Commercial Speech
Commercial Speech Speech intended to generate marketplace transactions. (Advertising)
Leading Cases <ul><li>Valentine v. Chrestensen </li></ul><ul><li>Bigelow v. Virginia </li></ul><ul><li>Virginia State Boar...
Valentine v. Chrestensen <ul><li>1942 </li></ul><ul><li>Leaflets urging people to pay for a tour of a submarine. </li></ul...
Bigelow v. Virginia <ul><li>1975 </li></ul><ul><li>Newspaper editor convicted for running ads for legal abortions in New Y...
Virginia State Board of Pharmacy <ul><li>1976 </li></ul><ul><li>Illegal for pharmacists to advertise prices for prescripti...
Central Hudson <ul><li>1980 </li></ul><ul><li>Ban on promotional advertising by electric utilities. </li></ul><ul><li>Comm...
Four-part Test <ul><li>Message not misleading.  Activity advertised is lawful. </li></ul><ul><li>Govt has a substantial in...
44 Liquormart v. Rhode Island <ul><li>1996 </li></ul><ul><li>Rhode Island law banned retail liquor price advertising excep...
Bolger v. Youngs Drug Products <ul><li>1983 </li></ul><ul><li>Law prohibits mailing unsolicited advertisements for contrac...
Greater New Orleans Broadcasting Ass’n <ul><li>1999 </li></ul><ul><li>Federal law prohibits some broadcast advertising of ...
ADVERTISING  REGULATION
History of Advertising Regulation <ul><li>1906 --  Pure Food and Drug Act </li></ul>
<ul><li>1914 -- Federal Trade Commission (FTC) created to enforce Sherman Antitrust Act and Clayton Act </li></ul><ul><li>...
Powers of the FTC <ul><li>Investigation begins -- public or nonpublic (usually nonpublic) </li></ul><ul><li>Letter of comp...
FTC May Require . . . <ul><li>forced disclosure </li></ul><ul><li>affirmative acts </li></ul><ul><li>corrective ads </li><...
False and Deceptive Ads What are they?
False Ad misleading in a material respect
Deceptive Acts or Practices <ul><li>Representation, omission or practice that is likely to mislead the consumer, and </li>...
Unfair Acts or Practices <ul><li>Injury causes, or likely to cause is </li></ul><ul><ul><li>substantial </li></ul></ul><ul...
Misleading and Deceptive Practices . . .  <ul><li>false oral or written representations </li></ul><ul><li>misleading price...
<ul><li>failure to perform promised services </li></ul><ul><li>failure to meet warranty obligations </li></ul>
Claims Must be Substantiated <ul><li>If you say “tests show . . . “ </li></ul><ul><ul><li>must have tests that show that <...
Disclaimers and disclosures <ul><li>must be clear and conspicuous </li></ul><ul><li>consumer must be able to notice, read ...
Demonstrations <ul><li>must show how the product will perform under normal use </li></ul>
Refunds <ul><li>must be made to dissatisfied customers, if you promised to make them </li></ul>
Advertising to children <ul><li>must be very careful </li></ul><ul><li>children have greater difficulty evaluating adverti...
Credit and Financial Issues <ul><li>Truth in Lending Act </li></ul><ul><li>Fair Credit Billing Act </li></ul><ul><li>Fair ...
Environmental Claims <ul><li>Deceptive to represent product offers a general environmental benefit </li></ul><ul><li>Eithe...
Free Products <ul><li>if its buy one, get one free </li></ul><ul><ul><li>one item must be free and the other no more than ...
Mail and Telephone Orders <ul><li>must have reason for stating shipping time </li></ul><ul><li>if delayed, must notify wit...
Testimonials and Endorsements <ul><li>must reflect typical experiences of consumers unless clearly and conspicuously state...
<ul><li>if person claims to be an expert, must be an expert </li></ul><ul><li>if endorser claims to use product, must use ...
 
 
 
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Commercial Speech/Advertising Regulation

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  • http://www.firstamendmentcenter.org/faclibrary/case.aspx?id=1912
  • http://www.canceradvocacy.org/news/pdf/photo_medicaread_10.15.03.jpg
  • http://inet.cenhud.com/ic_esco/images/svcmap2.gif
  • http://vm.cfsan.fda.gov/~lrd/stamp.jpg
  • supreme court history Sherman: http://business.enotes.com/images/business-finance/ebf_02_img0163.jpg
  • Commercial Speech/Advertising Regulation

    1. 1. Commercial Speech
    2. 2. Commercial Speech Speech intended to generate marketplace transactions. (Advertising)
    3. 3. Leading Cases <ul><li>Valentine v. Chrestensen </li></ul><ul><li>Bigelow v. Virginia </li></ul><ul><li>Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc. </li></ul><ul><li>Central Hudson Gas & Electric Corp. v. Public Service Commission </li></ul>
    4. 4. Valentine v. Chrestensen <ul><li>1942 </li></ul><ul><li>Leaflets urging people to pay for a tour of a submarine. </li></ul><ul><li>Violated city ordinance prohibiting distributing commercial leaflets on street. </li></ul><ul><li>Ordinance upheld. </li></ul><ul><li>No protection for commercial speech. </li></ul>
    5. 5. Bigelow v. Virginia <ul><li>1975 </li></ul><ul><li>Newspaper editor convicted for running ads for legal abortions in New York. </li></ul><ul><li>Virginia law prohibited abortion promotions. </li></ul><ul><li>Conviction reversed. </li></ul><ul><li>Ad included factual material of public interest. </li></ul>
    6. 6. Virginia State Board of Pharmacy <ul><li>1976 </li></ul><ul><li>Illegal for pharmacists to advertise prices for prescription drugs. </li></ul><ul><li>Consumers challenged law on grounds entitled to receive information pharmacists wished to communicate to them. </li></ul><ul><li>Commercial speech is protected. </li></ul>
    7. 7. Central Hudson <ul><li>1980 </li></ul><ul><li>Ban on promotional advertising by electric utilities. </li></ul><ul><li>Commerce is subject to government regulation. </li></ul><ul><li>So commercial speech accorded lesser protection. </li></ul>
    8. 8. Four-part Test <ul><li>Message not misleading. Activity advertised is lawful. </li></ul><ul><li>Govt has a substantial interest. </li></ul><ul><li>Restriction directly advances interest. </li></ul><ul><li>Restriction no more extensive than necessary. </li></ul>
    9. 9. 44 Liquormart v. Rhode Island <ul><li>1996 </li></ul><ul><li>Rhode Island law banned retail liquor price advertising except at point of sale. </li></ul><ul><li>No evidence ban significantly promoted state’s interest. </li></ul><ul><li>Less extensive measures available. </li></ul>
    10. 10. Bolger v. Youngs Drug Products <ul><li>1983 </li></ul><ul><li>Law prohibits mailing unsolicited advertisements for contraceptives. </li></ul><ul><li>Justifications insufficient to warrant sweeping prohibition. </li></ul>
    11. 11. Greater New Orleans Broadcasting Ass’n <ul><li>1999 </li></ul><ul><li>Federal law prohibits some broadcast advertising of lotteries and casino gambling. </li></ul><ul><li>Applied Central Hudson </li></ul><ul><li>Inconsistent law. </li></ul>
    12. 12. ADVERTISING REGULATION
    13. 13. History of Advertising Regulation <ul><li>1906 -- Pure Food and Drug Act </li></ul>
    14. 14. <ul><li>1914 -- Federal Trade Commission (FTC) created to enforce Sherman Antitrust Act and Clayton Act </li></ul><ul><li>1938 -- FTC given power to regulate “false and deceptive” advertising </li></ul>
    15. 15. Powers of the FTC <ul><li>Investigation begins -- public or nonpublic (usually nonpublic) </li></ul><ul><li>Letter of compliance </li></ul><ul><li>Consent order </li></ul><ul><li>Administrative complaint </li></ul><ul><li>Cease and desist order </li></ul><ul><li>Court -- injunction, civil penalties, consumer redress </li></ul>
    16. 16. FTC May Require . . . <ul><li>forced disclosure </li></ul><ul><li>affirmative acts </li></ul><ul><li>corrective ads </li></ul>
    17. 17. False and Deceptive Ads What are they?
    18. 18. False Ad misleading in a material respect
    19. 19. Deceptive Acts or Practices <ul><li>Representation, omission or practice that is likely to mislead the consumer, and </li></ul><ul><ul><li>Reasonable consumer </li></ul></ul><ul><ul><ul><li>if ad directed to particular group, consider reasonableness from perspective of that group </li></ul></ul></ul><ul><ul><li>Must be “material” representation, omission or practice </li></ul></ul><ul><li>Affect consumers’ behavior or decisions about the product or service </li></ul>
    20. 20. Unfair Acts or Practices <ul><li>Injury causes, or likely to cause is </li></ul><ul><ul><li>substantial </li></ul></ul><ul><ul><li>not outweighed by other benefits </li></ul></ul><ul><ul><li>not reasonably avoided </li></ul></ul>
    21. 21. Misleading and Deceptive Practices . . . <ul><li>false oral or written representations </li></ul><ul><li>misleading price claims </li></ul><ul><li>sales of hazardous or systematically defective products or services without adequate disclosures </li></ul><ul><li>failure to disclose information regarding pyramid sales </li></ul><ul><li>bait and switch </li></ul>
    22. 22. <ul><li>failure to perform promised services </li></ul><ul><li>failure to meet warranty obligations </li></ul>
    23. 23. Claims Must be Substantiated <ul><li>If you say “tests show . . . “ </li></ul><ul><ul><li>must have tests that show that </li></ul></ul><ul><li>Bayer, Bayer Children’s Aspirin, Cope, Vanquish, Midol </li></ul><ul><ul><li>ads promised more than they could deliver in the way of headache and tension relief </li></ul></ul>
    24. 24. Disclaimers and disclosures <ul><li>must be clear and conspicuous </li></ul><ul><li>consumer must be able to notice, read or hear, and understand the information </li></ul><ul><li>disclaimers and disclosures alone usually not enough to remedy a false or deceptive ad </li></ul>
    25. 25. Demonstrations <ul><li>must show how the product will perform under normal use </li></ul>
    26. 26. Refunds <ul><li>must be made to dissatisfied customers, if you promised to make them </li></ul>
    27. 27. Advertising to children <ul><li>must be very careful </li></ul><ul><li>children have greater difficulty evaluating advertising claims and understanding nature of information you provide </li></ul>
    28. 28. Credit and Financial Issues <ul><li>Truth in Lending Act </li></ul><ul><li>Fair Credit Billing Act </li></ul><ul><li>Fair Credit Reporting Act </li></ul><ul><li>Equal Credit Opportunity Act </li></ul><ul><li>Electronic Fund Transfer Act </li></ul><ul><li>The Consumer Leasing Act </li></ul>
    29. 29. Environmental Claims <ul><li>Deceptive to represent product offers a general environmental benefit </li></ul><ul><li>Either qualify broad environmental claims or </li></ul><ul><li>Avoid them </li></ul><ul><li>Don’t imply significant environmental benefits if benefit isn’t significant </li></ul>
    30. 30. Free Products <ul><li>if its buy one, get one free </li></ul><ul><ul><li>one item must be free and the other no more than regular price </li></ul></ul><ul><li>all terms and conditions of free offer must be described clearly and prominently </li></ul>
    31. 31. Mail and Telephone Orders <ul><li>must have reason for stating shipping time </li></ul><ul><li>if delayed, must notify with right to cancel </li></ul><ul><li>if longer than 30 days delay, or if second delay, must get consumer’s consent </li></ul><ul><li>if no shipping time promised, must ship within 30 days </li></ul>
    32. 32. Testimonials and Endorsements <ul><li>must reflect typical experiences of consumers unless clearly and conspicuously stated otherwise </li></ul><ul><li>statement that not all consumers will get same results is not enough </li></ul><ul><li>connections between endorser and company that are unclear or unexpected must be disclosed </li></ul>
    33. 33. <ul><li>if person claims to be an expert, must be an expert </li></ul><ul><li>if endorser claims to use product, must use product </li></ul>

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