I.
Commercial Advertising
Before Government Control
A.
Prior to
the federal government
asserting control over commercial speech, people had to rely on
common law (civil suits) for protection against false advertising.
B.
American Medical
Association helped to educate the public on medical
issues and outrageous drug claims.
C.
44 states adopted the Printer's Ink code
before the U.S. Congress created
the FTC.
II.
The Federal Trade
Commission
A.
Federal Trade Commission
Act passed in 1914
B.
FTC v. Winsted Hosiery Co.,
1922
– found false advertising
when the company labeled the product woolen when it was less than 10% wool
– 22 of 29 cases on false advertising were upheld between 1922 and 1931
C.
FTC v. Raladam Co., 1931
– restricted the FTC to matters of unfair business “competition in commerce” not consumer protection
as a violation of the 1914 act.
D.
Wheeler-Lea Amendment of
1938 resolved this setback in Raladam
– “unfair or deceptive acts or practices in commerce”
were now in the FTC domain
– FTC can now act in the interest of the general public
E.
The FTC is
currently
an independent government agency headed by 5 commissioners
appointed by the President and approved by the senate
G.
Three Bureaus
make up the FTC
1.
Bureau of Competition –
enforce anti-trust laws
2.
Bureau of Economics – deals
with stats and economic reports
3.
Bureau of Consumer
Protection – false/deceptive ads, other unfair practices
III.
Basic Rules for Commercial
Advertising
A.
FTC now has the authority to define
“deceptive advertising”, including messages with the “tendency” to deceive
(but not restrictions on ads in order to promote "fairness.")
B.
James Miller’s
(Reagen's Chair of the FTC) developed three points for
defining deceptive advertising.
1.
Consumer characteristics
- uses the response of the reasonable consumer
2.
Probability of deception
- that consumers will probably be deceived by the ad taken as a
whole
3.
Significance of deception
- the deception must be significant enough to actually influence a
consumer's decision.
C. FTC
definitions of
deception include
-
Puffery – abstract claims
and assertions of opinions that are difficult if not impossible to test
empirically is acceptable (p. 191)
-
Testimonials
must come from an actual product user; who has some expertise to make
claims; the claims must be true (not just opinion); and the person cannot
be an actor pretending to be an ordinary consumer.
-
Specific dishonest claims
and procedures - e.g. price deception, bait-and-switch,
etc.
IV.
Other Federal
Administrative Agencies that have some regulatory power
over "commercial speech
A.
Food and Drug
Administration
B.
Federal Communications
Commission
C.
Securities and Exchange
Commission
D.
U.S. Postal Service
V.
Commercial Advertising
Cases
A.
Valentine v Chrestensen (1942) handbills,
even ones with a political message do not have right to be distributed
on the streets as would political messages since they're mere
advertising
B.
Times v Sullivan gave a political ad. more
protection (see ch. 4) but Pittsburg Press v PCHR
(1973)gave no protection to ads which violate the law
C.
Bigelow v Virginia (1975) -
advertising abortion
services (in NY state) violated Virginia law.
USSC ruled this unconstitutional.
1.
changed the Chrestensen doctrine
2.
advertising facts and information "of
potential interest and value" to the public merits considerable
first amendment protection.
D.
Bates v State Bar of AZ (1977)
- denies bar associations the right to prohibit advertising of lawyers
prices and services. "Distribution of
truthful information cannot be restricted by professional
organizations."
E.
Consolidated Edison v Public Service Comm.
(1980) and Central Hudson Gas v PSC (1980) established a four part
test. Commercial ads can be regulated:
1.
Message Content --
must be
truthful and for lawful
activities,
2.
Government Interest -- the government interest in
constraint must be legitimate or substantial
3.
Advancement of the Government Interest -- the regulation must directly
advance the government interest asserted in
step 2
4.
Reasonable Fit between Ends and Means (SUNY v Fox 1989 added this
concept replacing the "narrowly drawn" test of Hudson) The
restriction must be designed to reasonably accomplish the goal and
not restrict substantially more speech.
-
Recent decisions suggest the
SCOTUS takes a
"good sense" approach to these four tests.
-
Generally, the courts still take a position that commercial speech
has less value and, thus, less protection than non-commercial speech.
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