Federal and Oklahoma Regulation of Advertising - Final Exam Study Guide | MC 4163, Study notes of Communication

Download Federal and Oklahoma Regulation of Advertising - Final Exam Study Guide | MC 4163 and more Study notes Communication in PDF only on Docsity! FEDERAL and OKLAHOMA REGULATION OF ADVERTISING Know the definitions, rules and examples. Be able to correctly recognize and apply them in hypothetical situations.  How is regulation achieved through: o Self-regulation  Under the First Amendment, are newspapers, magazines and broadcasting stations permitted to refuse to carry an advertisement? (see Page 554) o Lawsuits by competitors and consumers  What are such lawsuits typically about? o Lanham Act  What is it intended to do?  What was changed in 1989?  What is the three-part test that makes it easier for plaintiffs to win Lanham Act lawsuits for false advertising?  What monetary claims can the plaintiff win?  Federal Trade Commission o What is the FTC? Its background and purpose? How many members? How are they selected? How is it that the FTC can regulate nearly all advertising in the country? o FTC's definition of deceptive advertising. o FTC tools to combat deceptive ads. Which tool is used most often? o FTC's regulatory process.  Special types of advertising: testimonials, bait-and-switch.  Advertiser defenses.  Ad agency/publisher liability.  Why is deceptive advertising not granted any constitutional protection?  How do Oklahoma's statutes define deceptive advertising?  Be familiar with the types of deceptive advertising targeted by Oklahoma's Deceptive Trade Practices Act. o What civil lawsuits may be brought against deceptive advertising? What damages may the plaintiff recover? o What liability do the media have for disseminating deceptive advertising?  Oklahoma Consumer Protection Act o Understand bait and switch advertising. o What are the criminal penalities?  Oklahoma's regulation of deceptive spam o What does it prohibit and require? o What are the penalities? o What liability do e-mail service providers have for allowing spam or attempting to block spam? Return to Media Law Home Page JB 4163 — FINAL EXAM STUDY GUIDE: (Cortney’s) Regulating Deceptive Advertising; Defenses; Liability  Self-regulation o Newspapers, magazines, broadcasting stations, online service providers and other mass media have rules that more or less regulate the kind of advertising they will carry. o … sometimes economic interests. o Media is permitted to reject any content it chooses, with or w/out reason. o Advertising industry tries to self-regulate.  Better Business Bureau – National Advertising Division & National Advertising Review Board  Self-Regulatory Guidelines for Children's Advertising o What is the Children's Advertising Review Unit? What does it do?  Self-regulatory body for advertising to children under 12 yrs old (www.caru.org)  o What are the five guidelines for advertising to children? commerce before the FTC can intervene. Although many p&s are sold locally only, nearly every conceivable advertising medium is somehow affected by or affects interstate commerce.  Ex: All bdcst. Newspapers cross state lines. o Know the FTC's definition of deceptive advertising and how the elements have been applied.  Deceptive advertising – a material representation, omission or practice that is likely to mislead a consumer acting reasonably  1. There must be a representation, omission or practice that is likely to mislead the consumer.  2. The act/practice must be considered from the perspective of a consumer who is acting reasonably.  3. The representation, omission or practice must be material.  Advertising – any action, method or device intended to draw the attention of the public to merchandise, to services, to persons and to organizations  Elements: Must show acting in pub interest (easy), meets agency def of “advertisement” and affects interstate commerce in some way, must be deceptive or untruthful.  o What are the FTC's tools to combat deceptive ads? Which tool is used most often?  Guides  Voluntary compliance  Consent agreement/consent order – Most often used  Litigated orders  Substantiation  Corrective advertising  Injunctions  Trade regulation rules o What is the FTC's regulatory process?  Complaint filed, staff attorneys examine it – nothing = nothing, something – proposed complaint, consent agreement and memorandum is prepared for the commissioners, who vote on whether to issue a complaint or not.  Cs agree violation of law, advertiser notified, given opp to sign consent agreement/negotiate w/ agency for more favorable order.  1 – a can agree sign, cs vote to accept. Order published, made final in 60 days.  2 – a agree sign, cs reject it.  3 – a refuse sign.  2/3 – complaint issued against advertiser, hearing scheduled before administrative law judge. Judge wks w/in FTC and officiates at hearings. Informal trial. Judge thinks a violate, issue order to a to stop illegal practice (litigated order). Can dismiss case. Either side can appeal to cs to overturn judge’s ruling.  Cs agree a X deceptive, misleading – case ends If cs support jdg’s ruling against a, order becomes law after finalized by appellate court. A may appeal in a fed crt.  Difficult to reverse FTC ruling. Can overturn if  1 – convincing evidence agency made error in proceedings  2 – no evidence support cs findings  3 – violation o Const  4 – action goes beyond agency’s powers  5 – facts relied on in making ruling are not supported by sufficient evidence  6 – arbitrary/capricious acts by the cs  Advertiser defenses. o Basic defense – truth: proving that a product does what the advertiser claims it does, that it is made where the advertisers says it is made, or that it is as beneficial as it is advertised to be. o …Attack a different aspect of the government’s case rather than try to prove the statement true.  Ad agency/publisher liability. o Ad agency responsible if shown that it was an active participant in the production of a false or misleading ad and that it knew or should have known that the advertisement was false and misleading… could result if agency uses false and misleading data provided by the client.  It is the extent and nature of the agency’s participation in the false campaign that will ultimately determine liability. o Publisher… liable? Up to jury.  Liable for publishing a “commercial advertisement where the ad, on its face, and w/out the need for investigation, makes it apparent that there is a substantial danger of harm to the public.  Why is deceptive advertising not granted any constitutional protection? o  How do Oklahoma's statutes define deceptive advertising? o FTC – a material representation, omission or practice that is likely to mislead a consumer acting reasonably. o 1919 criminal statute – any assertion, representation or statement of fact which is untrue, deceptive or misleading  Be familiar with the types of deceptive advertising targeted by Oklahoma's Deceptive Trade Practices Act. o Passes off goods/services as those of another o Knowingly makes a false representation as to the source, sponsorship, approval or certification of goods or services o Knowingly makes a false representation as to affiliation, connection, association w/, or certification by another o Uses deceptive representations or designations of geographic origin in connection w/ g/s o Knowingly makes false representation as to the characteristics, ingredients, uses, benefits or quantities of g/s or a false representation as to the sponsorship, approval, status, affiliation or connection of a person therewith o Represents that goods are original or new if they are not o Represents that g/s are a particular standard, quality or grade or that goods are a particular style or model, if they are another o Disparages the g/s/business of another by false or misleading representation of fact o Advertises g/s which differ from those offered for sale in the advertisements o Advertises g/s w/ intent not to supply reasonably expectably public demand, unless the advertisement discloses a limitation of quantity o Makes false or misleading statements of fact concerning the reasons for, existence of, or amounts of price reductions  What are such lawsuits typically about?  False advertising. o Lanham Act  What is it intended to do?  Stop unfair competition in the marketplace.  What was changed in 1989?  The law now also prohibits an advertiser from making false claims about a competitor’s product as well.  What is the three-part test that makes it easier for plaintiffs to win Lanham Act lawsuits for false advertising? o What message, either explicitly or implicitly, does the ad convey? o Is this message false or misleading? o Does this message injure the plaintiff?  What monetary claims can the plaintiff win?  Actual damages and court costs from defendants.  Federal Trade Commission o What is the FTC? Its background and purpose? How many members? How are they selected? How is it that the FTC can regulate nearly all advertising in the country?  The Federal Trade Commission is the primary agent of the government empowered to enforce consumer protection laws. It was created by Congress in 1914 to police unfair methods of business competition. There are five members of the commission who are appointed by the president and confirmed by the Senate for a term of seven years.  Practically, the FTC can regulate nearly all advertising nationally, because it was created under the authority of Congress to regulate interstate commerce, products or services must be sold in interstate commerce or the advertising medium must be somehow affected by interstate commerce before the FTC can intervene. Even though some products are sold locally only, nearly all advertising is somehow affected by or affects interstate commerce. o FTC's definition of deceptive advertising. o There must be a representation, omission or practice that is likely to mislead the consumer. o The act or practice must be considered from the perspective of a consumer who is acting reasonably. o The representation, omission or practice must be material. o FTC tools to combat deceptive ads. Which tool is used most often?  Publicity is the FTC’s strongest ally in combating deceptive ads, because time is the FTC’s greatest enemy, and publicity the fastest means to combat the deception. However, other methods are:  Guides  Voluntary compliance  Consent agreement  Litigated orders  Substantiation  Corrective advertising  Injunctions  Trade regulation rules o FTC's regulatory process. A. Most cases come to the agency from letters written by either consumers or competitors. B. When a complaint is received, the FTC staff attorneys examine it to see if it has merit. C. If it does, then a proposed complaint, a proposed consent agreement, and a memorandum are prepared for the commissioners. D. The commissioners then vote on whether to issue a complaint. E. If the commissioners agree that the advertisement is in violation of the law, the advertiser is notified and given the opportunity to either sign the consent agreement that has been drafted or negotiate with the FTC for a more favorable order. One of three things can happen next: 1. The advertiser can agree to sign the agreement, and the commissioners vote to accept this agreement. If this happens, the order is published and made final within 60 days. 2. The advertiser can sign the agreement, but the commissioners reject it 3. The advertiser can refuse to sign the agreement. F. If either of the last two occurs, the complaint is issued against the advertiser , and a hearing is schedules before an administrative law judge (this judge works within the FTC and officiates at these hearings). G. The judge can then rule as to whether the ad violates the law (and then issue an order telling the advertiser to stop this illegal practice), or dismiss the case. Either side can the appeal the ruling. H. If the commissioners support an administrative law judge’s ruling against an advertiser, the order becomes law after it is finalized by an appellate court.  Special types of advertising: testimonials, bait-and-switch. o Testimonials- advertising coming straight from personal endorsements (no matter whom the endorser is: i.e. celebrities and authority figures, to the average consumer), where it is clear that speaker has a more personal connection to an ad than a mere paid actor/actress.  In order for it to be considered a testimonial endorsement, the consumer, or endorser, must believe that favorable endorsement of the product could result in some future benefit.  Experts who endorse products must have the expertise to evaluate the product.  If a celebrity or expert is endorsing a product, they must be a bona fide user of that product at the time.  Organizational endorsements must express the collective judgment of its members, not the mere decisions of its executives.  Celebrity endorsements must also reveal a material connection between endorsers and products.  Typical consumer endorsement must be from actual consumers, not paid actors.  An endorser cannot make a statement about a product that the advertiser could not legally make as well. o Bait-and-Switch Advertising- Using a phony product to get the consumer into the store. Then using clever, but still honest selling to convince to consumer to purchase another, similar product.  Bait-and-switch is illegal, because the law says that it is deceptive to advertise goods or service with the intent not to sell them as advertised or to advertise goods and service with the intent not to supply reasonable expected public demand, unless limitation on quantity is noted in the ad.  Advertiser defenses. o The basic, and best, defense against a false advertising claim is the truth, proving that the product does what the ad claims it does, or is made where it says it is made. The burden of proof to disprove an advertiser’s claim is on the government, but substantiate proof for the product advertised is helpful, and often supplied. o Another angle often used is to attack a different aspect of the government’s case rather than try to prove the statement true.  Ad agency/publisher liability. o An ad agency can be held responsible for false advertising if it can be shown that it was an active participant in the production of a false or