| Introduction | This page provides information, and
links to information, about advertising law and ethics. This site is intended to supplement,
not replace, the popular Advertising Law Internet
Page created by Lewis Rose, at the Arent Fox Kintner Plotkin
& Kahn law firm. Some of the links below are to resources on that site.
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| Current Issues | Advertising is constantly bombarded by
criticism. It is accused of encouraging materialism and consumption, of stereotyping,
of causing us to purchase items for which we have no need, of taking
advantage of children, of manipulating our behavior, using sex to
sell, and generally contributing to the downfall of our social system. Critics
of advertising abound. Barely a week goes by without some advertisement or
campaign, or the ad industry, being the focal point of some controversy. There even are web sites
dedicated to criticizing various aspects of advertising. To illustrate some of the many attacks on advertising, I have compiled a list of relatively recent examples that have appeared in newspapers and magazines. This is far from being an exhaustive list. It is intended merely to provide you with some ideas about how the public-at-large perceives advertising, and to give you a sense of the many legal and ethical problems inherent in the advertising profession.
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| Ethics | Law and ethics are not coterminous. All the issues discussed
on this page have ethical dimensions, but not all of them implicate legal
realities. The law is confined by limitations on government authority,
principally through the Constitution, while ethics bear no such limitations.
Ethics, therefore, should be subject to a higher standard of expectation
than law. See:
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| First Amendment | The United
States Constitution, through the First Amendment, places constraints
on government repression of speech. Advertising is recognized
by the courts as a form of "commercial speech." Commercial speech has
been defined by the Court as speech "which does no more than propose a
commercial transaction." Although the courts never have recognized it as
being as valuable as some other forms of speech, commercial speech is
protected by the First Amendment.
This means that many of the criticisms aimed at advertising are not
regulable by government. However, the Supreme Court, in Central Hudson
Gas & Electric v. Public Service Commission, declared that commercial
speech can be regulated if:
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| Deception | The Federal Trade Commission
(FTC) is the primary regulator of deceptive advertising in the U.S.
It was created by the FTC Act
in 1914. Section 5 of the Act gave the Commission the authority to regulate "unfair methods of competition." The Act was later changed, by the Wheeler-Lea Amendment, to give the FTC authority over both "unfair methods of competition" and "unfair or deceptive acts or practices." It is through this latter power that the FTC regulates deceptive advertising. Commissioners of the FTC act like judges, hearing cases when marketers are charged with violating the FTC Act. The Commission also publishes advertising guidelines for marketers, which are not law but merely advisory, and adopts trade regulation rules, which are law.
According to its 1993 Policy Statement on Deception, the FTC considers a marketing effort to be deceptive if: (1) there is a representation, omission, act or practice, that (2) is likely to mislead consumers acting reasonably under the circumstances, and (3) that representation, omission, or practice is "material." The term "material" refers to the fact that some deceptive claims are trivial, and that the FTC will only regulate deceptions that are important to consumers, i.e., those that affect consumers' "choice of, or conduct regarding, a product." Our bibliography on deceptive advertising and our bibliography on "materiality" can point you to numerous articles that discuss the intricacies of this definition.
To prove that an ad claim is, in fact, deceptive, the FTC is not generally concerned with what the claim says, but what it conveys to consumers. If that conveyed message differs from the reality of the product attribute being advertised, the claim is considered deceptive. This requires the Commission to look at two types of evidence: (1) evidence concerning what message is conveyed to consumers, and (2) evidence concerning the product attribute's true qualities. The former requires looking into the heads of consumers. The FTC considers surveys the best form of evidence to discover what message is conveyed by an ad, though sometimes the Commission relies on other evidence. The question of how best to unearth the inner thoughts of consumers has been an issue of significant research efforts and theoretical discussion. See our bibliography about evidence used to discover the conveyed message. The second form of evidence can require a variety of different methods of assessing a product's attributes. If, for example, the claim refers to the fuel mileage of an automobile, laboratory testing of the vehicle's fuel efficiency would normally be required. However, the FTC requires that advertisers conduct such testing prior to making the ad claim. If a claim is made without evidence in hand that the product will perform as advertised, the claim will be considered deceptive. This is known as "substantiation," and the Commission's requirements are detailed in the 1984 FTC Substantiation Policy. See, also, the bibliography on substantiation.
Most cases started by the FTC never require the Commission to make a final decision about the deceptiveness of an advertiser's claim. Those cases end, instead, in a "consent order," whereby the advertiser simply agrees to do what the FTC staff asks. No hearing is required. In those cases that do end in a final FTC decision, if the claim is found deceptive, the advertiser will face one of three possible remedies: (1) a Cease and Desist Order, which requires the advertiser to stop making the claim, (2) an Affirmative Disclosure Order, which forces the advertiser to provide consumers with more information, or (3) Corrective Advertising, which is a form of affirmative disclosure that is intended to correct lingering deception that results from a long history of deceiving the consumer. See our bibliography on Corrective Advertising.
Historically, claims that were "mere exaggerations" or "hyperbole" were considered to be puffery, and therefore not deceptive. Terms like "the best" or "the greatest" were sales talk, and the FTC would not regulate them. After all, everyone knows that "Wonder Bread" is not really a wonder, and "The Greatest Show on Earth" is not what everyone considers the greatest. Puffery, therefore, was a form of opinion statement, and considered unregulable. Some observers have expressed concern that the "puffery defense" was a loophole through which many deceptive claims fell. The Commission has been criticized for allowing deceptive claims to slip through under the guise of puffery. On the other hand, the FTC has defined puffery as claims that (1) reasonable people do not believe to be true product qualities, and (2) are incapable of being proved either true or false. Consequently, if deception is the creation of a "false belief" about the product in the mind of a consumer, claims that fall into the FTC definition of puffery cannot be deceptive. By definition, such claims can be neither false nor can they create belief. This means that if deceptive claims have slipped through regulation as puffs, it is because the FTC has failed to follow its own definition. See our bibliography on puffery and puffery quotes.
See, also, the following:
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| Unfairness | In addition to its power to regulate deceptiveness, the
FTC can regulate marketing practices for unfairness. It is possible for
marketers to treat consumers unfairly without deceiving them. In the past, the unfairness power enabled the FTC to reach a wide variety of marketing practices. Until 1980, the Commission defined unfairness to include "immoral, unethical, oppressive, or unscrupulous conduct." This, many business people felt, allowed the Commission too broad a range of authority. Responding to pressure from Congress, in 1980 the FTC published a Policy Statement on Unfairness that re-defined the scope of this authority.
After 14 years of debate, the FTC Act Amendments of 1994
incorporated a definition of "unfairness" into the Commission's enabling
Act. This new definition limits the application of the FTC's unfairness
power to an act or practice that:
How this definition will be interpreted by the Commission remains subject to speculation, until some cases of unfairness are decided.
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| Subliminal Appeals | Subliminal
stimulation has become one of the more popular
advertising-related topics for students and lay-people. Popularized by
Wilson Bryan Key's book, Subliminal Seduction (1973), this subject has
captured the imagination of people everywhere. The term "subliminal" means "below the limen," or below the threshold of consciousness. The idea is that certain things are heard, seen, or felt, that never reach our conscious thought processes, and that those things may still be recorded somewhere in our mind and have an impact on our decisions and behavior. Key argued that advertising professionals use this concept to hide images within advertisements, and that these images manipulate our behavior without our even realizing we have seen them. Key uses the term "subliminal perception," which is something of a misnomer, since perception implies conscious awareness. Psychologists have studied this phenomenon since the late 1800s, and originally called it "subception." However, while this is a real psychological phenomenon, all research on this topic indicates that subliminal stimulation is incapable of affecting our purchasing behavior, contrary to the allegations of Key. While this is a fun topic of discussion, there is no evidence that advertisers embed hidden images in advertisements, and there is ample evidence that such efforts would be a waste of time. For more information, see:
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| Tobacco & Alcohol | Tobacco and alcohol advertisements are extremely popular
targets for regulation. Both products can cause death or injury,
and both are subject to attack by activist groups opposed to those products.
Much debate has surrounded ad regulation proposals for these products. Many critics have argued that ads cause consumption of these products, and that the harmful impact of these goods can be diminished by curtailing or severely restricting the ads. Others counter that there is no real evidence that the ads cause consumption and that it is the product, not the advertising, that is the danger, so it is the product that should be regulated. Central to this debate is the question of whether the First Amendment would allow such regulation. For more information, see our:
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| Children | Issues of advertising law and ethics often center around
advertising's potential impacts on children. Since about 1970,
many concerns and criticisms have been expressed about the effects of
ads on kids, and many laws have been proposed to deal with those effects.
In addition to the Federal Trade
Commission's active involvement in protecting children, because much of
the advertising targeting children historically has appeared on television,
the Federal Communications Commission
likewise has been heavily involved in regulating such advertising.
More recently it has become common for advertising's critics to cast otherwise unconstitutional regulatory proposals in terms of child protection. For example, after several congressional bills designed to curtail tobacco advertising failed, their sponsors began introducing bills to stop tobacco advertising that might have an impact on children. The obvious hope is that courts will be more forgiving of laws aimed at protecting kids. For additional information, see the following:
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| Privacy | In marketing communications, issues of privacy have historically
been the province of direct marketing. However, new technologies
- particularly the Internet - have spurred an "interpersonalization" (or
"demassification") of advertising. This has wrought a blurring of
the lines that traditionally separated various types of marketing
communication. In years past, advertising was one-way communication through
a mass medium. Today, it is taking on characteristics of direct
marketing, enabling two-way communication between buyer and seller.
As a result, it inherits some of the legal and ethical considerations
of direct marketing, which largely concern invasion of consumers' privacy.
For more information, see:
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| Trademark & Copyright | Trademark and copyright are part of what the legal community
calls "intellectual property." These two areas of advertising law
are too frequently overlooked by both scholars and practitioners.
Too often, trademarks are violated, or the marketer fails to protect
a mark. And, commonly, advertisements are published with no effort to
protect the copyrights in the art and copy of the ads. As a simple primer to the copyright laws, for students, I prepared How to Copyright Your Creative Work. For other information about both copyright and trademark law, see:
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| Sweepstakes, Contests & Lotteries |
Games of chance have been popular promotional devices for
nearly 500 years. In the 1500s merchants in Italy used prizes by chance
as a means of increasing business. But anti-gambling laws have restricted
their use as a marketing tool. Over the past century games of chance have
been severely limited by both state and federal laws. In recent years,
however, sweepstakes and contests have become popular marketing tools.
Generally, these games of chance are permitted, so long as they do
not constitute "lotteries" or "gift enterprises." Although restrictions vary somewhat from one jurisdiction to another, a lottery, gift enterprise or similar scheme exists when:
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| Political | Political advertising is subject to different rules than
ads for commercial products and services. Because "political speech"
is widely acknowledged as the core reason behind the free speech provisions
of the First Amendment, the Supreme Court treats such speech as the
most valuable (and, hence, most protected) form of speech. Political
advertising is both advertising and political speech, but since it
does not fall within the definition of "commercial speech" it is
considered political speech and receives the highest degree of protection
under the First Amendment. Political advertising is not wholly unregulated, though. It is subject to some minor restraint under the Federal Communications Commission's Equal Access law, and under the Federal Election Act. Also, most states have some laws that apply to political advertising, though most of those restrictions never have been tested for constitutionality and they are largely unenforced. At this point little information specifically dealing with political advertising has been posted on the Internet. However, feel free to look at our Political Advertising links and Political Advertising quotes.
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| Telemarketing | Telemarketing has become increasingly unpopular with consumers in recent years, as the practice has become more pervasive. New technologies have made it possible for computers to place the calls, dramatically increasing the calls received by many people. It is seen by some as an invasion of their privacy, an unwanted interference, an annoyance, and when the consumer is paying for phone services by the minute (e.g., mobile telephones) sellers are costing consumers money. In effect, the marketers are seen by many as using the consumer's property (telephone) for their own purposes. This has led to numerous legal and self-regulatory measures aimed at curtailing the practice or, at a minimum, putting more control over this practice in the hands of the individual consumers. To this end, there are many telemarketing laws that have emerged at the end of the 20th Century. Several states now require marketers to obtain lists of people who prefer not to receive telemarketing calls, and make it illegal for marketers to call anyone whose name appears on the do-not-call lists. In many cases the state's Attorney General creates and maintains such a list, in some cases they must use other lists like the one maintained by the Direct Marketing Association, and in some instances it is up to the individual marketer to establish and maintain its own list. At least two states now are requiring telemarketers to register and obtain a bond before calling consumers in that state. And some states are starting to place limits or specific requirements on calls, like prohibiting the use of automatic calling devices or requiring clear disclosures be made at the beginning of a telemarketing call. Note that many or most of these rules also apply to Unsolicited Advertising Faxes.
For additional information, see the FTC Telemarketing Sales Rule and
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| Self-Regulation | The advertising industry has no real Code of Ethics or
Code of Professional Conduct. This is largely because advertising is
a profession of communication, and communication is protected by
the First Amendment. While other professions can adopt a Code that
is enforceable by law, any attempt to license or otherwise legally enforce
an ethical code for advertising would run afoul of free speech guarantees. The closest thing to an Advertising Code of Ethics is the Code of Advertising adopted by the Council of Better Business Bureaus (CBBB). That code applies to all Better Business Bureau members, and is enforced through the CBBB's National Advertising Division (NAD). As the CBBB receives consumer complaints about an advertiser, those complaints are referred to the NAD. If the NAD receives a significant number of complaints about that advertiser, it asks the advertiser to comply with the provisions of the Code by modifying or discontinuing the offending advertisement(s). If the advertiser feels that the ad does not violate the Code, or otherwise chooses not to make the requested change, the case is "appealed" to the CBBB's National Advertising Review Board (NARB). At that stage the case is heard by a panel, composed of representatives from three other advertisers, an advertising agency representative, and a member of the public. The panel then renders a decision. If the decision requires the advertiser to make changes in the ad, and the advertiser refuses, the NARB can notify the media and the Federal Trade Commission of the decision and the advertiser's refusal. In addition, the CBBB sponsors the Children's Advertising Review Unit (CARU). The CARU publishes Self-Regulatory Guidelines For Children's Advertising, and monitors children's advertising for ethical offenses. See, also: |
| Other Issues | There are many topics that could be
addressed here. The following are intended to provide you with pointers to information
on some of these issues:
Advertising is "Evil"
Food & Drug Advertising
Manipulation of Consumers
Picturing Money in Ads
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| Research Sources | To find information that is not provided (or linked) on this
page, the following provide some good starting points for your research:
One cautionary note: most of the computer-based research tools are incomplete and may only go back a few years, and most of them are sensitive to the key words you input. This means that you can easily overlook vast numbers of relevant articles if you rely solely on a computer search. I strongly recommend that you use both computer search tools and traditional hard-bound indexes when researching one of these topics.
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