Transcript Rahj Chapter 15

The 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.
Commercial Speech Doctrine
Analysis
1. 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”
2. 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.
Commercial Speech Doctrine
Analysis, Continued
3. 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
three things:
• there is a substantial government interest that
justifies the regulation;
• there is some evidence the regulation directly
advances the substantial interest; and
• there is a reasonable fit between the state
interest and the government regulation.
Lawsuits By Competitors
Lanham Act: Section 43(a) allows for
federal civil lawsuits based upon both
false advertising and false endorsements.
The key provisions are set forth at:
15 U.S.C. § 1125.
Federal Regulation of Advertising
Key Government Agencies:
1. FTC – Federal Trade Commission
Nearly 100 years old, the FTC polices unfair methods
of business competition and protects consumers from
deceptive advertisements.
www.ftc.gov/
2. FDA – Food & Drug Administration
Responsible for protecting public health and ensuring
that products like cosmetics, drugs, and food are
honestly and accurately represented to the public.
www.fda.gov/
TOP 10 Consumer Fraud
Complaints to the FTC in 2003
1.
2.
3.
4.
Identity Theft—42%
Internet Auctions—15%
Shop-at-Home/Catalog Sales—9%
Internet Services and Computer Complaints—
6%
5. Prizes, Sweepstakes and Lotteries—5%
6. Foreign Money Offers—4%
6. Advance Fee Loans & Credit Protection—4%
8. Telephone Services—3%
9. Business Opportunities and Work-at-Home
Plans—2%
10. Magazine Buyers Clubs—1%
11. Office Supplies and Services—1%
FTC Definition of False or
Deceptive Advertising
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.
FTC Tools & Remedies To Stop
False Advertising
• Guides
• Voluntary Compliance
• Consent Agreements
• Litigated Orders
• Substantiation
• Corrective Advertising
• Injunctions
• Trade Regulation Rules
Regulatory Process
Complaint Based System
 Special Reg. of Deceptive Ads

– Testimonial
– Bait and Switch