Chapter 12: Advertising

Topic Overview:
This chapter defines commercial speech and in which situations it can be protected under the First Amendment. The Federal Trade Commission is in charge of overseeing companies and if the public has a complaint they will respond to those misleading/false or inappropriate advertising. The test that is used to determine whether it is legal for the government to regulate commercial speech is the Central Hudson test and it allows the government to regulate in the least restrictive way possible.
Defining Terms:

• Federal Trade Commission: A federal agency created in 1914. Its purpose is to promote free and fair competition in interstate commerce; this includes preventing false and misleading advertising. 
• Lanham Act: A federal law that regulates the trademark registration process but also contains a section permitting business competitors to sue one another for false advertising. 
• Native Advertising: Ads designed to resemble the editorial content of the medium where they appear. The Federal Trade Commision has said this may be deceptive if it difficult for consumers to distinguish advertising from editorial content. 
• Puffery: Involves advertising that exaggerates the merits of products or services in such a way that no reasonable person would take the claim seriously, from deception. 
• Vice Products: Products related to activities generally considered unhealthy or immoral or whose use is restricted by age or other condition. The category includes alcohol, tobacco, firearms, sexually explicit materials, and drugs. 
• Standing: The position of a plaintiff who has been injured or threatened with injury. No person is entitled to challenge the constitutionality of an ordinance or statute unless he or she has the required standing-that is, unless he or she has been affected by the ordinance or statute.
• Opinion Letter: An informal FTC communication providing general advice about advertising techniques. 
• Advisory Opinion: A FTC measure that offers formal guidance on whether a specific advertisement may be false or misleading and how to correct it. 
• Industry Guides: In advertising a FTC measure that outlines the FTC's policies concerning a particular category of product or service. 
• Trade Regulation Rules: A broadly worded statement by the FTC that outlines advertising requirements for a particular trade.
• Voluntary Compliance: The general FTC practice to allow advertisers to follow FTC rules and correct violations before the commission takes action. 
• Consent Order: An agreement between the FTC and an advertiser stipulating the terms that must be followed to address problematic advertising; also called a consent agreement. 
• Cease and desist order: An administrative agency order prohibiting a person or business from continuing a particular course of conduct.
• Litigated Order: A FTC order filed in administrative court and enforceable by the courts whose violation can result in penalties, including fines of up to $10,000 per day. 
• Substantiation: The authority of the FTC to demand that an advertiser prove its advertised claims.
• Corrective Advertising: The FTC power to require an advertiser to advertise or otherwise distribute information to correct false or misleading advertisement claims.

Important Cases:
Central Hudson Gas & Electric Corp. v. Public Service Commision of New York (1980): A utility company wanted to promote the use of electricity in violation of a state statute. The Supreme Court established a four-part test to determine the constitutionality of regulations on commercial speech.
Sorrell v. IMS Health Inc. (2011): Vermont law prohibited drug marketing & data mining companies from buying doctors' prescription records from pharmacies for marketing purposes. The state law restricted the sale or disclosure of pharmacy prescription records to brand-name drugs to protect doctor's privacy. The Supreme Court found the law to unconstitutional because it limited pharmacies' sale and distribution of information, content-based restriction.

Relevant Doctrine:

The Central Hudson Test After Sorrell:

Courts asked to rule on the constitutionality of a regulation on commercial speech must determine:

1. Is the commercial speech false or related to an illegal activity? a) If yes, the speech may be banned or strictly regulated. b) If no, proceed with the test.
2. Is the regulation of commercial speech based on its content? a) If yes, the court must apply heightened, or strict, scrutiny and presume that the rule is unconstitutional. b) If no, proceed with the test.
3. Is the regulation of commercial speech content neutral? a) If yes, the court must apply the Central Hudson test and strike down the regulation unless the answer to all of the following is yes. 

- Does the rule relate to a significant government interest?

- Does the rule directly advance that government interest?

- Is the regulation unrelated to the suppression of speech?

- Does the regulation "fit" the government interest without unduly infringing on speech?

Controversies:
In April 2015, two In-N-Out employees wore a pin that had a number 15 to work, indicating their support to raise the minimum wage to $15. According to section 7 of the National Labor Relations Act, which gives the right for employees to express labor-related speech. However, In-N-Out could justify its uniform policy by showing substantial evidence with "special circumstances." The company has petitioned the Supreme Court for review because the U.S. Court of Appeals for the Fifth Circuit ruled in favor of section 7 to defend the workers' rights.

My Questions/Concerns:

Reference:

Trager, Robert., Ross, Susan Dente., & Reynolds, Amy (2018), The Law of Journalism and Mass Communication. Thousand Oaks, CA: Sage Publications.