Commercial Speech

by   |  05.29.09  |  Commercial Speech, Supplemental Information


Historical context of dawn of advertising regulation.
1. “Can both fresh water and salt water flow from the same spring?” (James 3:11).
2. Late 19th and early 20th century was age of reform.
3. Ads and porn usually seen same way – commercial speech.
4. Statutory reform signaled by Sherman Antitrust Act of 1890.
5. Political reform manifested in Progressivism.
6. Forces of Yellow Journalism of 1890s underlined excesses.
7. Modern advertising and marketing was taking form.
8. Roberson v. Rochester Box (1902) addressed privacy.
9. Pavesich v. N.Eng. Life (1905) led to appropriation tort.
10. Journalism reformers emerged as Muckrakers.
11. Ad reform was led by Printer’s Ink model statute of 1911.
12. Clayton Act of 1914 was coupled with Sherman Act.
13. Federal Trade Commission Act of 1914 signaled new age.
14. National Vigilance Committee (BBB parent) began in 1915.

How did the FTC get its power?
1. §5 of the FTC Act gave Federal Trade Commission task of “preventing unfair methods of competition in commerce.”
2. Wheeler-Lea Act of 1938 added “unfair or deceptive acts or practices in commerce” to the §5 FTC policing function.
3. §12 was added in 1938 to define false advertising as an “unfair or deceptive act of commerce.”
4. W-L Act negated FTC v. Raladam, which called for a showing of an ad’s adverse effect on commerce for a ban.
5. W-L Act changed policy from “caveat emptor” [“beware the buyer”] to “caveat venditor” [“beware the seller”] concept.
6. FTC Improvement Act of 1975 added “affecting commerce” phrase to the commission’s responsibilities.

How is the FTC organized?
1. Commission of five members has rule-making powers and is an executive agency, which is empowered by statute.
2. Staff does day-to-day work for the commissioners and has executive powers. Its Bureau of Consumer Protection is segment most concerned with advertising.
3. Administrative law judges of the FTC have quasi-judicial powers.
4. Central offices are in Washington, and regional offices are maintained by the commission.

What are the powers and enforcement tools of FTC?
1. Publicity.
2. Industry guidelines.
3. Trade rule regulations or TRR’s.
4. Advisory opinions.
5. Letters of voluntary compliance.
6. Consent orders.
7. Cease-and-desist orders.
8. Can represent consumers in court against deceivers.
9. Injunctions.

What constitutes “deception”?
1. The contemporary test applies the “reasonable person test;” what does a reasonable person deem to be deceptive?
2. Puffery is beyond the reach of the FTC until the product claim goes to specific claim of performance of product.
3. Misrepresentation of fact is deceptive.
4. An ad may deceive even though technically, literally true.
5. Package size, unreasonably related to content, can deceive.
6. Non-disclosure of material fact is deceptive; FTC v. Colgate was about sandpaper shaving cream prop that was soaked in water before being shaved to demo effectiveness of cream.
7. “Substantial test data” must be available to support specific product performance claims.

What is the “unfairness doctrine”?
1. In the 1970s the FTC also began to act upon unfairness to consumers, particularly in endangerment of health cases.
2. The FTC can take class actions to court on behalf of consumers to whom advertisers’ have been unfair.
3. Distribution of razor blade samples in packets inserted in newspapers thrown at residence doorsteps was stopped.
4. Advertising of psychic-surgery in the Philippines for the alteration of psychological defects was stopped.

Is an ad agency liable for deception?
1. Agencies are liable for deception to the degree they participated in development of the ad (Carter Products v. FTC, 1963).
2. An appeals court rejected an agency’s plea for exclusion for cease-and-desist order (Colgate Palmolive v. FTC, 1965).
3. Deception avoidance “is an area in which the agency has expertise” (Merck & Co. v. FTC, 1968).
4. The rule is that an entity that takes some of the profits must bear a proportionate share of the damages burden.

Does a medium have a right to refuse advertising?
1. If the medium knows the ad is deceptive, the ad can be refused because it will create liability for the medium.
2. Privately owned print media may refuse any ad that it believes will damage its business.
3. City transit systems must reject political advertising (Lehman v. Shaker Heights) because of Captive Audience Theory.
4. Broadcast stations must accept all federal candidates’ political advertising because of §312 of Communications Act.
5. Broadcasting stations most accept all political ads if they accept one because of §315 of Communications Act.
6. Public university or college papers must accept ads of legal products, services and candidates because of Forum Theory.
7. High school news can refuse ads because of “legitimate pedagogical concerns” (Hazelwood v. Kuhlmier).

What is corrective advertising?
1. Corrective advertising has been ordered by the FTC to attempt to dispel residual deception planted by advertising.
2. Leading case is Warner-Lambert v. FTC (1977); W-L was ordered to spend $10 million in corrective TV advertising.
3. The message was designed to counteract years of false claims that Listerine prevented or mitigated common colds.
4. A post-corrective ad study showed that a significant portion of consumers still believed the original claims.
5. Warner-Lambert leaves a major question about efficacy of corrective advertising in changing “primacy effects.”

Is subliminal advertising a real threat?
1. “And God is faithful; he will not let you be tempted beyond what you can bear” (1 Corinthians 10:13).
2. “Sub” means below; “liminal” or “limen” means “threshold”; communication of which we are aware is “supra liminal” or above the threshold.
3. Scott Parker’s thesis data supported the ability of a small number of people to see hidden messages, thus these message were supraliminal for these subject; other subjects could not answer questions, nor did they have opinions, about the hidden messages, which were subliminal for these subjects. No support has been shown for the power of subliminal messages to change behavior.
4. The literature attributed to Key is based on bogus theatre and popcorn studies; these data do not exist.
5. The only federal document about subliminal advertising is a letter of the Federal Communications Commission, which says subliminal advertising is contrary to “the public interest.”
6. More central to Christian concern is the lack of examination of the effect of relativistic values oozing into our brains, attitudes and behaviors from the spirit of this age.

How is advertising seen by the First Amendment?
1. Advertising is seen as commercial speech – like obscenity at one point – as opposed to political and religious speech.
2. “Purely commercial advertising” had little First Amendment help before mid-1970s (Valentine v. Chrestensen, 1942).
3. “Political advertising” was given near absolute protection in actual malice libel case New York Times v. Sullivan (1963).
4. Balancing Theory denied First Amendment cover for classifieds segregated by sex in Pittsburgh Press v. PCHR (1973).
5. City transit system political ad ban is upheld; Captive Audience outweighs Forum Theory (Lehman v. Shaker, 1973).
6. “Advertising is not stripped of all First Amendment protection” – abortion ads in Bigelow v. Virginia (1976).
7. The court ensures “the stream of commercial information flows cleanly as well as freely” – Rx price ads in Virginia Citizens Consumer Council v. Virginia Pharmacy Board (1976).
8. Bar associations cannot ban professional advertising by its members (Bates v. State Bar of Arizona, 1977).
9. Bans of truthful ads about legal utility upheld with four-part test: • (a) Is the ad protected by the First Amendment? • (b) Is the asserted governmental interest substantial? • (c) Does the regulation directly advanced the legitimate state interest? • (d) Is the regulation the “least restrictive means” to serve that interest? (Central Hudson v. PSC, 1980).
10. Outdoor ad controls are OK if regulation focus on issues other than contents (Metromedia Inc. v. San Diego, 1981).
11. Central Hudson rule applied to ads inside poverty-stricken Puerto Rico of legal, local casinos (Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 1986).
12. Magazines have legal duty to readers for foreseeable crimes tied to advertising (Eimann v. Soldier of Fortune, 1988).
13. Commercial handbills – advertising – can be distributed in newsracks (Cincinnati v. Discovery Network, 1993).
14. Bans on state-operated lottery broadcast advertising in non-lottery states are OK (U.S. v. Edge Broadcasting Co., 1993).
15. Modified Hudson “least restrictive means possible” Test 4 to “narrowly tailored” for objective (S.U.N.Y. v. Fox, 1989)
16. Federal ban on truthful disclosure of alcoholic content on label is unconstitutional (Rubin v. Coors Brewing Co., 1995).
17. Ban on price advertising of alcoholic beverages is unconstitutional (44 Liquormart v. Rhode Island, 1996).
18. A 1997 federal law prohibiting advertising by drug-compounding pharmacies did not meet the Hudson test (Thompson v. Western States Medical, 2002).
19. Ban keeping judicial candidates from announcing views on disputed legal and political issues failed the First Amendment test (Republican Party of Minnesota v. White, 2002).