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Commercial Speech
Origins of commercial speech
rights
1942 -- Valentyne v. Chrestensen:
Supreme Court said purely commercial speech had no First Amendment protection.
1964 -- New York Times v.
Sullivan: political ad at center of debate, but Supreme Court did not discuss purely
commercial speech.
Commercial Speech
Pittsburgh Press Co. v.
Pittsburgh Commission on Human Relations (1973) --No protection for illegal ads under
First Amendment
Bigelow v. Virginia (1975) --
Court struck down ban on abortion referral ads. Framed issue as political speech case.
Commercial Speech
Virginia State Board of Pharmacy
v. Virginia Citizens Consumer Council (1976)
Court said price advertising of
prescription drugs should be allowed.
Based decision on people’s
right to receive information.
Commercial Speech
How courts determine if ad
regulation is constitutional?
Central Hudson Gas & Electric
v. Public Service Commission of New York (1980)
Established 4-part test for
commercial speech cases.
Struck down ban on ads promoting
electricity use.
Central Hudson
Test
1. Is expression protected by the
First Amendment? Is it lawful and truthful?
2. Is the government interest
substantial?
3. Does regulation advance the
government interest?
4. Could government interest be
served by narrower restriction on speech?
Commercial Speech
First Amendment rights not
absolute.
Federal agencies that regulate
ads include:
Federal Trade Commission (FTC)
Food & Drug Administration
(FDA)
Housing and Urban Development
(HUD)
Department of Transportation
(DOT)
Commercial Speech
Agencies regulating advertising
Treasury
U.S. Department of Agriculture
(USDA)
Department of Commerce
Consumer Products Safety
Commission
Department of Energy
Environmental Protection Agency
Commercial Speech
Why ads don’t get same
protection as political speech
Commercial speech is more
"hardy"; it can withstand regulation.
Commercial speech more easily
verified; facts can be stated objectively, but opinions cannot.
Commercial Speech
Federal Trade Commission
Created in 1914
5 members, staggered 7-year terms
Protects consumers and
competitors
Issues rules and regulations
concerning consumer products
The FTC
Enforcement Powers
Prospective remedies
Industry guides
Advisory opinions
Voluntary agreements
Substantiation
Trade Regulation Rules (TRRs)
FTC
Enforcement powers
Formal remedies
Cease and desist order
Corrective advertising
Court injunctions
Consent decrees
Civil and criminal penalties
FTC
Agency’s two major concerns
Unfairness
"An act or practice that
causes or is likely to cause substantial harm that a consumer may not reasonably avoid and
that has no compensating benefit."
Deception
"A material
representation or omission that is likely to mislead consumers acting reasonably."
FTC
Deception
Material statement -- can’t
be just an incidental part of ad.
Reasonable -- law doesn’t
protect the clueless.
Likely to mislead
Expressly false
Implied falsehood
Deception
Types of implications
Reasonable basis
Proof
Demonstration
No qualification
Ineffective qualification
Significance
Puffery
Expertise and endorsement
Other Regulations
State remedies
Limited by courts
Competitor remedies
Lanham Act
Industry self-regulation
NAD and NARB
NAB Television Code
Consumer remedies
Recent
Controversies
Tobacco ads
FDA tried to regulate ads
Banned billboards near schools
Required other billboards to be
black and white
No sponsorship of events
No merchandise
Federal appellate court ruled
against FDA
But, cities’ bans on
billboards for tobacco and alcohol upheld
Recent
controversies
Florida tobacco settlement
Included bans on advertising
No ads on public transit or in
sports arenas
Billboard ads banned
Companies must replace billboard
ads with anti-smoking messages
Recent
Controversies
Calvin Klein
FBI briefly investigated
complaints of "kiddie porn" in underwear ads. Klein removed ads
Recently, new campaign also drew
criticism and was pulled.
Recent
Controversies
Liquor advertising
Supreme Court strikes down 2 bans
Rubin v. Coors Brewing Co. (1995)
Federal ban on putting alcohol
content on beer labels overturned
44 Liquormart v. Rhode Island
(1996)
State ban on price advertising of
booze overturned
Recent
Controversies
Advertising and the Internet
FTC looking at "spam"
mail rules
March 1998 -- Company won $2
million from "spammer" that clogged network
Washington state passed law in
1998 against spam
© A.L. Fargo 2001
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