NCJ Number
50917
Date Published
1977
Length
42 pages
Annotation
THE ECONOMIC AND LEGAL JUSTIFICATIONS FOR ADVERTISING REGULATION, THE NEED FOR A CONSUMER-ORIENTED REGULATION PROGRAM, AND RECENT FEDERAL TRADE COMMISSION TRENDS IN REGULATION ARE ASSESSED.
Abstract
THE ECONOMIC JUSTIFICATION FOR ADVERTISING REGULATION IS BASED ON THE FAILURE OF THE THEORETICAL CONCEPT OF THE FREE MARKET SYSTEM. MARKET INCENTIVES TO CHALLENGE FALSE ADVERTISING ARE LACKING, AND THE MARKETPLACE IS SO DIVERSE THAT CONSUMERS MAY NOT SEE WHATEVER CHALLENGING ADVERTISING THE COMPETITION MOUNTS. THE ROLE OF INDUSTRY SELF-REGULATION IS EXAMINED ALSO AND FOUND TO BE DEFICIENT. THIS MARKET FAILURE AND THE INEFFECTIVENESS OF POSSIBLE ALTERNATIVE SYSTEMS TO ENSURE TRUTHFUL AND RELEVANT ADVERTISING IS AN INDICATION THAT SOME FORM OF GOVERNMENT REGULATION IS WARRANTED. IN RECENT DECISIONS, THE U.S. SUPREME COURT EXPANDED THE AREA OF PROTECTED COMMERCIAL SPEECH, THEREBY ADDING A CONSTITUTIONAL DIMENSION TO GOVERNMENT REGULATION OF THE ADVERTISING PROCESS. GOVERNMENT REGULATION POLICY, HOWEVER, MUST ADHERE STRICTLY TO PREDETERMINED GUIDELINES AND MUST HAVE A RELEVANT CONSUMER ORIENTATION. CONSUMER PRESSURES ON THE FEDERAL TRADE COMMISSION (FTC) AND FTC RESPONSE TO THESE PRESSURES ARE EXAMINED. TRADITIONALLY THE FTC HAS REGULATED ADVERTISING ON THE BASIS OF 'DECEPTION' OR 'UNFAIR TRADE PRACTICE.' THE MEANINGS OF THESE TERMS ARE EXAMINED, AND CHANGES IN MEANING OVER THE YEARS AND SHIFTS IN ORIENTATION FROM COMPETITOR-PROTECTION TO CONSUMER-PROTECTION ARE TRACED. THIS SHIFT IN ORIENTATION HAS INCREASED EMPHASIS ON THE FAILURE TO SUBSTANTIATE CLAIMS AND DECEPTION WHILE DECREASING EMPHASIS ON COMPARATIVE PRICE ADVERTISING AND USE OF MOCK-UPS. THE NEW EMPHASIS IS ON CORRECTIVE ADVERTISING. THE CONSTITUTIONALITY OF CORRECTIVE ADVERTISING REQUIREMENTS AND THE USE OF THIS DEVICE ARE DISCUSSED. THE ARTICLE CONTAINS NUMEROUS FOOTNOTES.