|
COM 400: ADVERTISING |
Copyright 2004
Dr. Janet McMullen
Last Updated: Wednesday, March 31, 2004
"A campaign for Orkin Pest Control caused panic and damage, when it began airing in March. One ad begins as a fake fabric softener commercial, then a cockroach crawls across the screen. Some viewers saw the roach and thought it was real. In fact, one woman tried to kill the roach by throwing a motorcycle helmet at it, but she only succeeded in killing her TV." AP 4/6/200
The Federal Trade Commission was established in 1914 to oversee advertising, among other things.
First Amendment Issues:
As you recall, commercial speech wasn't even considered speech for a very long time. Not until
Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976). The change didn't happen all of a sudden, but gradually:
Justice Renhquist dissented, arguing that this decision demeaned the First Amendment and the concept of the market place of ideas. It (the First Amendment) doe not protect the rights of a person to decide between the purchase of two brands of shampoo in the same way it protects political ideas.
Q: Does this decision indicate a change in the values of our culture. I have said that TV and culture in general indicate that we are what we buy. Is the Supreme Court elevating commerce to the level of political thought? This would be a great think piece.
1980 Central Hudson Gas & Electric Corp. v. Public Service Commission : Court struck down a regulation that prohibited electric utilities from running ads which encouraged the use of electricity. Supreme Court said such a ban was unconstitutional. This case established a four part test for restriction of commercial speech:
FOUR PART TEST:
1. Is the speech truly commercial speech and is it accurate? Is the "expression related solely to the economic interests of the speaker and its audience," an "offer to buy or sell goods," or an "encouragement to buy or sell goods"?
2. Does the Government have a Legitimate Regulatory Interest in Limiting the Speech? Preserving the safety, morals, aesthetic quality of the area traffic safety, etc.
3. Does restricting the Commercial Speech ADVANCE the Government Interest?4. The ban must be narrowly drawn.
In 1996, in 44 Liquormart, Inc. v. Rhode Island, the court strengthened the First Amendment protection for advertising. According to this case, the court would apply strict scrutiny to any restrictions on commercial speech. The Central Hudson test would still be in force, but might be by-passed if a state's advertising regulation served to keep consumers in the dark to the extent that they could not make informed purchasing decisions. (Kent, 1996)
The court distinguished this case from Anheuser Busch Inc. v. Schmoke (1996). That case had to do with restrictions on liquor advertising. It was determined to be different because it dealt with alcohol advertising outdoors and limits the time, place and manner in which it is advertised. The dealt with advertising targeted at young people, and does not prevent advertising in numerous other media.
A 1999 case dealt with casino advertising. A group of New Orleans broadcasters challenged a federal regulation prohibiting private casino advertising. They wanted to air advertising for legal casinos in Louisiana and Mississippi. The court used the Central Hudson test:
For a great site with lots of advertising resources, see http://adlaw.com/ . This is a great site that has current information on all kinds of issues relating to advertising practices and legalities. There is a detailed description of new legal requirements for direct mail sweepstakes, and a new page on how commercials get network clearance.
Students are encouraged to check these out and bookmark them for further reference.
How can you get in legal problems with advertising?
It might not be as hard as you think. There are some basic trouble areas:
UNFAIR AND DECEPTIVE ADVERTISING:
UNFAIRNESS:
Narrowed in 1980 to mean that an advertisement or commercial practice causes substantial injury to the customer.
Unfairness claims can be brought today if
At one point in the 1970s, some citizen's group argued that all advertising to children was inherently unfair, because the kids couldn't adequate understand the advertiser's motives or the techniques employed to sell them a product. Neither Congress nor the courts bought that argument and so we have the standards above.
In 1994 a new definition of unfairness was signed into law. The new definition defines the act in terms of the harm it will cause, not the content of the message! Previously, the content was the focus of examination, but now an unfair act is one that "causes or is likely to cause substantial injury to consumer which is not reasonably avoidable by consumers themselves and not outweighed by the countervailing benefits to consumers or to competition." This allows the FTC to go after advertisers when they see there is harm.
DECEPTION:
In 2000, a billboard company sued CBS for deception and trespassing for not showing the company's boards during New Year's Eve coverage. In its shots of Time's Square, CBS was hesitant to capture the big jumbotron which normally carried an NBC logo and digitally substituted a CBS logo. The company said it devalued the billboards for which clients had paid big money, expecting them to be seen during the New Year's Eve coverage. (Trigoboff and Dickson, 10/9/00)
Deception is much more concrete and "provable." While specifics may be considered, the FTC will look at the overall impression created by the advertising. If every single claim made is true and the overall impression of the ad is false or misleading, the ad will be considered deceptive. In 1993, the FTC issued a policy statement on deception. In it were listed some of the things which would be considered problematic.
This is a bigger concern of FTC than is unfairness and applies more to advertising than to customer relations.
Definition of deception in advertising: the ad is ....
What is a reasonable customer?
What is a material statement? One which is likely to influence a purchasing decision.
What is considered an express falsehood?
Rapid Shave case: Soaked sandpaper? No Plexiglas with sand on it...>BIG DIFFERENCE!
FTC v. Colgate-Palmolive (1964) The ad was deceptive because it used the demonstration as PROOF of the effectiveness of the product.
{Mock-ups can be used if they aren't used to make a false claim. Mashed potatoes can be used for ice cream because ice cream would melt under hot lights. Not because its texture is different or because it's supposed to be "super ice cream"}
A February, 2000 case applies the issue to book covers. The case is Lacoff v. Buena Vista Publishing. Another case concerning the same cover is Keimer v. Buena Vista Books. The problem centers on the investment guide, The Beardstown Ladies' Common-Sense Investment Guide, and centered on the percentage of return the women earned on their investment. The book jacket said they earned more than they did. While the mistake may have been an honest error, the issue has many serious implications for book promotion and promotion in other media as well. Is the book cover advertising or part of the book itself? That is the issue. One judge said it was advertising and the other said it was not....The cases will be appealed, and if there are different outcomes in different states, publishers face serious problems trying to meet requirements across the country. The problem occurs when part of the book is used on the jacket and the publisher has no way to know the accuracy of the information. While it seems to me they should check this stuff before they publish the book, we'll see what happens. (Fried, 2000)
What is an implied falsehood?
One in which the facts are there, but presented in such a way that the viewer might read something more into the meaning than is represented by the facts alone.
Your text cites some of the 15 false impression falsehoods identified by Prof. Ivan Preston: (Know what these are....)
Pat Boone and family were caught when it found out that ALL of the daughters who appeared in the Acne-Satin Commercial did NOT use the product. Boone and family had to give back some of the money earned from the commercials and give it TO people who bought the product.
It should be noted that there are NO laws against false POLITICAL advertising. In fact, Minnesota passed such a law which was found to be unconstitutional at the district court level. That decision is being appealed. The law, as written makes it a gross misdemeanor to knowingly disseminate false information in a political campaign ad. (Advertising Compliance Service, 1996)
The additional categories which will be discussed below are all additional types of false or deceptive advertising. However, these special categories have been problematic in the past, and merit closer scrutiny by the student.
Unsubstantiated claims
While certainly an substantiated claim is probably false, it is important to look at this area a little more specifically. An advertiser can be sued, run to trouble with the FCC or with advertising self-regulators, and both the advertiser and the agency can be responsible.
When a provable claim is made, the advertiser must do the following:
Misuse of the word "new"
This word can only be used when the product in question has actually be substantively reformulated or changed. A tiny or cosmetic change doesn't quality. Additionally, you can only use "new" for a period of six months after the altered product is introduced. (An exception is made to the six month period in markets where the product may have been tested prior to the normal distribution.)
Abusing publicity rights
We have just studied privacy, so we don't need to go back over that here, but be reminded that appropriation and publicity concerns definitely apply to advertising. There is one catch: the person must be recognizable to have publicity, but you don't have to show their face for that to happen. Descendability rights vary from state to state and some states are harder on "look a like" cases than others. When in doubt...don't!
Misuse of the word "free"
The FTC doesn't scour every ad to see if the word "free" is there and used appropriately, but there are specific policies about the use of the word. You can only use "free" or offer a savings claim (including coupons) when:
Using flags, stamps or money in advertising
It is against the law to use federal, state and foreign flags in advertising. Flags do appear incidentally (as part of background shots, for example), and stars and stripes and red, white, and blue color schemes often show up. However these may not be representations of actual flags, and thus, they get around the law.
Paper money can't be reproduced in a non-video or filmed ad unless specific conditions are met:
- It must be photographed in black and white
- It has to be 150% bigger or 75% small than the actual currency
- Any plates created to make it must be destroyed after use
There are no restrictions on photographing coins, but there are restrictions on stamps which must be reproduced either bigger or smaller than the original and cannot be cancelled. Foreign stamps can be photographed at the actual size but must be in black and white.
Regan v. Time Inc (1984) Sports Illustrated showed a basketball hoop stuffed with money. The U.S. Government wants money shown as described above because they don't want to aid counterfeiters in their illegal endeavors. Government interest in the integrity of legal tender is more important than right to show picture of bills in a certain way.
Unsubstantiated or misleading demonstrations
Television demonstrations are very powerful persuasive vehicles because viewers are encouraged to make purchasing decision based on what they see. However, we all know that "seeing is believing" isn't as true as it used to be. Accurate records should be kept of any demonstration in case it is challenged. It is even suggested by some experts that the advertiser get a sword affidavit from the director, producer, and other participants in the production. Such a document should specifically attest to the authenticity of the demonstration.
Unsubstantiated or misleading testimonials
The Resource Files at http://www.adlaw.com/ offer excellent guidelines for testimonials. Testimonials are some of the most powerful commercial vehicles available, because readers and viewers identify with the person promoting the product and assume that person had no reason to tell a falsehood whether that person is a celebrity or an ordinary person. The FTC has a guide for the use of testimonials and endorsements which is summarized on the ADLAW site.
Comparative advertising
Comparative advertising can be very effective, but it can also bring headaches. Throughout the notes and the text, you'll find examples of such cases. When an advertiser loses one of these cases, the penalties are very steep. (In one case, $40 million!) Be sure you consider the overall impression of the ad, and check everything. Most advertisers don't deliberately falsify their claims. They're not stupid. What happens is that the overall impression is problematic because it is not supported with substantiation. Make sure all the stats you use are checked and rechecked and that the methodology is sound. Be very cautious. While these ads can be very valuable and persuasive, they are maximum "Malox moments" when they go south....
So, can you do comparative ads at all? Yes! Be sure you....
What can the FTC do to stop faulty advertising?
Prospective Remedies: Statements and guidelines which identify problem areas.
Staff Opinion Letters: quick, free advice, but may not be binding
Advisory Opinions: More formal and placed on public record. If follow the advisory, you're protected until they change their minds.
Industry Guides: guidelines which establish the FTC's interpretation of the law for the WHOLE industry (as opposed to a single entity as with the advisory opinion) These guidelines may be directed at a specific issue or area.
Trade Regulation Rules: authorized by FTC Act of 1914 power of law like FCC rules and regulations
Halting Advertisements:
Consent Decrees: Advertiser agrees to stop doing what he's doing.
Advertisers don't want the FCC to file a formal complaint which would result in lots of bad publicity! Consent decrees usually originate when a private individual complains about the ad frequently start because a competitor complains (BY LETTER in both cases). The FTC staff investigates; if the ad appears deceptive; a letter sent asking for agreement to the Consent Decree.
In February of 1998, three advertising agencies settled with the FTC concerning charges that ads they produced were deceptive concerning car lease agreements. The Honda, Mitsubishi and Mazda commercials made claims of "zero down" or "penny down" leasing agreements, and these claims were determined to misrepresent the total amount of the lease. The consent decree specifies how such situations are to be handled in the future. It should be noted that a consent decree is not an admission of guilt and is considered to me a settlement of an issue of controversy. (FTC Press Release, 1/20/98 --link no longer active))
Jenny Craig International, Inc. also came to a consent agreement with the FTC concerning deceptive advertising charges about the success of their weight loss programs. This agreement sets out standards for future weight loss documentation and specifies the following statement must be included in the advertising, "For many dieters, weight loss is temporary." The advertising must also refer to the fact that dieters should not expect to lose the same amount of weight as the individuals in the testimonial advertising. (FTC, 2/17/98) http://www.ftc.gov/9802/petapp13.htm (no longer active)
Some recent actions if the FTC further illustrate. Links for these are still active. (I would encourage you to 'wander' around the FTC site. There is lots of interesting and very good stuff there.... Maybe some term paper ideas? )
QVC was charged by the FTC on March 24, 2004 with making deceptive claims about weight loss products and cold lozeges. The suit was filed in the federal district court in Philadelphia. For more information, see http://www.fcc.gov/opa/2004/03/qvc.htm
Marketers of another diet product agreed to pay $2.2 million in redress and stop deceptive advertising practices concerning the products Zymax, MillinesES (containing Ephedra) and Serotril. For more information see http://www.ftc.gov/opa/2004/03/levey.htm
Diet products "got it" again from the FTC on March 17, 2004. This time it was the makers of Focus Factor and V-Factor who agreed to stop unsubstantiated claims in their advertising of these products and to pay $1 million in consumer redress. See http://www.ftc.gov/opa/2004/03/vitalbasics.htm
Cease-And-Desist Orders:
This occurs if the consent decree was not signed. When that happens, the FTC files a formal complaint which leads to a Cease and Desist Order. The order must be justified by order by a specific and substantial public interest.
The procedures which lead to a cease and desist order:
Some advertisers have found it cheaper to let a successful campaign to run and pay the fines, (which are usually less than $10K), than to stop it. When one considers the cost of production, the print or television time which has already been bought, and the fact that the advertiser may not have a new ad with which to replace the old one, it may be more cost effective to let it run the course of the campaign and just pay the fine.
The Geritol case ran on for 14 years, from 1962 until 1976 when FTC finally won a $280,000 judgment against Geritol. During that time Geritol sold a lot of tonic to people who thought it would help "tired blood." They most certainly made more than a quarter of a million dollars off the product during that period of time!
Another similar case involved Reader's Digest and a promise of cash toward a new car with a magazine subscription....The court upheld an fine of $1.75 Million dollars against the Digest. However, during the time, the magazine raised $5 million in subscriptions. You do the math!
However, of late, some of those fines damages have been getting stiffer. According to the Advertising Compliance Service, a federal judge upheld a sixteen million dollar award due to deceptive advertising. The court even held one of the company's officers personally liable for that amount! Other damage awards and civil damages range from $100,000 to $2.75 million!
These are used in deceptive advertising cases to stop an offending ad QUICKLY!
Sometimes STATEMENTS are required of an advertiser to compensate for deception in advertising
Affirmative disclosure: The advertiser must disclose the truth about something deceptive said in the past. For example, "Geritol will probably not correct a run down feeling in most people...."
Corrective Advertising: This is only used after a long campaign which misled the public.
First required in 1971 of the Continental Baking Co. Their product, Profile Bread, was advertised making claims that it contained fewer calories than other types of bread. The actual reason was that the bread was sliced thinner. They had to run a corrective ad. (For a copy from that ad, see Middleton, 1997)
"...I'd like to clear up any misunderstanding you may have about Profile Bread from its advertising or even its name...."
Another famous corrective advertising case involved the mouth wash, Listerine: Warner-Lambert Co. had to correct statements about its product preventing colds, and had to spend $10 million to correct the false impression.
Sometimes competitors are hurt too. When that happens, they can seek injunctions under the authority of the LANHAM TRADEMARK ACT. It prohibits false advertising that misrepresents another person's goods or services.
Topricana claimed that it was a better product than Minute Maid, but never mentioned the name. Ads were stopped by an injunction because the court thought Minute Maid would be injured.
A Tylenol ad went even further. That ad said Tylenol was a better product than Anacin! It showed other competing products as well. The court issued an injunction because the ad gave the impression that a survey had been done and it was reporting results.
Companies can also seek monetary damages. U-Haul won a $40 Million damage award against Jartran concern an ad that said Jartran had lower rates and newer trucks.
RICO: Racketeer Influenced and Corrupt Organizations Act
Sweepstakes, Contests and Lotteries
These are VERY important for broadcasters because we're always running contests and being asked to do PSA's for organizations running contests....Can get into LOTS of trouble...
When I was in school, there were no state lotteries ( waaaaaay back in the dark ages) Gambling was seen as a corrupting influence from which people needed to be protected. So FEDERAL law prohibited advertising of lotteries. NOW there are some exceptions:
ELEMENTS OF A LOTTERY:
There has been some concern that contests over the internet automatically require consideration because people have to purchase a computer and pay for an internet provider in order to have access. If the contest is only open to those people who have internet access, there is a problem. (Fedman, 1996)
In addition, the free alternative method of entry may not be enough to protect a station or contest operator from a consideration issue. In Tennessee, a recent case illustrates that point. In 1997, the Attorney General of the state found that a rubber duck race was unlawful. The promoters had requested a $5.00 donation for each duck to benefit the designated charity. The rules did not state how free ducks could be obtained or if they would have the same chance to win. (Feldman, 1997)
All contests should have clearly written and
distributed official rules. Make sure that all advertising and promotion
is clear about the rules and is not misleading in any way. In some states,
contests have to be registered and a bond posted to cover the value of the
prize. Check local state laws or check with your state Broadcasters'
Association or your communication counsel. They will have all the recent
info.
1988: Charity Games Advertising Clarification Act
United States v. Edge Broadcasting Company (1993) -- Court ruled 7-2 that federal prohibition against advertising lotteries in states in which they are illegal was UPHELD. The station was WMYK-FM Power 94 located in Moyock, N.C, only 3 miles from VA line. VA had legal lottery, and VA stations with lottery advertising were heard in Moyock. Power 94's signal was heard in VA. The station claimed its First Am. rights to broadcast information about legal activities was being restricted by the law. Court said no. Congress had the right to make that limitation. If they allow Power 94 to broadcast, how much farther into N.C. would the allowance go? Where do you draw the line.. ..How does that effect N.C.'s interest in protecting people from gambling's destructive influences.
CONTESTS:
You can advertise a contest if it is legal and contains only two of the elements of a lottery. Federal Com. Act of 1934 established regulations re: lotteries and contests
How do you know if a promotion qualifies as a game of skill? All elements of chance need to be eliminated. Here are some guidelines:
Most states require all the rules and operative procedures of a contest must disclosed. According to the law firm of Arent Fox, the following areas of disclosure are necessary to meet most state requirements:
Broadcasters must not be involved in deceptive contests or RIGGED contests.
Phony Contests: A station offered a $500 reward for D-Jay Greg Austin who said he was in Bermuda, but was really still in the studio. The FCC frowned, and the license of the station was REVOKED! (WMMX, 1981)
In 2000, The Deceptive Mail Prevention and Enforcement Act took effect. This act imposes a number of restrictions on sweepstakes and other direct mail contests. Ads which appear in newspapers and magazines and which are not directed at a specific named individual are exempt. But contests like the ones we frequently receive in the mail are covered by the legislation. The act mandates that advertisers for the contest affirmatively disclose that participants do not have to make a purchase, what the chances of winning are and who the sponsor is. People who do not wish to participate cannot be penalized in any way, nor mandated to purchase a product, or any made to do anything not consistent with the act. Further, there has to be a way individuals can be removed from the mailing list without jumping through major hoops. For more information see the excellent site at http://www.adlaw.com/ .
RIGHT TO REFUSE ADVERTISING: Newspapers may reject ads as they so chose. Broadcasters may reject advertising EXCEPT for political advertising during certain times prior to elections.
Anti-discrimination in Housing Advertising: In February, 1995, the Department of Housing and Urban Development clarified its rulings on what terms could be used in ads for housing and which ones could not. Real estate ads cannot discriminate based on race, color, religion, sex, handicap, family status or national origin. THUS, "no Irish," "no wheelchairs," etc. would be discriminatory. It is okay to say "nice neighborhood" "4th floor walk-up" etc.
Lawyers Advertising: Supreme Court (though divided) upheld a Florida law which made lawyers wait 30 days before approaching accident victims for representation. While lawyers have the right to send advertising letters, this restriction limits the time frame. Its design is to protect people who are suffering from further invasion. People who need a lawyer can check in the telephone directory, or ads in media.
Casino Advertising: A federal court overturned a federal ban on all broadcast advertising of casino gambling. The courts said there was insufficient evidence that such a ban furthered the interest of the non-gambling states of Utah and California. (The case was brought by Nevada broadcasters). The court suggested that broadcast advertising be allowed in states which in which casino gambling is legal. The Justice Department appealed the case, but the U.S. Supreme Court decided not to hear the case. (Albiniak, 1998) The Supreme Court heard the case in 1999 and remanded the case to the lower court. See discussion earlier in the lecture.
Narrowly drawn bans: A ban on "Junk Faxes" was found narrow enough to be acceptable. The goal of the ban was to prevent advertisers from shifting the cost of advertising from the advertiser to the consumer by sending all manner of junk fax advertising. The ban was even handed said the courts, in that applied to all commercial solicitation whether from Ma Bell or the Girl Scouts.
Another narrowly drawn ban which was upheld was one in the Telephone Consumer Protection Act which prohibits automated recorded telephone solicitation. Such calls must be introduced by a live person and agreed to by the recipient. The ban is designed to protect privacy in the home from "unwarranted intrusion by 180,000 solicitors whose automated dialers played recorded messages to up to 7 million householders per day in 1991.
A radio station in Atlanta has found itself in trouble for leaving unwanted and allegedly illegal phone messages. The suit claims the station, 99X violated state and federal law. The suit is one of three to be filed against radio stations in early 2000 for the use of ADAD (automatic dialing and announcement devices). The station allegedly recorded promotional announcements made by its air personalities and these announcements were played after the ADAD dialed the numbers, usually when the recipients were not home. They were then left on answering machines or voice mail where they take up needed space and take time to remove.
The claimants say the calls violated the federal Telephone Consumer Protection Act which makes illegal advertising messages which are pre-recorded unless the intended recipient has given express permission to the sender. Georgia law even requires that permission be in writing, a much more rigorous standard than the Federal law.
99X missed the mark in a couple of ways according to the suit which was filed in February, 2000:
The reasoning behind the "recording" part of the law is that you can't hang up on a recording and or tell it not to call you back. The fines can be stiff as well. Federal penalties can be between $500 and $1500 for violating the TCPA.. The Georgia law does not specify specific penalties.
The issue of direct telemarketing and what is permitted hasn't gone away....
While the National Do Not Call Registry implemented by both the FCC and the FCC was challenged in court, the constitutionality of the registry was upheld by the Tenth Circuit court on February 17th. That ruling made it clear that the FCC and the FTC could continue to enforce the regulation and protect consumers from unwanted calls. (Muris, 2004)
In 2003, the FTC Telemarketing Sales Rule was amended. The Do-Not-Call Registry was enacted. Further, businesses are banned from using recorded messages to contact consumers by telephone. While the ban doesn't apply if a live operator participates in the call, it does apply even if there is an existing business relationship between the caller and the callee. It also puts limits on the amount of "abandoned calls" -- those which are not answered by a live person, i.e. answering machines or voice mail. There is some split jurisdiction between the FTC and FCC on this issue and some discrepancy in regulations. Banks, common carriers and charities are not covered by the FTC action. Penalties for making non-compliant calls can result in fines up to $11,000 per call! (Fishel, "FTC Bans..." 9-3-03)
The laws apply to fax transmission as well. There is a $12 million dollar suit against the restaurant Hooters for sending unsolicited fax advertisements. (Renaud, 2/25/2000) . A $5.4 million fine was was imposed against Fax.com for sending unsoliticed faxes to business and personal machines. Fax.com had more than 489 violations of the Telephone Consumer Protection Act which allows fines up to $11,000 per violation. This is the largest fine levied to date under that statute.(Fishel, 1-7-04)
Cigarette Advertising:
June 1994, FTC closed investigation on R. J. Reynolds Tobacco Co. concerning the Joe Camel Campaign. The commission voted 3 to 2 NOT to issue an administrative complaint against Reynolds for unfairly encouraging kids to smoke. Insufficient evidence was reason.
June 1995, Philip Morris Co. agreed to stop placing signs at sporting events where they would be seen on television. No broadcast advertising of cigarettes is allowed. They didn't agree that they had violated the 1971 Federal Cigarette Labeling and Advertising Act. Some ads in the future may inadvertently appear, but they will be placed away from scoring tables and end zones.
In several states, including Alabama, state attorneys general have brought suit against cigarette manufacturers. In December of 1997, R.J. Reynolds agreed to pay $10 Million to communities in California in order to settle a lawsuit which accused the company of targeting children with its advertising. The company has denied the Joe Camel campaign was targeted at minors, and has admitted no wrong doing. The FTC moved to ban Joe Camel in May, 1997. (Associated Press, 9/12/97) Recent revelations in the Minnesota hearings and in other states have meant settlements in the millions of dollars.
The FDA in response to a push from President Clinton has come forward with a number of regulations that would ban cigarette advertising on billboards with 1,000 feet of schools and playground, adverting in magazines, etc. with large underage readership, and prohibiting cigarette brands from sponsoring athletic events. These new regs require cigarette companies to make efforts to efforts to educate young people about the harms of smoking. (Law Journal Extra lj.xom...media/1220decs.html) The public service announcements you see on television now are in response to these new regulations and the negative outcome of lawsuits against the cigarette companies.
Alcoholic Beverage Advertising: (important issue)
The Supreme Court ruled that a 1995 federal prohibition against listing the alcohol content on beer labels did not advance the government interest sufficiently and was, therefore, it was unconstitutional. The FTC hoped such a restriction would prevent "strength wars" among beer companies. The restriction was deemed "irrational" because alcoholic content is listed on advertising and on other alcoholic products.
The FTC is currently investigating whether the nation's two largest brewers are targeting underage drinkers. Anheuser-Busch and Miller Brewing filed papers in April of 1997, denying such allegations. Citizen groups are putting pressure on several levels of government to address such advertising.
In 1996, The Distilled Spirits Council of the U.S. ended the 50-yr. ban on liquor advertising on broadcast media. There was concern that beer and wine had cut into the liquor market as a result of the advantage beer and wine had through broadcast advertising.
Chairmen of the FTC and the FCC are angered by the decision and have vowed to do something about it. As yet, no formal regulations have been placed on the books, but hearings and NOIs are underway. Broadcasters are concerned that if such investigation shows a detrimental effect of liquor advertising, beer and wine advertising will be lost to broadcast as well. The new FCC Chairman, William Kennard, is interesting in holding hearings on the issue.
The argument is that liquor advertising is already in print media and on the Internet. At least one cable network and some cable operators have begun showing liquor commercials. A Corpus Christi, TX television station has already followed suit.
The FTC is not threatening to revive it's little-used power to make rules, but may investigate the unfairness of the commercials if they attract minors to participate in illegal or detrimental behaviors.
After Stroh's placed a Schlitz Malt Liquor commercial in My So Called Life on MTV, the FTC subpoenaed documents and video tape from both Strohs and Seagrams. The concern was that they were targeting under-aged drinkers. (Fleming, 1997)
In an effort to create some better P.R., Seagrams began an advertising campaign promoting responsible drinking. Seagrams will begin adding six-second messages to the beginning of its distilled spirits ads. The copy actually says, "..but don't drink if your under 21." Many television stations are still refusing to run the ads.
In addition to Seagrams, distiller Brown Forman, makers of Finlandia Vodka, plan to begin advertising on radio and television.
Members of congress are not pleased by any of these arguments. Senator Robert Byrd of (D-W.V.) has been especially outspoken. Congress held hearings on the issue in 1997.
The FTC has been investigating the issue, and in early 1997 indicated that regulation would be hard to achieve because of the lack of scientific evidence of a "likelihood to cause substantial injury." The issue is alcoholic beverage ads aimed at children. Of course such proof will be hard to come by, since it would be unethical to expose children to such advertising to see whether it increased the likelihood that they would be underage drinkers or develop a drinking problem later. The FTC believes that industry self-regulation is a better alternative, and that government regulation should be the last resort. The Supreme Court seems to leave an opportunity for regulation. In 44 Liquormart (1996) it ruled that it would defer to the government's judgment when a restrictions concerns advertising related to unlawful behavior (as underage drinking would be). (Flemming, 1997)
There is some controversy about whether the FCC or the FTC has jurisdiction over televised liquor ads. The Distilled Spirits Counsel wants the FTC to have it (probably because they have less powers of enforcement than the FCC). The FCC chairman is poised to begin an inquiry in the very near future, but broadcasters say it's a non-issue. Very few broadcasters accept liquor ads at all. (Albiniak, 11/24/97) At least one commissioner has doubts as well. Commissioner Michael Powell thinks the FCC has enough to do without dealing with this issue. Congress can handle the issue if the FCC does not. (McConnell, 11/17/97) Still, at least nine states have filed a Petition for Rulemaking with the FCC recommending a ban on liquor advertising on radio and television. Former Surgeon General Dr. C.Everett Koop gave his complete support to the petition and further requested a ban on beer commercials as well. (Rusk, 1997)
One article questioned whether tobacco states might actually the oppose regulations to limit tobacco and liquor advertising.
In 1999, the FTC issued a report on self-regulation of the alcohol industry. Read the entire report at http://www.ftc.gov/reports/alcohol/alcoholreport.htm
So for two years or so, things sat still on this issue. The occasional cable channel or local station would run an ad or two, but there was no wide-spread expansion of hard liquor advertising on television. Then, in December of 2001, NBC announced it would begin to run hard-liquor ads on its network after 9 p.m. The first spot was to appear on Saturday Night Live. NBC stipulated that before they could run advertising, a liquor company would have to commit to a four-month on the air social responsibility campaign which would encourage designated drivers and drinking responsibly, and 20% of the time they bought after that would have to be of that same public service nature. Guinness UDV, makers of Smirnoff vodka and other beverages began running those spots on December 17. NBC also stipulated that at least 85% of the audience at the time of the ads must be 21 years or older. (McClellan, 12/14/01) Competitors, lawmakers and citizens' groups lauded the approach as measured and responsible and there was little protest initially. (Albiniak, 12/17/01) Cable nets and broadcast competitors were measured in their response. They weren't willing to say they would follow NBC's lead, but did say they would observe the situation and consider their options. Advertising hard liquor was tempting because of the difficult financial times facing the electronic media industry, and because hard liquor clients would open an entirely new category of advertising to broadcasters and cable casters. Further, those clients wanted desperately to be on the air, and were ready to do just about anything to do so, including spending hundreds of millions of dollars on commercials.
The American Medical Association spoke out against the NBC policy on Dec. 17, (Albiniak, 12/17/01) accusing them of being irresponsible and greedy. After the first of the year, others joined in protest. Two NBC affiliates announced they would not carry the ads if they ran on the network, but would cover them with promos. (Broadcasting, 1/18/02) Representative Frank Wolf of Virginian and 12 other members of Congress wrote the network of their concerns. "We fear that your decision to air liquor ads will have a devastating impact on young people..." and expressed a desire to hold hearings on the matter, with chairmen in both the House and Senate agreeing to do so. (Albiniak, 2/28/02). In early March, NBC's P.R. problems got even worse when the AMA took out a full page ad in the New York Times calling NBC's decision "shockingly irresponsible." On March 20, NBC relented and decided not to run the ads. But the cat was out of the bag. On March 22, Mothers Against Drunk Driving called for tougher standards concerning beer and wine ads and called for Congressional hearings on the matter. (Eggerton, 2/30/01) In an interview a few days later, Billy Tauzin, Chairman of the House Energy and Commerce Committee said he believed all alcoholic beverages should be treated the same, and he noted that while all of this was going on the beer lobby was quietly working the halls of Congress.
Obviously, The Distilled Spirits Council was disappointed by NBC's move, and NBC had to be disappointed in the outcome as well. None of its industry peers stepped forward support the move, though most have considered hard liquor ads. (Albiniak, 3/25/01) No cable nets are rushing to take up the banner either. (Forkan, 4/1/02) They all have basically let NBC take the heat while they stood back to see if was "safe" for them to follow. Further, NBC may have done more damage than good. Now there is a credible concern that more alcoholic beverage advertising is desired by electronic media, and if hearings are held, there is a real possibility that all such products could be banned, as cigarettes were. It will be an interesting situation to watch....
What about advertising on the Internet? The FTC has not yet determined how that should be handled. Supposedly they are waiting to see if self-regulation works. National Advertising Division of Better Business Bureau will monitor Internet sites and target advertisers who behave unethically. Some states have enacted laws to prohibit SPAM - unwanted email ads. There has also been concern about fraud on websites which advertised specific products or services, especially health-related sites. (Overbek, 2000) A 1999 Virginia law was particularly welcomed because it meant that America On Line, located in Virginia, could use the law against "spammers" from other states who use AOL. The law levies fines of between $500 and $2500 for anyone who uses a false identity to send mass e-mailings. The ACLU says the law is unconstitutional. (Monair, 1999)
Can Spam Act of 2003 (also known as the Controlling the Assault of Non-Solicited Pornography and Marketing Act ) can be found at http://www.spamlaws.com/federal/108s877.html . This act was passed in response to concerns that "spam" was compromising the use and intent of e-mail services. According to one source, spam accounts for 56% of all Internet e-mails (Salem, 2003). It has also become fraudulent and increasingly offensive. Adult-product type spam has increased up to 170% in 2003. The new law went into effect January 1, 2004, but it may not have had a great impact to date. A Pew Internet and American Life study which was conducted in February and March of 2004 found that a quarter of respondents were getting more spam than previously and 29% of users are decreasing their use of e-mail because of the spam problem. 63% of users were less trusting of e-mail than they had been before. 77% of respondents found spam annoying or unpleasant. (Sinrod, J. , 3-25-04) The legislation allows the FTC to investigate the creation of a "do not spam" registry that would be similar to the "Do Not Call" registry. It also requires such e-mail messages to be clearly labeled and subject lines and headers cannot be false or misleading. Further, it prohibits advertisers from gathering addresses improperly or from using automated systems to generate names or addresses.
The problem is that spam is a world-wide problem and originates from locations all over the world. Problems: Governments can't do anything about violators outside their jurisdiction. Further, tracking down and isolating spammers is not a simple task. Japan, the European Union and 29 states have enacted anti-span laws, but those have had little effect. The new law provides for fines and prison time for habitual or fraudulent spammers. (Salem, 2003)
The Federal Trade Commission has an excellent page, "Advertising and Marketing on the Internet: Rules of the Road." which can be found at http://www.ftc.gov/bcp/conline/pubs/buspubs/ruleroad.htm . It covers all the laws applicable to Internet advertising and marketing.
Advocacy Ads have caused some problems as well. When Benetton used death row inmates' interviews and photos in a ad campaign, Missouri Attorney General Jay Nixon filed suit against the company, saying it committed fraud and trespass. The suit says that the company misrepresented what the photos and interviews would be used for, and that February 2000 expansion of the ad campaign was the last straw. The company was supposed to offer balanced views in the piece on the issue of capital punishment and failed to so. They had been assured the campaign would not focus on prison issues and conditions, but the ad itself had a definite anti-capital punishment position. The question of taste was also an issue for Sears which withdrew from its association with Benetton products.
Self Regulation:
Because of the First Amendment, the advertising industry has no real ethics code. Such a code would have to do with what an advertiser could and couldn't say, and that would be a speech violation. So self regulation takes place through the Council of Better Business Bureaus and its National Advertising Division. The BBB has advertising guidelines and a National Advertising Division (NAD) to examine and arbitrate complaints. Be sure you check out the BBB site and see how this is done. There are also separate guidelines for children's advertising and monitoring is done by the CARU, the Children's Advertising Review Unit.
If you go to the http://www.arentfox.com/ you can find examples of recent decisions by NARB.
Helpful links for the student:
AdLaw.com is an excellent site with lots of good resources. Go to the AdLaw Handbook, and you'll find excellent and understandable resources on almost everything having to do with advertising law. http://www.adlaw.com/
Arent Fox Advertising Law Internet Site. This is a great site with all kinds of valuable resources and good links as well. You will find it at http://www.arentfox.com/ . Go to practice areas and select advertising law area.
The Better Business Bureau The Better Business Bureau has become the source of self-regulation for the advertising industry. As a consequence, there are lots of resources there about that process and lots of other information about advertising as well. http://www.bbb.org/
Federal Trade Commission. This is the "horse's mouth" so to speak. It is also a very good site with lots of information that is easy to understand. Check the press releases for recent decisions in an easy-to-read format. The site is located at http://www.ftc.gov/ .
Law Journal Extra. This site is excellent for most aspects of law we study in this class. There are excellent articles on advertising law. Go to practice areas page to find the category you need. Find LJX at http://www.ljx.com/ .
Additional Resources for this lecture:Dr. Janet McMullen
Email Dr. Mc at U.N.A. Email Dr. Mc at Home on AOL
Return to Com 400 Page
Return to Dr. Mc's Home Page