Regulation of Advertising and Promotion

1. Regulation of Advertising and Promotion

2. SelfRegulation Federal Regulation State Regulation Advertising is regulated through SelfRegulation Federal Regulation

3. Advertisers and Agencies Industry Trade Associations BBB NARC Media Self-regulation of Advertising Advertisers, Agencies, Media and their Lawyers Industry Trade Associations Voluntary self regulation by the advertising industry, business, and media to maintain consumer trust and confidence and limit government interference The Public

4. The Pharmaceutical Industry Has Developed Advertising Guidelines To Self-Regulate

5. The National Advertising Review Council is an Important Self-Regulatory Body

6. Sources of NAD Cases (2008)

7. Some TV Network Guidelines for Children’s Advertising Must not over glamorize product Don’t over-glamorize product No exhortative language, such as “Ask Mom to buy…” No exhortative language, such as “Ask mom to buy…” Generally no celebrity endorsements Generally no celebrity endorsements Can’t use “only” or “just” in regard to price Can’t use “only” or “just” in regard to price Generally no comparative or superiority claims Generally no comparative or superiority claims No costumes or props not available with the toy No costumes or props not available with the toy Three-second establishing shot of toy in relation to child Three-second establishing shot of toy in relation to child No shots under one second in length

8. Encourages truthful, ethical and responsible advertising Effective regulatory mechanism Preferable to government intervention Often results in more stringent standards than those imposed by legislation Takes too long to resolve complaints Problems with budgeting and staffing Lack of power or authority Self-serving to advertiser and media Appraising Self-Regulation Encourages truthful, ethical and responsible advertising Perspective of Advertisers, Agencies and Media Effective regulatory mechanism Preferable to government intervention Often results in more stringent standards than those imposed by legislation Takes too long to resolve complaints Perspective Of Critics Problems with budgeting and staffing Lack of real power or authority

9. Hard Liquor Advertising on TV: Legal?CSPI’s Response to Seagram’s Moratorium Violation

10. Mike’s Hard Lemonade: On TV, Web and in Print

11. How About Tobacco advertising? No tobacco ads on tv or radio, but… … magazines and outdoor posters near retailers ok, unless targeted to minors

12. Freedom of speech or expression is the most basic federal law that governs advertising and promotion Speech promoting a commercial transaction is protected but must be truthful Freedom of speech must be balanced against competing interests such as advertising of harmful products Advertising and the First Amendment Freedom of speech or expression is the most basic federal law that governs advertising and promotion Speech promoting a commercial transaction is protected but must be truthful

13. Federal Communications Commission (FCC) Federal Trade Commission (FTC) Food and Drug Administration (FDA) Bureau of Alcohol Tobacco, and Firearms U.S. Postal Service Federal Government Agencies Involved in the Regulation of Advertising and Promotion Federal Communications Commission (FCC) Federal Trade Commission (FTC) * Food and Drug Administration (FDA) U.S. Postal Service

14. Created By FTC Act (1914) Created By FTC Act (1914) Wheeler Lea Amendment (1938) Made Deceptive Practices Unlawful Wheeler Lea Amendment (1938) Made Deceptive Practices Unlawful Three Major Divisions • Bureau of Consumer Protection • Bureau of Economics • Bureau of Competition Federal Trade Commission

15. FTC very powerful and active regulator 1980 FTC Improvements Act passed 1980’s and 1990’s FTC becomes less active 2000 to present FTC focused on enforcement of existing regs Federal Regulation by the FTC 1970’s 1970’s FTC very powerful and active regulator 1980 FTC Improvements Act passed 1980’s and 1990’s FTC becomes less active 2000 to present

16. Causes substantial physical or economic injury to consumers Could not reasonably be avoided by consumers Must not be outweighed by countervailing benefits to consumers or competition The Concept of “Unfairness”: Legal Requirements Causes substantial physical or economic injury to consumers Could not reasonably be avoided by consumers

17. Likelihood of misleading consumer Perspective of reasonable consumer Materiality – misrepresentation or practice is likely to affect consumers’ purchase decision “Deceptive Advertising”: Key Elements Likelihood of misleading consumer Perspective of reasonable consumer

18. Bayer – “The wonder drug that works wonders” BMW – “The ultimate driving machine” Nestle – “The very best chocolate” Snapple – “Made from the best stuff on earth” Puffery: Some Examples Advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts

19. Affirmative Disclosure Cease and Desist Orders Advertising Substantiation Corrective Advertising Ways the FTC Deals With Deceptive Advertising FTC Programs to Prevent Deceptive Advertising Affirmative Disclosure (i.e. disclaimers) Advertising Substantiation FTC Programs to Deal With Deceptive Advertising After It Occurs Cease and Desist Orders

20. Corrective Advertising & Cease/Desist Doan's Pills Must Run Corrective Advertising: Ads Claiming Doan's Is Superior in Treating Back Pain Were Unsubstantiated FTC News ReleaseMay 27, 1999 The Federal Trade Commission has ordered the makers of Doan's Pills to run ads to correct misbeliefs resulting from their unsubstantiated claim that Doan's Pills are superior to other over-the-counter analgesics for treating back pain. The Order, contained in a Commission opinion announced today, would require advertising and packaging to carry the message, "Although Doan's is an effective pain reliever, there is no evidence that Doan's is more effective than other pain relievers for back pain." The order also would prohibit Novartis Corporation and Novartis Consumer Health, Inc., the marketers of Doan's, from representing that the product is more effective than other over-the-counter products unless they possess and rely upon competent and reliable scientific evidence -- including at least two clinical studies — to substantiate their claims. In addition, the order would require Novartis to have scientific substantiation for any claims made regarding the efficacy, safety, benefits or performance of any over-the counter analgesic they market. Doan's has been marketed and sold for over 90 years and always has been advertised as a backache product.

21. False statements have been made about advertiser’s product or your product The ads actually deceived or had the tendency to deceive a substantial segment of the audience The deception was “material” or meaningful and is likely to influence purchasing decisions The falsely advertised products or services are sold in interstate commerce You have been or likely will be injured as a result of the false statements, either by loss of sales or loss of goodwill False Advertising: The Lanham Act False statements have been made about advertiser’s product or your product Elements Required To Win a False Advertising Suit Under the Lanham Act The ads actually deceived or had the tendency to deceive a substantial segment of the audience The deception was “material” or meaningful and is likely to influence purchasing decisions The falsely advertised products or services are sold in interstate commerce

22. Common Areas of FTC Inquiry Environmental Claims “Free” Claims Made in the USA Claims Advertising as a Contract Testimonials Fact vs Puffery

23. FDA’s Nutrition Labeling and Education Act (1990)

24. State Regulation In addition to recognizing decisions by the federal courts regarding false or deceptive practices, many states have special controls and regulations governing the advertising of specific industries or practices.

25. Banning unsolicited emails (SPAM) Privacy issues such as profiling and collecting personal information Protecting children when they are online Legal Marketing/Advertising on the Internet Banning unsolicited emails (CAN-SPAM) Privacy issues such as cookies-based tracking, profiling and collecting personal information

26. Major Provisions of the CAN-SPAM Act • It bans false or misleading header information. • It prohibits deceptive subject lines. • It requires that your e-mail give recipients an opt-out method. • It requires that commercial e-mail be identified as an advertisement and include the sender’s valid physical postal address.

27. Enacted to protect the privacy of children when they are using the Internet Places restrictions on collecting information from children via the Internet Privacy policies must be posted on home pages and areas where information is collected; parents must affirm registration through reply e-mail Children’s Online Privacy Protection Act (COPPA) Enacted to protect the privacy of children when they are using the Internet Places restrictions on collecting information from children via the Internet