Commercial Speech

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Commercial Speech
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What is commercial speech?

• Commercial Speech is an expression, economic in
  nature, by a person or business entity persuading
  the audience to take certain action (e.g.,
  purchase a product) with the intent of making
  profit.
• speech that does no more than propose a
  commercial transaction
• expression related solely to the economic
  interests of the speaker and its audience

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Means of regulations

• Place (ads in certain places, media type, etc.)
• Type of advertisement (tobacco products, law
  firms, etc.)
• Content (indecent, false, etc.)

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Historical development

• Before 1976, courts classified commercial speech
  as speech unprotected by the First Amendment.
• Unprotected does not mean prohibited.
• It means that before 1976 government had to use a
  simple rational justification for its regulations
  (such justifications are very difficult to
  challenge).
• However, such regulations were not common.

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Historical development 1976

• Virginia State Board of Pharmacy v. Virginia
  Citizens Consumer Council (1976) the Supreme
  Court ruled that commercial speech is generally
  protected by the First Amendment.
• Advertising, however tasteless and excessive it
  sometimes may seen, is nonetheless dissemination
  of information as to who is producing and selling
  product for what reason, and at what price.

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Historical development 1980

• In Central Hudson Gas Electric v. Public
  Service Commission of New York (1980), the
  Supreme Court developed a test for reviewing
  commercial speech regulations

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Central Hudsons Test (Four-Point)

• 1. Is the commercial message either misleading
  or related to illegal activity?
• 2. Does the government assert a substantial
  interest to be achieved by the restriction on
  speech?
• 3. Does the restriction directly advance this
  interest?
• 4. Is the restriction no more extensive than
  necessary?

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In other words The Commercial Speech Doctrine
States That

• False or misleading advertising, as well as
  advertising about unlawful goods and services,
  receives no First Amendment protection.

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In other words The Commercial Speech Doctrine
States That

• Truthful and non-misleading advertising about
  lawful goods and services receives an
  intermediate level of First Amendment protection
• more protection than speech such as obscenity,
  which is not protected by the First Amendment,
• but less protection than political speech, which
  often is said to be at the core of the First
  Amendment.

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Commercial Speech Doctrine Analysis

• If it is commercial speech, then is the speech
  false or misleading, or does it pertain to an
  unlawful product or service? If so, then it
  receives no First Amendment protection and the
  analysis ends.

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Commercial Speech Doctrine Analysis

• If the commercial speech is true, non-misleading,
  and pertains to a lawful product or service, then
  it receives First Amendment protection.
• It may, however, still be regulated and
  restricted if the government can prove three
  things

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Commercial Speech Doctrine Analysis

• the government must prove that
• there is a substantial government interest that
  justifies the regulation
• there is some evidence the regulation directly
  advances the substantial interest and
• there is a reasonable fit between the state
  interest and the government regulation.

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Federal Regulation of Advertising

• FTC Federal Trade Commission. Nearly 100 years
  old, the FTC polices unfair methods of business
  competition and protects consumers from deceptive
  advertisements. www.ftc.gov/
• FDA Food Drug Administration Responsible for
  protecting public health and ensuring that
  products like cosmetics, drugs, and food are
  honestly and accurately represented to the
  public. www.fda.gov/

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FTC Definition of False or Deceptive Advertising

• 1. There must be a representation, omission or
  practice that is likely to mislead or to confuse
  the consumer.
• 2. The act or practice must be considered from
  the perspective of a reasonable consumer.
• 3. The representation, omission, or practice
  must be material such that it is likely to
  influence the purchasing decision.

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False and deceptive advertising

• Perpetual "sales"
• Psychological pricing
• Advertising the maximum
• Bait and switch. Offering a product at a low
  price with no intention to sell it
• "Going out of business" sales a message of
  urgency and "dumped" prices
• Scare tactics

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False and deceptive advertising

• Units of sale and pricing
• Memberships. Problems in comparing prices of
  items sold in regular packages and bulk packages.
• Fillers and oversized packaging
• Hidden fees and surcharges

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False and deceptive advertising

• Meaningless Awards e.g., Best in class
• Meaningless terms deluxe, advanced, hi-tech,
  heavy duty, super, ultra.
• Undefined terms organic, light, low-tar, mild,
  natural,

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A Knight's Tale controversy

• Newsweek revealed in June 2001 that print ad for
  a movie A Knight's Tale, contained glowing
  comments from a film reviewer who did not exist.

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Top Consumer Fraud Complaints to the FTC in 2006

• Over 670,000 complaints filed
• Identity theft complaints represented 36 percent
• Shop-at-Home/Catalog Sales - 7 percent
• Prizes/Sweepstakes and Lotteries - 7 percent
• Internet Services and Computer - 6 percent
• Internet Auctions - 5 percent
• Foreign Money Offers - 3 percent
• Advance-Fee Loans and Credit Protection - 2
  percent

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Top Consumer Fraud Complaints to the FTC in 2012

• more than 2 million complaints overall
• Identity Theft 369,132 18 percent
• Debt collection 199,721 10 percent
• Banks and Lenders 132,340 6 percent
• Shop-at-Home and Catalog Sales 6 percent
• Prizes, Sweepstakes and Lotteries 5 percent
• Impostor Scams 4 percent
• Internet Services 4 percent
• Auto-Related Complaints 4 percent

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FTC Tools Remedies To Stop False Advertising

• Guides
• Voluntary Compliance
• Consent Agreements
• Litigated Orders
• Substantiation
• Corrective Advertising
• Injunctions
• Trade Regulation Rules

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Lanham Act Section 43(a)The federal trademark
protection law

• The section of the Act allows for federal civil
  lawsuits based upon both false advertising and
  false endorsements.

23
Quack Watch http//www.quackwatch.org/
Operated by Stephen Barrett, M.D.

• Your Guide to Quackery, Health Fraud, and
  Intelligent Decisions
• For example 25 Ways to Spot Quacks and Vitamin
  Pushers. http//www.quackwatch.org/01QuackeryRelat
  edTopics/spotquack.html