Unit 7

1
Unit 7

• Commercial Speech
• Regulation of Advertising

2
Evolution of First Amendment Protection for
Commercial Speech

• Valentine v. Chrestensen (1942) U.S. Supreme
  Court said advertising received no First
  Amendment protection.
  
• N.Y. Times v. Sullivan (1964) The Court said a
  paid political ad did receive protection under
  the First Amendment.
  
• Pittsburgh Press Co. v. Pittsburgh Commission on
  Human Relations, (1973). The Court suggested it
  might give constitutional protection to an
  ordinary commercial proposal.

3
Evolution of First Amendment Protection for
Commercial Speech (continued)

• Bigelow v. Virginia, (1975). The Court said the
  First Amendment protects an ad containing factual
  material of clear public interest and promoting a
  legal activity.
• Virginia State Board of Pharmacy v. Virginia
  Citizens Council, (1976). The Court explicitly
  declared that purely commercial speech receives
  First Amendment protection, but the government
  may regulate ads that are false, misleading, or
  deceptive or promote illegal products or
  services.

4
Evolution of First Amendment Protection for
Commercial Speech (continued)

• Central Hudson Gas Electric Co. v. Public
  Service Commission of New York, (1980). The Court
  articulated the Central Hudson test.
  
• Board of Trustees v. Fox, (1989). The Court
  modified the fourth part of the Central Hudson
  test.
  

5
The Central Hudson Test (modified by Board of
Trustees, SUNY v. Fox, 1989)

• 1.) Is the expression eligible for protection
  under the First Amendment? If the ad is false,
  deceptive, misleading or promotes illegal
  activities or products, the answer to this
  question is no, and the case ends here.
• However, if it is determined that an ad is
  entitled to First Amendment protection, the next
  step is to analyze the constitutionality of the
  regulation.

6
The Central Hudson Test, contd

• 2. Is the asserted government interest in
  regulation (reason for regulating) substantial?
  
• 3. Does the regulation directly advance the
  government interest? (Does the regulation do what
  its designed to do?)
  
• 4. Is there a reasonable fit between the
  government interest and the regulation? Is the
  regulation narrowly tailored to achieve the
  desired objective?

7
Recent Commercial Speech Case 1

• U.S. v. Edge Broadcasting (1993) Edge owned a
  radio station in N.C. whose major audience was in
  Virginia. The Court upheld a federal law
  prohibiting the broadcasting of lottery ads by a
  station licensed to a state that prohibited
  lotteries.
• The regulation advanced the substantial
  government interest of allowing N.C. to
  discourage gambling among its residents.
  

8
Recent Commercial Speech Case 2

• 44 Liquormart, Inc. v. Rhode Island (1996) The
  Court struck down a Rhode Island law banning
  retail liquor price advertising except at the
  point of sale.
• R.I. provided no evidence that the
  price-advertising ban significantly promoted the
  states interest in temperance.
  
• There were less extensive measures likely to meet
  the states goal.
  

9
Recent Commercial Speech Case 3

• Greater New Orleans Broadcasting Assn v. U.S.
  (1999) The Court ruled that a federal law
  prohibiting broadcast ads for private casino
  gambling by stations located in a state in which
  such gambling is legal violated the First
  Amendment.
• Federal law was riddled with exceptions.
• Government failed to connect casino advertising
  with evil effects of gambling.
  

10
Deceptive Advertising

• An ad is deceptive if it contains a
  representation or omission of information that is
  material and likely to mislead consumers acting
  reasonably to their detriment.
• The FTC now tends to focus its regulatory efforts
  on deception that may cause consumers physical or
  economic harm.

11
FTC Tools to Combat Deceptive Advertising

• To prevent deception
• Advisory opinions
• Industry guides
• Policy statements
• Trade Regulation Rules
• Substantiation

12
FTC Tools to Combat Deceptive Advertising
(continued)

• To halt and/or punish deception
• Consent decrees
• Cease and desist orders (Both consent decrees and
  cease and desist orders can include corrective
  ads or affirmative disclosures.)
  
• Injunctions (FTC must go to court and ask court
  to issue an injunction.)
  
• Civil penalties
• Criminal penalties

13
Right to refuse advertising

• The courts have recognized that media have the
  right to refuse advertising as long as they are
  not violating contracts, antitrust law or
  anti-discrimination laws.
• Broadcast media, however, do have some legal
  obligations to provide advertising time to
  candidates during election.
  

14
Self-regulation

• NAD (National Advertising Division) Reviews
  national advertising and investigates complaints
  about ads
  
• NARB (National Advertising Review Board) Hears
  appeals from NAD decisions
  
• CARU (Childrens Advertising Review Unit)
  Monitors ads aimed at children under 12,
  investigates complaints, reviews proposed ads