Regulation in ISC

1
Regulation in ISC
2
Types of Regulation

• Industry self-regulation
• State regulation
• Federal regulation
• International regulation

3
Most forms of ISC are heavily regulated

• Public Relations and political advertising are
  the major exceptions

4
Industry Self-Regulation

• Regulation by media
• Regulation by trade groups
• Regulation by Better Business Bureau

5
Regulation by Trade Groups

• Direct Marketing Association
• Ethical Guidelines cover direct marketing and
  some forms of sales promotion
• Voluntary, but violation results in negative
  publicity and loss of membership
• Available at www.the-dma.org

6
Regulation by Trade Groups

• Promotion Marketing Association, Inc.
• Hold annual promotion law conference
• Code of ethics
• Available online at www.pmalink.org

7
Regulation by Trade Groups

• Public Relations Society of America
• Code of ethics
• Workshops on ethical/regulatory issues
• Available online at www.prsa.org

8
The BBB and Ad Regulation

• National Advertising Review Council
• National Advertising Division (NAD)
• National Advertising Review Board (NARB)

9
NAD NARB

• National ads only
• Issues of
• Product performance claims
• Product superiority claims
• Scientific/technical claims
• NOT questions of taste!

10
Benefits of NAD Process

• Relatively inexpensive
• Relatively quick
• Uses ad experts
• Levels the playing field

11
NAD NARB

• Broad membership
• Advertisers
• Advertising agencies
• Public

12
CARU

• Childrens Advertising Review Unit
• Reviews ads directed to children in all media
• Reviews online material targeted to children
• Safe Harbor program

13
State Regulation

• Very problematic!
• 4,960 hits for advertising on the kentucky.gov
  website
• Gambling/lotteries

14
Federal Regulation

• First Amendment protects commercial speech
• Central Hudson Test
• Looks at whether government should have interest,
  and whether oversight is overkill

15
Federal Trade Commission

• Deception
• Puffery
• Affirmative disclosure
• Unfairness causes substantial, unavoidable
  injury to consumers
• Comparative advertising

16
FTC mechanisms

• Consent order
• Cease-and-desist order
• Corrective advertising
• www.ftc.gov

17
Other Federal Agencies

• Federal Communications Commission
• Food Drug Administration
• Postal Service
• Bureau of Alcohol, Tobacco, and Firearms

18
Lanham Act

• False statements made
• Deception or tendency to deceive
• Deception likely to influence buying behavior
• Product/service sold between states
• Affect of loss of sales or loss of goodwill

19
International Regulation

• U.S. laws much less restrictive than in other
  countries
• Comparative advertising
• Customer databases