FTC member urges scrutiny of ads

Wednesday, April 7, 1999

A member of the Federal Trade Commission warned advertising agencies, their clients and news organizations that the panel may begin stepping up efforts to curb deceptive ads if more self-regulation efforts don't surface.

In a March 25 speech to the American Advertising Federation, Commissioner Sheila F. Anthony said she was dismayed at the poor response from news organizations to a pamphlet listing FTC guidelines for spotting deceptive advertising. Anthony said the agency distributed the guidelines to 50 state press associations, but only 17 had passed the guidelines on to their members.

“The Commission has tried to enlist the media in its fight against fraudulent and deceptive practices,” Anthony said in her speech, titled “A Big Stick, a Keen Eye and Some Help from our Friends.” “But we are concerned that too many deceptive ads are slipping through. I believe the media can and should do a better job.”

But commercial-speech experts warn that such talk sounds too much like support for future government review efforts. That, they say, clearly violates First Amendment prohibitions on prior restraint.

Rick Kaplar of The Media Institute said that although the FTC has a lot of experience in targeting deceptive advertising, it shouldn't attempt to stifle such ads before the fact.

“Prior review is a synonym for prior restraint,” Kaplar said.

Although Anthony conceded in her speech that some First Amendment problems could arise, she said no law prohibits the agency from suing those who run deceptive ads.

The commissioner said the FTC earlier this year filed charges against two manufacturers — one for bottling salt water and selling it as a dietary supplement called “Vitamin O” and another for selling a so-called “impotence drug” called Vaegra.

Both products had been advertised in national newspapers and on the Internet.

Last year, the FTC settled cases with Chrysler, Bozell and Martin Advertising in Birmingham, Ala., on charges that their automobile ads omitted cost information or buried it in fine print.

Anthony said law-enforcement measures were needed to “stop the Internet from turning into the 'wild West' of advertising and marketing.”

Advertising experts say they are leery of federal mandates.

“They are encouraging the industry to take voluntary steps, but I am not too sure they have legal authority to require it,” said Wally Snyder, president of the American Advertising Federation.

Kaplar said advertisers should be skeptical.

“Are you going to have a government agency that is going to try to stop false and misleading ads from appearing in the first place or are they going to continue with the traditional way?” Kaplar asked. “I just get very worried about any thought of the FTC getting involved in any prior review or censorship. It just opens the door to all sorts of things.”

Kaplar offered that the “traditional way” — putting the ads into the marketplace and letting advertisers suffer consequences if they produce deceptive ads — works best.

He said an agency attempting to determine what is false and misleading beforehand is also problematic because “one person's misleading advertisement is another person's rhetorical hyperbole.”

But Anthony encouraged advertisers to take the matter into their own hands to avoid government interference.

“Our attitude is that, in many instances, self-regulatory initiatives can address consumer concerns in a more flexible manner and in a much shorter period of time than government regulation.”

Kaplar said: “The question always arises: If there is always the threat of government action if the industry doesn't live up to certain standards, is that truly voluntary? Personally, I think industry has a good track record of policing itself.”