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Commercial Speech

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Title: Commercial Speech


1
Commercial Speech
2
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

3
Means of regulations
  • Place (ads in certain places, media type, etc.)
  • Type of advertisement (tobacco products, law
    firms, etc.)
  • Content (indecent, false, etc.)

4
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.

5
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.

6
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

7
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?

8
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.

9
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.

10
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.

11
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

12
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.

13
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/

14
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.

15
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

16
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

17
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,

18
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.

19
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

20
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

21
FTC Tools Remedies To Stop False Advertising
  • Guides
  • Voluntary Compliance
  • Consent Agreements
  • Litigated Orders
  • Substantiation
  • Corrective Advertising
  • Injunctions
  • Trade Regulation Rules

22
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
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