COMM 4650 Media Law Chapter 15

There is an ______ exception to the do-not-call provisions that allows a company to call a consumer with whom it has such a relationship, even if the consumer's number is on the registry. An EBR exists when a consumer has purchased, rented or leased the company's goods or services within 18 months preceding a telemarketing call.

"established business relationship" (EBR)

Until the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act bill was signed, the FTC was limited to dealing with unfair and deceptive practices that were _____.

"in commerce."

Printers' Ink Statutes

-Found in 47 states -Most make false advertising a misdemeanor

Disclosure Requirements

All commercial e-mail messages must disclose three specific items of content: (a) a clear and conspicuous identification of the message as an "advertisement or solicitation," (b) a notice of the "opt-out" mechanism and (c) a "valid physical postal address." All commercial e-mail "that includes sexually oriented material" must also include a warning label on the subject line. To implement this provision, the FTC in 2004 adopted a rule requiring spammers who send sexually oriented material to include the warning "SEXUALLY-EXPLICIT:" in the e-mail subject line or face fines for violations of federal law.35 In addition, the matter in the spam e-mail message that is initially viewable when it is opened cannot include any sexually oriented material.

Identify the activities that are proscribed as "aggravated violations" according to the CAN-SPAM Act.

Aggravated Violations: The act proscribes as "aggravated violations," warranting additional civil and commercial penalties, (a) e-mail "harvesting" or the knowing use of harvested addresses, (b) the automated creation of multiple e-mail accounts used for commercial e-mail and (c) the use of unauthorized relays for commercial e-mail messages.

False/Misleading Messages

Commercial e-mail messages that include "materially false or misleading" header information or deceptive subject lines are prohibited.

According to COPPA, online operators do not have to notify parents and get their permission before collecting, using, or disclosing personal information from children.

False

Corrective advertising is a highly controversial scheme based on the premise that to merely stop an advertisement is in some instances insufficient.

If the advertising campaign is successful and long running, a residue of misleading information remains in the mind of the public after the offensive advertisements have been removed. Under the corrective advertising scheme, the FTC forces the advertiser to inform the public that in the past it has not been honest or has been misleading.

Identify the key divisions of the BBB's Advertising Self-Regulatory Council (ASRC).

National Advertising Division, Child Advertising Review Unit

The FTC prohibits bait-and-switch advertising, which it defines as "an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, Page 606in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser."

The FTC's rules state, among other things, the following: No ad containing an offer to sell a product should be published if the offer is not a bona fide effort to sell that product.61 Advertisers cannot engage in practices that discourage purchase of advertised merchandise as part of a bait scheme to sell other merchandise, such as refusing to show or sell the product offered in accordance with the terms of the offer.

It is difficult for courts to reverse an FTC ruling. There are only a handful of reasons that a judge can use to overturn the commission decision.

The case goes to an appeals court, and there is no new finding of fact: What the FTC says is fact, is fact. The following are all instances in which a court can overturn an FTC ruling: (1) "convincing evidence" that the agency made an error in the proceedings; (2) no evidence to support the commission's findings; (3) violation of the Constitution—for example, the agency did not provide due process of law; (4) the action goes beyond the agency's powers; (5) facts relied on in making the ruling are not supported by sufficient evidence; and (6) arbitrary or capricious acts by the commission. An appeal of an adverse ruling by a circuit court can be taken to the Supreme Court, but only if certiorari is granted.

Voluntary Compliance

The company can voluntarily agree to terminate the advertisement and never use the claim again.

Whereas commercial speech typically receives limited First Amendment protection, two types of commercial speech receive no protection whatsoever:

The government may ban advertising that is false, misleading or deceptive. Much of the rest of this chapter is devoted to defining and explaining such regulation. The government may ban advertising for unlawful goods and services. This broad exception to the protection of the First Amendment was established primarily to permit the government to bar discriminatory employment advertising. It is illegal for an employer to discriminate on the basis of race or religion or ancestry or even gender when hiring employees. Help-wanted ads that offer employment to "whites" or "men only," for example, are illegal.10 Advertisements for prostitution (an illegal service) are not protected by the First Amendment, with the Web site Backpage.com today often fighting legal battles over its "escort" ads.

Identify the argument put forth by Justice Scalia that concluded the debate on the "Beef. It's What's for Dinner" campaign.

The majority concluded that while "citizens may challenge compelled support of private speech" they "have no First Amendment right not to fund government speech."

Government may regulate truthful advertising for legal goods and services if the following conditions are met:

There is a substantial state interest to justify the regulation. There is evidence that the regulation directly advances this interest. There is a reasonable fit between the state interest and the government regulation.

The advantages of the trade regulation rules (TRRs) are numerous.

They speed up and simplify the process of enforcement. Advertisers can still litigate the question, challenge the trade regulation rule, seek an appeal in court and so forth. In most cases they probably will not go to that expense. Trade regulation rules have had a great deterrent effect, as they comprehensively delimit what constitutes an illegal practice. In the past, after the commission issued a cease and desist order, businesses frequently attempted to undertake practices that fell just outside the narrow boundaries of the order. The TRRs are much broader and make it much harder for advertisers to skirt the limitations. Finally, via TRRs the FTC is able to deal with problems more evenhandedly. An entire industry can be treated similarly, and just one or two businesses are not picked out for complaint.

The second aspect of the law that improved FTC remedies allowed the FTC to seek civil penalties against anyone who knowingly violates the provisions of a litigated order, even if that person was not originally the subject of the order.

To wit: Chemical company A sells a spray paint that is toxic if used in a closed area, but the product is advertised as Page 601being completely harmless. The FTC moves against the company and issues a cease and desist order stating that in the future the firm must not advertise the product as being completely harmless. Chemical company B also sells a spray paint that has the same toxicity and is advertised the same way. If it can be shown that company B was aware of the provisions of the order against company A and continued to advertise its product as being completely safe, B can be fined up to $10,000 per day for violating the order, even though the order is not directed against B.

Identify the criterion used by the Lanham Act in the test of false advertising.

What message, either explicitly or implicitly, does the ad convey? Is this message false or misleading? Does this message injure the plaintiff?

A food manufacturing firm in its advertisement claims that it is safe to consume its products without refrigeration. However, during the ad, a disclaimer mentions that it cannot be left unrefrigerated for more than 24 hours. The FTC is most likely to use _____.

an injunction

Since then, courts have developed a _____ articulating just how much First Amendment protection advertising receives and the criteria the government must satisfy to permissibly regulate it.

commercial speech doctrine

Spokespersons for the FTC have said that the agency will use the power only in those instances in which the advertising can cause harm, in those cases that contain a clear law violation and in those cases in which there is no prospect that the advertising practice will end soon.

injunction

Sometimes an advertiser doesn't want to sign a consent agreement. It may believe that the advertising claim is truthful or may simply want to hold off any FTC ban on certain kinds of product claims. In this case the FTC can issue an order, usually called a _____, to stop the particular advertising claim.

litigated order

The FTC was created by Congress in 1914 to _____.

police unfair methods of business competition

Advertising must be truthful and not misleading, with misleading ads sweeping up those in which _____.

relevant information is omitted, those that imply something that's not true and those in which any disclaimers or disclosures are not clear and not prominent enough for reasonable consumers to see, hear and understand them

Advertising _____ has been an important part of the FTC regulatory scheme since 1972. The basis of the program is simple: The commission asks advertisers to substantiate claims made in their advertisements.

substantiation

consent order or decree

written agreement between the commission and the advertiser in which the advertiser agrees to refrain from making specific product claims in future advertising