⚖️Media Law and Policy Unit 7 – Commercial Speech and Advertising

What's Commercial Speech?

• Commercial speech refers to communication or expression related to the economic interests of the speaker and its audience
• Includes advertising, marketing, and other forms of promotion intended to sell products, services, or ideas
• Differs from other types of protected speech (political, artistic, or scientific) due to its commercial nature and profit motive
• Receives a lower level of First Amendment protection compared to other forms of speech
• Can be subject to greater government regulation to protect consumers and prevent deception
• Examples of commercial speech include:
  • Print advertisements in newspapers or magazines
  • Television commercials
  • Radio ads
  • Billboards and outdoor advertising
  • Online advertisements and sponsored content

First Amendment and Commercial Speech

• The First Amendment to the U.S. Constitution protects freedom of speech, including commercial speech
• However, commercial speech does not receive the same level of protection as other forms of speech (political, artistic, or religious)
• The government can regulate commercial speech more extensively to prevent false, misleading, or deceptive advertising
• Regulations on commercial speech must meet the Central Hudson test, which requires:
  1. The speech must concern lawful activity and not be misleading
  2. The government's interest in regulating the speech must be substantial
  3. The regulation must directly advance the government's interest
  4. The regulation must not be more extensive than necessary to serve that interest
• The First Amendment does not protect false or misleading commercial speech
• Advertisers have a lesser degree of First Amendment protection when making factual claims about their products or services

Key Court Cases

• Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976)
  • Established that commercial speech is entitled to First Amendment protection
  • Struck down a Virginia law that prohibited pharmacists from advertising prescription drug prices
• Central Hudson Gas & Electric Corp. v. Public Service Commission of New York (1980)
  • Established the four-part Central Hudson test for determining when the government can regulate commercial speech
  • Struck down a New York regulation that banned promotional advertising by electric utilities
• 44 Liquormart, Inc. v. Rhode Island (1996)
  • Struck down a Rhode Island law that prohibited advertising the price of alcoholic beverages
  • Held that the government's interest in promoting temperance did not justify the ban on truthful, non-misleading price advertising
• Lorillard Tobacco Co. v. Reilly (2001)
  • Struck down Massachusetts regulations that restricted outdoor and point-of-sale tobacco advertising near schools and playgrounds
  • Held that the regulations were more extensive than necessary to serve the state's interest in preventing underage tobacco use

Regulating Advertising

• The Federal Trade Commission (FTC) is the primary federal agency responsible for regulating advertising and protecting consumers from deceptive or unfair practices
• The FTC enforces truth-in-advertising laws, which require advertisements to be truthful, not misleading, and backed by evidence
• The FTC can take action against false or deceptive advertising through:
  • Cease and desist orders
  • Civil penalties
  • Consumer redress (refunds or other compensation)
• State consumer protection agencies and state attorneys general also regulate advertising and enforce state-level consumer protection laws
• Industry self-regulation plays a role in maintaining advertising standards through organizations like the National Advertising Division (NAD) and the Better Business Bureau (BBB)

Truth in Advertising

• Advertisers must ensure that their claims are truthful, not misleading, and substantiated by evidence
• Deceptive advertising practices prohibited by the FTC include:
  • False or misleading claims about a product's features, benefits, or effectiveness
  • Bait-and-switch tactics (advertising a low-priced item to lure customers, then steering them to a more expensive product)
  • Failure to disclose material information that could affect a consumer's decision
  • Unsubstantiated health or safety claims
• Advertisers must have a reasonable basis for their claims before disseminating an advertisement
• The level of substantiation required depends on the type of claim being made (health claims require more rigorous scientific evidence)
• Testimonials and endorsements must reflect the typical experience of consumers and disclose any material connections between the endorser and the advertiser

Special Rules for Specific Products

• Certain products and industries are subject to additional advertising regulations due to their potential impact on public health, safety, or welfare
• Examples include:
  • Tobacco products
    • Broadcast advertising of cigarettes and smokeless tobacco is prohibited
    • Warning labels are required on packaging and advertisements
  • Alcohol
    • Advertising must not target underage audiences or encourage excessive consumption
    • Some states restrict or prohibit certain types of alcohol advertising
  • Prescription drugs
    • Direct-to-consumer advertising must include a "major statement" of the drug's risks and side effects
    • Advertisements must present a fair balance of the drug's benefits and risks
  • Dietary supplements
    • Claims must be truthful and not misleading
    • Advertisements must include a disclaimer stating that the FDA has not evaluated the product's claims
• Children's advertising is subject to additional scrutiny to protect young audiences from deceptive or inappropriate marketing practices

Online Advertising Challenges

• The rise of digital advertising has created new challenges for regulating commercial speech online
• Online advertising can be more targeted, interactive, and difficult to monitor than traditional media
• Native advertising (sponsored content that blends in with editorial content) can blur the line between advertising and journalism
• Influencer marketing on social media platforms can make it difficult for consumers to identify sponsored content
• Online behavioral advertising (targeted ads based on a user's browsing history) raises privacy concerns
• The FTC has issued guidelines for online advertising, including:
  • Requiring clear and conspicuous disclosure of sponsored content
  • Ensuring that disclosures are prominently placed and understandable to consumers
  • Holding advertisers responsible for false or misleading claims made by influencers or affiliates
• International jurisdiction issues can complicate the regulation of online advertising across borders

Ethical Considerations

• Advertising has the potential to influence consumer behavior and shape social norms, raising ethical concerns beyond legal compliance
• Ethical issues in advertising include:
  • Stereotyping and representation (perpetuating harmful stereotypes or lack of diversity)
  • Targeting vulnerable populations (children, elderly, or economically disadvantaged)
  • Promoting unhealthy or socially irresponsible behavior (excessive consumption, unrealistic beauty standards)
  • Environmental impact (encouraging unsustainable consumption or greenwashing)
• Advertisers have a responsibility to consider the social and cultural impact of their messages
• Self-regulatory organizations, such as the Advertising Self-Regulatory Council (ASRC), promote ethical standards and responsible advertising practices
• Cause-related marketing (aligning brands with social or charitable causes) can raise concerns about exploitation or insincerity if not executed responsibly
• Ethical advertising practices can build trust and loyalty among consumers, while unethical practices can damage brand reputation and contribute to social harms