1. Mass Media Law 18 th Edition Don Pember Clay Calvert Chapter 15 Regulation of Advertising McGraw-Hill/Irwin © 2013 McGraw-Hill Companies. All Rights Reserved.

2. 15-2 Advertising and the First Amendment Commercial Speech Doctrine –Truthful and non-misleading advertising about lawful goods and services receives an intermediate level of First Amendment protection—more protection than speech such as obscenity, which is not protected by the First Amendment, but less protection than political speech, which often is said to be at the core of the First Amendment. –False or misleading advertising, as well as advertising about unlawful goods and services, receives no First Amendment protection.

3. 15-3 Advertising and the First Amendment Commercial Speech Doctrine Analysis –Is it commercial speech? “speech that does no more than propose a commercial transaction” “expression related solely to the economic interests of the speaker and its audience”

4. 15-4 Advertising and the First Amendment Commercial Speech Doctrine Analysis –If it is commercial speech, then is the speech false or misleading, or does it pertain to an unlawful product or service? If so, then it receives no First Amendment protection and the analysis ends.

5. 15-5 Advertising and the First Amendment Commercial Speech Doctrine Analysis –If the commercial speech is true, non-misleading, and pertains to a lawful product or service, then it receives First Amendment protection. It may, however, still be regulated and restricted if the government can prove: 1.There is a substantial government interest that justifies the regulation; 2.There is some evidence the regulation directly advances the substantial interest; and 3.There is a reasonable fit between the state interest and the government regulation.

6. 15-6 The Regulation of Advertising Lawsuits By Competitors and Consumers – Lanham Act: Section 43(a) allows for federal civil lawsuits based upon both false advertising and false endorsements.

7. 15-7 The Regulation of Advertising State and Local Laws –States regulation of advertising predates federal regulation. –Many states have unfair and deceptive acts and practices statutes, known as “Little FTC Acts.”

8. 15-8 The Regulation of Advertising Federal Regulation –Federal Trade Commission (FTC) - Nearly 100 years old, the FTC polices unfair methods of business competition and protects consumers from deceptive advertisements. –Food and Drug Administration (FDA) - Responsible for protecting public health and ensuring that products like cosmetics, drugs, and food are honestly and accurately represented to the public.

9. 15-9 The Regulation of Advertising Telemarketing –In 2003, the FTC initiated the National Do Not Call Registry that allows people to block the calls of telemarketers. Advertisers claimed the Registry violated their First Amendment rights to free speech. The 10 th Circuit ruled in 2004 that the Registry did not violate First Amendment rights because the government asserted a “substantial interest” and the Registry directly advanced that interest.

10. 15-10 The Regulation of Advertising Regulating Junk E-Mail and Spam –CAN-SPAM Act of 2003: False/Misleading Messages – are prohibited under the law. Functioning Return Addresses and Opt-Out Mechanism – all commercial e-mail messages must contain either a functioning return e-mail address or an “opt-out” mechanism. 10-Day Prohibition Period – spam senders are barred from transmitting e-mails for 10 business days to anyone who opted out originally.

11. 15-11 The Regulation of Advertising Regulating Junk E-Mail and Spam –CAN-SPAM Act of 2003: Disclosure Requirements – all commercial e-mails must disclose a) it is an advertisement or solicitation, b) an opt-out mechanism, and c) a “valid physical postal address.” Aggravated Violations – additional penalties may be applied to those who a) engage in e-mail “harvesting,” b) use multiple e-mail accounts for commercial messages, or c) use unauthorized relays for commercial e-mail.

12. 15-12 Federal Trade Commission False Advertising Defined 1.There must be a representation, omission or practice that is likely to mislead or to confuse the consumer. 2.The act or practice must be considered from the perspective of a “reasonable consumer.” 3.The representation, omission, or practice must be “material” such that it is likely to influence the purchasing decision.

13. 15-13 Federal Trade Commission Means to Police Deceptive Advertising –Guides –Voluntary Compliance –Consent Agreement –Litigated Orders

14. 15-14 Federal Trade Commission Means to Police Deceptive Advertising –Substantiation –Corrective Advertising –Injunctions –Trade Regulation Rules

15. 15-15 The Regulatory Process Procedures 1.The advertiser can agree to sign the agreement, and the commissioners vote to accept the agreement. The order is published and made final in 60 days. 2.The advertiser can agree to sign the agreement, but the commissioners reject it. 3.The advertiser can refuse to sign the agreement.

16. 15-16 Special Cases of Deceptive Advertising Testimonials –Testimonial – an advertising message that consumers are likely to believe reflects the opinions, beliefs, findings or experience of a party other than the sponsoring advertiser. The endorsement can be communicated by a verbal message, demonstration, picture or likeness, signature or other identifying personal characteristic or the seal of an organization.

17. 15-17 Special Cases of Deceptive Advertising Testimonials –A celebrity or expert endorser must be a bona fide user of the product. –When an organization endorses a product, there must be evidence that the endorsement represents the collective judgment of the members. –An endorser cannot make any statement about a product that an advertiser cannot make. –Endorsements that the claim comes from typical consumers must be made by consumers.

18. 15-18 Special Cases of Deceptive Advertising Bait and Switch Advertising –Bait and switch advertising – lures consumers into a store who are in the market for an item seen at one price. The merchant then claims the product is not available at the price but another model can be purchased at a high price. This practice is illegal.

19. 15-19 Special Cases of Deceptive Advertising Defenses –The primary defense for deceptive advertising is truth, that the product does what the advertiser claims, is made how it was claimed to be made and/or is beneficial in the way presented. –May also argue the claim in question is not material, and therefore will not impact a purchasing decision.

20. 15-20 Special Cases of Deceptive Advertising Advertising Agency/Publisher Liability –Traditionally, advertising agencies and publishers were not held liable in cases of false or harmful advertising. Recent cases, however, have held some agencies and publishers liable in some circumstances.