence is not wrong but it isn't particularly good in my opinion.

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