Corporate and Commercial Speech
is an area of law that pertains to public relations and advertising. It involves:
- US regulatory agencies with jurisdiction over advertising
- Major laws regulating advertising
- History of US advertising regulation in the 20th century
- General advertising regulation
- Constitutional issues about free speech and restraints on commercial speech
- Special issues – liquor advertising
- Special issues – tobacco advertising
- Special issues – advertising to children
- Constitutional issues about corporate speech
- Special issues – campaign finance laws
- The right to advertise
- Advertising ethics
1. US Regulatory Agencies
- FTC — Federal Trade Commission — Regulates most forms of commercial advertising and anti-competitive business practices
- FDA — Food and Drug Administration — Regulates advertising of foods, medicines and cosmetics
- FCC — Federal Communications Commission — Regulates advertising in broadcasting
- SEC — Securities and Exchange Commission — Regulates advertising of stocks and financial institutions
- FEC — Federal Election Commission — Regulates (or regulated) political campaign ads
- US Trademark Office — Regulates use of company trademarks
- State and local governments — Also regulate advertising, trademarks and time-place-and-manner advertising
1.1 Major US laws regulating advertising
Pure Food and Drug Act — 1906, creating FDA, amended many times since. Drug advertising regulation has two key provisions: a) Drugs may only be advertised for the specific medical use for which they were approved; and b) advertising must contain a “fair balance” between the benefits and risks of a drug. The FDA has a Truthful Presciption Drug Advertising summary on the web.
Federal Trade Act – 1914 law creating the Federal Trade Commission. Modern code contains a good overview of legislative mandates and guidance in specific areas of problem advertising.
Lanham Act – A 1946 law preventing unfair use of another company’s trademark which also regulates some fair advertising practices. The Lanham Act also applies to web meta-tags and all forms of electronic communication.
2. History / US advertising / 20th Century
Regulation of commercial and corporate speech originated in the early 20th century in the wake of scandals surrounding advertising of “patent” medicines and fraudulent medical claims about everything from narcotics to breakfast cereals.
Samuel Hopkins Adams, a journalist and reformer, warned at the time that gullible Americans were swallowing “huge quantities of alcohol, an appalling amount of opiates and narcotics, and a wide assortment of varied drugs ranging from powerful and dangerous heart depressants to insidious liver stimulants.” All of these were advertised in newspapers and magazines with glowing medical endorsements. The lack of regulation was so serious that even cereal makers were claiming that a person with appendicitis could eat their cereals in order to avoid surgery (as we saw in the Collier v. Postum libel case).
Around the same time, an investigation of the Chicago meat processing industry by Upton Sinclair led to urgent calls for reform. The result of both food and medical issues was the Pure Food and Drug Act of 1906, creating the Food and Drug Administration (FDA).
Deceptive practices in commercial advertising were regulated somewhat later following the formation of the Federal Trade Commission in 1914 to enforce two major laws against anti-competitive business practices — the Sherman Anti Trust Act (1890) and the Clayton Anti-Trust Act (1915). By the 1930s the FTC’s brief included consumer protection and regulation of advertising.
3. General advertising regulation
The most important regulator for general commercial advertising is the Federal Trade Commission, and its guidelines are extensive, but generally fall into the category of avoiding deception and backing up advertising claims.
Major areas include:
- Truth in Advertising – Advertising laws are aimed at protecting consumers by requiring advertisers to be truthful about their products and to be able to substantiate their claims. All businesses must comply with advertising and marketing laws (From SBA web site)
- Product labeling — Claims made on product packaging must comply with some basic truth-in-packaging and labeling rules. These claims include descriptions of ingredients, package size and volume, and discount or lower price labeling. Under the Fair Packaging and Labeling Act (FPLA), the Federal Trade Commission (FTC) and the Food and Drug Administration (FDA) issue regulations requiring all consumer commodities be labeled to disclose net contents, identity of the product, and the name and place of business of the product’s manufacturer, packer or distributor. (From SBA web site)
- Special product advertising — Automobiles, computers and internet services, health and fitness products, housing and real estate, telephone services, and environmental or green marketing claims . For alcohol and children’s advertising, see below.
The FTC issues guidelines which help advertisers understand regulations in areas such as price claims, use of the word “free,” endorsements, diet plans, food advertising and so on. For example, the FTC says:
- Agencies, publishers and web sites are themselves responsible for ensuring that their advertisers claims are substantiated. It is not enough to take the claims at face value.
- Disclaimers and disclosures must be clear and conspicuous.
- Demonstrations must show how the product will perform under normal use.
- “Bait and switch” advertising is not permitted.
When the FTC learns of a deceptive practice, it may meet informally with a company and propose a cease and desist order. If the company agrees, and a consent order can be worked out, no further action is taken. However, companies may challenge proposed orders before an administrative law judge and appeal any decisions in federal court.
The FTC may order fines, corrective advertising or other remedies in cases of misleading advertising. For instance, some companies have been forced to advertise that their product doesnt cure tired blood in all cases of anemia, or that there may be substantial penalties for early withdrawl from certain types of bank accounts.
Class action lawsuits on behalf of the victims of deceptive advertising have been another mechanism by which enforcement of fair trade laws take place. For instance, in March, 2006, a lawsuit against makers of sun screen products was filed claiming false and deceptive advertising, even though the Federal Trade Commission has warned consumers that sun block is not very effective or that certain debt relief services do not relieve debt.
Another example, provided by the FTC, is this: Suppose a package once made from 2 percent recycled fibers is now being made from 3 percent recycled fibers. Clearly, would be false to say the package is 100 percent recycled. But could a company say: “Now with 50 percent more recycled fibers” ? No, according to the FTC’s guidelines on environmental advertising, such a claim would be deceptive even though it is literally true.
Another important area of advertising regulation is the Food and Drug Administration’s regulations about prescription drug advertising. See these links for FDA prescription advertising guidelines — and other advertising advisories.
4. Constitutional issues regarding advertising and free speech
In the wake of the patent advertising and unsafe food scandals of the early 20th century, commercial speech did not have First Amendment protection. This was reaffirmed in the Valentine case in 1942.
But by the 1970s, when the anomalies in the original hierarchy of speech doctrine became obvious, the courts started with a two-tier view of speech, as either protected or unprotected. But there were problems. For example, an ad asking for help in the Civil Rights movement (New York Times v Sullivan, below) is clearly political. But what about an offer for abortion services? Is it political or commercial? (See Bigelow). Or how about generic drugs for senior citizens? (See Virginia Board). Eventually, the lack of distinction between commercial and political speech led the court to provide First Amendment protection for any truthful commercial speech.
Chaplinsky v. New Hampshire, 1942 — Several weeks before the Valentine decision, the court issues a “two-tier theory” of communication, in which “certain well-defined and limited classes of speech, the prevention and punishment of which have never been thought to raise any constitutional problem.” The Chaplinsky case is a prior restraint / “fighting words” case but it guided advertising doctrine for several decades.
** Valentine v. Chrestensen, 316 U.S. 52, 1942 — The Supreme Court said that the First Amendment does not apply to commercial advertising. F.J Chrestensen had a surplus Navy submarine on display and was advertising it with handbills passed out on New York streets. However , a city ordinance allowed only political handbills on the street. The court said that the Constitution “imposes no restraint on government as respects commercial advertising.”
** New York Times v. Sullivan, 376 U.S. 254, 1964 — Although this case involved advertising, the Supreme Court took pains to distinguish it from the Valentine case because it involved “idea” or political advertising, which had full First Amendment protection. (See section on libel law). The Court took pains to distinguish this case from Chrestensen,: “The publication here was not a “commercial” advertisement in the sense in which the word was used in Chrestensen. It communicated information, expressed opinion, recited grievances, protested claimed abuses, and sought financial support on behalf of a movement whose existence and objectives are matters of the highest public interest and concern.”
Pittsburgh Press v Pittsburgh Commission on Human Relations, 413 U.S. 376, 1973 — A city ordinance banning sex descrimination did apply to newspaper classified ads for employment. Before this, newspaper classified help wanted ads were always categorized under “Help Wanted: Male” and “Help Wanted: Female.” After this case, newspaper advertising changed nationwide and no gender distinctions were permitted.
** Bigelow v Virginia 421 US 809 1975 — An advertisement in a University of Virginia paper, the Virginia Weekly, for abortion services in New York City was both political and commerical. The court upheld Bigelow’s right to advertise and inform people of abortion services in other states. (Note this case came up just after Roe v. Wade).
Va. Board of Pharmacy v. Virginia Citizens Consumer Council 1976 — Before this decision, pharmacies were not free to advertise the price of drugs and the availability of generic drugs. The decision allowing advertising is another example where the Court could no longer separate commercial and political speech.
Bates v. Arizona State Bar 1977 — Supreme Court said state regulation of professional advertising for lawyers is not constitutional. Bates is another commercial speech case with political underpinnings. In this case, lawyers for a legal aid service to low income Hispanics challenged state laws forbidding advertising by lawyers and won.
** Central Hudson Gas & Electric Corp. v. Public Service Commission (PSC) of New York, 447 U.S. 557 1980 — This case is important as a major test of the validity of government restrictions on commercial and corporate speech. The PSC had issued rules forbidding advertising that might encourage consumption of electricity. (It was the “energy crisis,” after all.) Central Hudson challenged the rules. The Supreme Court used the case to issue a FOUR PART TEST for determining whether government restrictions are valid:
1. Does the ad involve a lawful activity?
2. Is there a substantial government interest?
3. Does the regulation advance this interest?
4. Is the regulation the least restrictive means to serve the interest?
Bolger v. Youngs Drug Products Corp 1983 — This case involved straightforward advertising of condoms through the mail. The US Postal Service said the company could not mail such ads. The Central Hudson test was applied, USPS claiming substantial government interest in preventing interference with parents attempts to discuss birth control.. However, the court said the Postal Service regulation was overly broad. “The level of discourse reaching a mailbox cannot be limited to that which would be suitable for a sandbox.” This argument is often cited in obscenity cases.
* Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico 478 U.S. 328 1986 — This was a major exceptionto the trend of commercial speech protection and has since been reversed. In Posadas, the Central Hudson test did not prevent restrictions on ads in Puerto Rico concerning legal gambling there. Legislation in Puerto Rico banned casino advertising directed at residents of Puerto Rico, although not casino advertising directed to tourists. The Court said a legitimate government interest (preventing casino gambling by Puerto Ricans) was served even though other types of gambling, including horse racing and lotteries, could be advertised. The casinos argued that once an activity is legal, restrictions cant be applied to advertising. But the court turned the argument on its ear: Because the activity could be made illegal, its ill effects can be minimized by regulating advertising. This is similar to the arguments in the questions of alcohol or tobacco advertising. Also, the court said not all regulations had to be the “least restrictive” ones. Reasonable regulations could be reasonable in proportion ot the interest served.
State University of New York v. Fox 1989 — Here the court upheld a university’s restrictions on commercial speech on campus.
4.1 Special Issues — Liquor advertising
In the past two decades, court decisions reflect a trend towards more protection of commercial speech and less regulation. This was clearly illustrated by several liquor advertising cases, especially Rubin v. Coors and 44 Liquormart v. RI.
** Rubin v. Coors 1995 — Coors was advertising the alcohol content of its beers and the Bureau of Alcohol, Tobacco and Firearms did not approve, fearing that once consumers knew which brands had higher alcohol content it would lead to market competition for high alcohol beers and more intoxication among the public. But the Court said advertising that discloses only truthful information can’t be prohibitied.
** 44 Liquormart v. Rhode Island 517 U.S. 484 1996 — In this case, a business wanted to advertise its liquor prices and the state of Rhode Island said it couldn’t. The Supreme Court disagreed. One justice, Clarence Thomas, said that if an activity is legal it is not constitutional to “keep people in the dark for what the government perceives to be their own good.”
Voluntary restraints for liquor advertising on radio and TV were in place between 1936 and 1996. These were voluntary restraints by the Distilled Spirits Council. (Wine and beer ads were common on radio and TV, but not ads for whiskey, rum, tequila, etc). After courts gave distilled spirits the green light in Rubin and 44 Liquormart, the Distilled Spirits Council decided to end the voluntary restrictions. In the ensuing controversy, the Clinton administration unsuccessfully asked Congress to authorize the FTC to regulate liquor advertising, and FTC Commissioner Roscoe B. StarekStarek said: “Alcohol advertising poses difficult First Amendment issues because this advertising concerns behavior that is legal when directed to adults” but, he believed, would likely harm children.
“Since the [ban was broken in 1996] expenditures for alcohol advertising have increased dramatically, even though liquor commercials were mainly found only on cable channels. However, in the winter of 2002 the first major network, NBC, indicated that it would start accepting hard liquor advertisements on shows airing after 9 P.M.. In a poll conducted by the Center for Science in the Public Interest (2001, December) 68% of the respondents opposed NBC’s change of policy and 70% agreed that it was dangerous to have liquor ads on television because young people will be exposed to liquor. Heeding public pressure, NBC cancelled its plans in March, 2002. — MediaWise Facts and Tips
4.2 Special Issues –Tobacco advertising
1971 — US broadcast advertising for tobacco became illegal in the US on Jan. 1, 1971 under the Federal Cigarette Labeling and Advertising Act of 1966. This was the same act that required all tobacco companies to put warning labels on their products. The act followed a nationwide controversy over the link between smoking and cancer which exploded with the US Surgeon General’s report of 1964 positively linking cancer and smoking. “Smokeless” tobacco (snuff) also came under the law in 1986, and state regulation of billboards was challenged in Lorillard v. Reilly, 2001 (below).
2005 — Bans on tobacco advertising in Europe and Asia were consolidated and reinforced with the 2005 World Health Organization Framework Convention on Tobacco Control.
2009 — Family Smoking Prevention and Tobacco Control Act – Regulations now prohibit tobacco companies from sponsoring sports or music events, or displaying logos on T-shirts, hats, or other apparel. The law has also led the Food and Drug Administration to develop extremely graphic warning labels which have been challenged in a series of court cases (such as RJ Reynolds v. FDA, below).
Two major cases have tested the extent of tobacco advertising control in the US:
* Lorillard Tobacco v. Reilly, 2001 — The Federal Cigarette Labelling and Advertising Act 15 USC 1333 was not as restrictive as a state of Massachusetts law, especially with respect to advertising near schools and on billboards. The Supreme Court ruled that the state had a “substantial interest” in regulating the sale of tobacco. The court also rejected the tobacco industry’s plea to be treated as fundamental First Amendment issues (using the “strict scrutiny” test) and instead insisted that the Central Hudson test was adequate:
“For over 25 years, the Court has recognized that commercial speech does not fall outside the purview of the First Amendment. Instead, the Court has afforded commercial speech a measure of First Amendment protection “ ‘commensurate’ ” with its position in relation to other constitutionally guaranteed expression. In recognition of the “distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government regulation, and other varieties of speech,” we developed a framework for analyzing regulations of commercial speech that is “substantially similar” to the test for time, place, and manner restrictions. The analysis contains four elements: “At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.”
Petitioners urge us to reject the Central Hudson analysis and apply strict scrutiny. They are not the first litigants to do so. Admittedly, several Members of the Court have expressed doubts about the Central Hudson analysis and whether it should apply in particular cases. But here … we see “no need to break new ground. Central Hudson, as applied in our more recent commercial speech cases, provides an adequate basis for decision.”
** R.J Reynolds v. FDA — Nov. 7, 2011, the 11th Federal District Court agreed with five tobacco companies to temporarily halt requirements that disturbing graphic images be printed on tobacco packages. The temporary halt (injunction) was granted so that a First Amendment review could take place. (These extremely graphic warning labels were required under the Family Smoking Prevention and Tobacco Control Act of 2009). The basic argument, once again, is over the strict scrutiny standard, but the new twist is the idea that by forcing the tobacco companies to print disturbing graphic images, the government is “compelling” speech. (Compelled speech has been seen as unconstitutional in, for example, Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp. a/Boston, Inc., 515 U.S. 557, 573-74, 1995 and also in Rosenberger v. Rector & Visitors of UVa, 515 U.S. 819,830, 1995).
But there are narrow exceptions to this in the arena of compelled commercial speech that allow the government to require disclosures to protect consumers from”confusion or deception, but these are for “purely factual and uncontroversial information.” And the graphic images that the FDA wants tobacco companies to use are not factual, but rather, designed to evoke an emotional reaction from smokers.
Under a strict scrutiny analysis, the court said, the government carries the burden of demonstrating that the FDA’s rule is narrowly tailored to achieve a compelling government interest. The interest in this case is unclear (and seems to go beyond education), the court said. Also, the mandatory use of the top 50% of a cigarette package and the top 20 percent of a printed tobacco advertisement “are any thing but narrowly tailored.” Yet at the same time, the court was not persuaded that irreparable harm would occur to the tobacco companies, since the estimated $20 million cost of pre-press work is “twelve one-hundredths of one percent of plaintiffs’ combined annual sales as reported for 2010.”
4.3 Special Issues — Advertising to children
Marketing to children is always different because they are far more gullible. FTC Commissioner Roscoe B. Starek summed up the FTC’s positions in 1997, noting the controlling influence of Central Hudson as reaffirmed by 44 Liquormart and going on to make a case for a compelling government interest in limiting the power of advertisers to target children. But the anti-regulatory climate of the late 1970s through the 90s led to a flourising of deceptive practices, such as encouraging children to use a 900 number to call their favorite cartoon characters or the Joe Camel ads.
Advertisers should take special care not to misrepresent a product or its performance when advertising to children. The Children’s Advertising Review Unit (CARU) of the Council of Better Business Bureaus has published specific guidelines for children’s advertising that you may find helpful.
5. Constitutional issues regarding corporate speech
Two major issues have surfaced around corporate speech in recent decades:
- Regulation of corporate / commercial advertising, including truth-in-advertising laws relative to corporate public relations; and
- The First Amendment implications of campaign finance laws.
5.1 Regulation of corporate / commercial advertising
Consolidated Edison Co. v. PSC NY 1980 — Con-Ed inserted a promotion of good old clean, safe, nuclear power (watch out for the three eyed fish) in its regular monthly bills. The Natural Resources Defense Council, a group opposed to nuclear power, wanted to insert anti-nuclear power arguments into consumers bills also. Since there was no guarantee of access under Miami Herald v. Tornillo or Red Lion v. FCC (which applies only to scarce airwaves), the PSC told Con Ed to stop advertising controversial stuff.
The NY supreme court said that was reasonable time, place and manner restriction on free speech. US supreme court reversed, said the ban wasnt reasonable time place restriction or narrowly tailor way to serve a compelling state interest. Prior restraint on commercial speech has to be content neutral. The case took place around the same times as the Central Hudson case (above) to a test for restrictions on corporate speech.
** Nike v. Kasky, 2003 — In April 1998, California activist Marc Kasky sued Nike for unfair and deceptive practices under California’s Unfair Competition Law and False Advertising Law. He asserted that “in order to maintain and/or increase its sales,” Nike made a number of “false statements and/or material omissions of fact” concerning the working conditions under which Nike products are manufactured in foreign facilities.
The US Supreme Court decided not to hear the case for procedural reasons. Nevertheless, the court noted that new First Amendment questions were presented. “On the one hand, if the allegations of the complaint are true, direct communications with customers and potential customers that were intended to generate sales–and possibly to maintain or enhance the market value of Nike’s stock–contained significant factual misstatements. The regulatory interest in protecting market participants from being misled by such misstatements is of the highest order. That is why we have broadly (perhaps overbroadly) stated that “there is no constitutional value in false statements of fact”– eg Gertz v. Robert Welch, Inc., 418 U. S. 323(1974). On the other hand, the communications were part of an ongoing discussion and debate about important public issues that was concerned not only with Nike’s labor practices, but with similar practices used by other multinational corporations… Knowledgeable persons should be free to participate in such debate without fear of unfair reprisal. The interest in protecting such participants from the chilling effect of the prospect of expensive litigation is therefore also a matter of great importance… That is why we have provided such broad protection for misstatements about public figures that are not animated by malice. See New York Times Co. v. Sullivan, 376 U. S. 254 (1964). See the First Amendment Center’s article on this case.
5.2 Constitutional issues regarding campaign finance laws and advertising
Restrictions on campaign financing directly affect advertising since anywhere from 70 to 90 percent of a political campaign’s expenditures involve some form of advertising. Because of the influence of corporations and unions on elections through campaign fund raising, Congress has wrestled with restrictions on campaign financing for decades. One of the first reform laws passed in this area was the Federal Election Campaign Act of 1974 which set limits on campaign contributions and mandated disclosure of campaign contributions.
Buckley v. Valeo, 1976 — Tested the Federal Election Campaign Act of 1974 , and the US Supreme Court upheld the law in 1976. But the court also ruled that spending money to influence elections is a form of constitutionally protected free speech, and struck down portions of the law. The court also stated candidates can personally give unlimited amounts of money to their own campaigns.
* First National Bank of Boston v. Bellotti, 1978 — A state statute prohibited commercial businesses from getting involved in public affairs unless they were directly affected. 1st National campaigned against a progressive personal income tax. Court held that non-media corporations have at least some first amendment rights. This case is very interesting because of the influence of corporations on later public initiatives, such as Proposition 87 in California in 2006. In Bellotti,
Chief Justice Rehnquist’s dissent has been of particular interest among those who believe corporate speech should be regulated. Rehnquist said:
“A state grants to a business corporation the blessings of potentially perpetual life and limited liability to enhance its efficiency as an economic entity. It might reasonably be concluded that those properties, so beneficial in the economic sphere, pose special dangers in the political sphere… Furthermore, it might be argued that liberties of political expression are not at all necessary to effectuate the purposes for which States permit commercial corporations to exist. So long as the Judicial Branches of the State and Federal Governments remain open to protect the corporation’s interest in its property, it has no need, though it may have the desire, to petition the political branches for similar protection. Indeed, the States might reasonably fear that the corporation would use its economic power to obtain further benefits beyond those already bestowed. 6 I would think that any particular form of organization upon which the State confers special privileges or immunities different from those of natural persons would be subject to like regulation, whether the organization is a labor union, a partnership, a trade association, or a corporation. ..”
McConnell v. Federal Election Commission, 540 U.S. 93 (2003 — Supreme Court upheld the constitutionality of most of the Bipartisan Campaign Reform Act of 2002, also known as the McCain Fiengold Act. The question was whether the Federal Elections Commission can regulate speech by regulating campaign spending on political advertising , which has an enormous influence over the outcome of political campaigns. According to a Wikipedia article:
“The BCRA was a mixed bag for those who wanted to remove the money from politics. It eliminated all soft money donations to the national party committees–but it also doubled the contribution limit of hard money, from $1,000 to $2,000 per election cycle, with a built-in increase for inflation. In addition, the bill aimed to curtail so called “issue ads” by banning the use of corporate or union money to pay for broadcast advertising that identifies a federal candidate within 30 days of a primary or nominating convention, or 60 days of a general election. Any ads within those periods that identify a federal candidate must be paid for with regulated, hard money or with contributions exclusively made by individual donors.”
* Citizens United v Federal Election Commission, 558 U.S. 50 (2010), — a landmark and hotly controversial Supreme Court decision holding that corporate financing of political advertising is free speech under the First Amendment. Attempts to limit corporate influence in politics had included the McCain Fiengold Act. According to the Wikipedia article: The 5–4 decision resulted from a dispute over whether the non-profit corporation Citizens United could air via video on demand a critical film about Hillary Clinton, and whether the group could advertise the film in broadcast ads featuring Clinton’s image, in apparent violation of the … McCain–Feingold Act.
6. The right to advertise / Access to the media
There are three generic advertising media to consider in this area:
- Public media, that is, media controlled by city and state governments, such as bus or subway ads;
- Broadcast media, that is, radio and television;
- Print media, of course, newspapers and magazines.
** Lehman v. Shaker Heights 418 U.S. 298 1974 — This is a public media case and it resulted in the Lehman rule. Here a candidate for office wanted to advertise on a city-run bus line. The Supreme Court said that the city was free to limit its advertising to commercial products only so long as it did so consistently. If all political ads are rejected there is no discrimination.
* Friends of the Earth v. FCC 1971 — This is a broadcast media case. When the FCC first moved against tobacco advertising, in 1967, it did so under the “Fairness Doctrine” which said that viewpoints must be allowed to compete on television. The tobacco industry’s ads were countered under the Fairness Doctrine by ads urging people to quit smoking starting. The Friends of the Earth, an environmental public intertest group, sued the FCC under the Fairness Doctrine saying it should be able to counter gasoline a nd automotive advertising for high octane gas guzzling cars. In 1974 the FCC reinterpreted the Fairness Doctrine as not giving a right of reply in cases involving commercial advertising. Later the entire Fairness Doctrine was scrapped. (See “Chilling the Internet: Lessons learned from the Regulation of Broadcasting“)
** Miami Herald v. Tornillo 1974 — This case involves the print media. Here the Supreme Court said that a Florida law imposing a “right of reply” on the print media was not constitutional. A candidate for public office insisted that the Herald print his advertisement responding to a Herald editorial, and the Herald refused. The court said that the print media had a right to control its contents without government interference. While the press should be responsible, Chief Justice Warren Burger said, “like many other virtues it cannot be legislated.”
Note, however, that under anti trust laws, even a newspaper cannot reject advertising concerning activities that are in competition with the newspaper’s business.
7. Advertising ethics
Most publications and broadcast organizations have codes, standards or guidelines for deciding what will and will not be accepted. The publisher or broadcaster has the responsibility for libel, invasion of privacy or other faults in an advertisement, as we saw in the New York Times v. Sullivan case, among others. But by the same token, publishers and broadcasters have the right to refuse advertising, with rare exceptions. ( FCC Section 315 political broadcasting and direct competitors advertising under anti-trust laws). Of course, in the WDAY case, the courts said that broadcasters could not be held responsible on the one hand if they were being forced to air political ads on the other hand.
Most organizations have guidelines for advertising that rely on the American Advertising Federations Code of Ethics. They may also be simplified or elaborated as well as in-house guidelines.
The Roanoke Times, for instance, has the following ten basic rules:
- Clear statement
- No loss of money
- No injury to health
- Follow the law
- No unfair attacks
- No misleading ads
- No obscene advertising
- Identified advertisers
- Follow classifications
- Clear advertising sources
The ABC’s at the FTC: Marketing and Advertising to Children, FTC Commisswiuoner Roscoe B. Starek, July 25, 1997.
Alcohol advertising expenditures (FTC report)
Adlaw newsletter concerning legal developments for advertising in both the US and the UK.
“An irresponsible approach to free speech,” by Richard T. Kaplar, Commercial Speech Digest, winter 1997.
“Advertising and the First Amendment” by Bruce E.H. Johnson, First Amendment Center