Cases--Pts of Law
Which federal agency has the jurisdiction over false and misleading advertising claims made on the Internet?
The FTC--their regulation of advertising is not determined or limited by medium. (See p. 587)
True or False: Advertising agencies and the mass media can also be held responsible for false advertisements.
TRUE (p. 606 & 587 can help). Anyone involved in the dissemination of the message can be held responsible.
True or False: The government can regulate the advertising of a completely legal product or service.
TRUE (Central Hudson test helps understand what regulations are permissible under the First Amendment)
What are the two types of commercial speech that receive no First Amendment protection?
1) Advertising that is false, misleading, or deceptive; and 2) Advertising for unlawful goods and services. (See p. 563)
What is the purpose of the three prong test established in U.S. v. Caronia (2008)?
US v. Caronia established three factors court consider when determining if the speech in question is in fact commercial speech. These three factors include: 1) whether the expression is an advertisement 2) whether it refers to a specific product 3) whether the speaker has an economic motivation for speaking.
True or False: In determining if an ad is deceptive, the FTC will view that ad from the perspective of the most vulnerable consumer.
FALSE. (The FTC considers the perspective of a "reasonable person" within the ad's target demographic)
The FTC has numerous tools to address and/or stop deceptive advertising. STATE and EXPLAIN two (2).
FTC tools/remedies include: -Guides and the Child Online Privacy Protection Act -Voluntary compliance -Consent agreement -Litigated orders -Substantiation -Corrective advertising -Injunctions -Trade regulation rules (Hint: these are listed in a gray box on p. 591, and explained in the following pages.)
True or False: Under the Lanham Act, an advertiser can force a medium to publish an advertisement.
FALSE. (See p. 571--Section on Self-Regulation explains how newspapers, magazines, and other mass mediums decide what advertisements to include/exclude)
When applying the Central Hudson test, the burden of proof for the three test prongs falls on ____________.
The government. (Federal, state, and local governments must prove each of the prongs to justify the regulation as permissible under the First Amendment)
What arguments under the Central Hudson Test did the 8th Circuit make in ruling that the lower court should not have dismissed the case in Missouri Broadcasters Association v. Lacy (2017)?
The 8th U.S. Circuit Court of Appeals found that the Missouri law restricting information about alcohol advertising: 1)did in fact have a substantial state interest in promoting responsible drinking (could meet first prong) but... it was plausible that plaintiffs could argue/prove the 2 remaining prongs of the Central Hudson test because there were questions about whether the regulations actually promoted responsible drinking (they could advertise alcohol sales/promotions in their business) and that the restrictions were more excessive than necessary (there were likely reasonable alternatives that didn't intrude on plaintiff's first amendment rights).
The FTC initiated the National Do Not Call Registry in 2003, which was later challenged by several telemarketing agencies in the Mainstream Marketing Services, Inc. v. FTC (2004) case. What did the 10th Circuit Court of Appeals rule?
In a unanimous decision, the appellate court ruled that the registry did not violate the First Amendment free speech rights of telemarketers. They applied the Central Hudson test, highlighting the voluntary participation component of the registry as well as the "established business relationship" exception.
In the context of competitor-versus-competitor false advertising lawsuits (e.g., when an advertiser makes statements about a competing product or service that are seen as false or misleading), what are the three questions (prongs) used under the federal Lanham Act to test for false advertising? (Note: these are NOT the same criteria outlined by the FTC).
Under the Lanham Act, criteria for false advertising include asking: 1) What message, either explicitly or implicitly, does the ad convey? 2) Is this message false or misleading? 3) Does this message injure the plaintiff? IMPORTANT DISTINCTION TO NOTE: Advertisers/companies are more likely to win false advertising suits under the Lanham Act (primarily concerned with economic competition). The Lanham Act is NOT an effective tool for consumers. The FTC and state laws (like the Printers' Ink statute described on p. 577) offer better ways for consumers to seek judicial remedies for false advertising.
True or False: The US Supreme Court has given the states authority to regulate advertising for professional services such as doctors or lawyers.
TRUE. (This was part of the court's ruling in the Central Hudson case. See p. 563--Note: The Dwyer case is an exception)
In what case did the U.S. Supreme Court rule that a New York regulation banning promotional ads by electric utility companies was unconstitutional?
Central Hudson Gas & Electric Corp. v. Public Service Commission (1980).
What was the point of law in Anheuser-Busch Inc. v. Schmoke (1996)?
The court said that the Baltimore ordinance banning outdoor advertising for alcoholic beverages in areas where children walk to school or neighborhoods where children play was permissible because it directly and materially advanced the city's interest. (This case is a good example where regulation of advertising meets the Central Hudson test--particularly the second prong: there was enough evidence to support that the regulation directly advanced the state interest).
True or False: When enforcing rules regarding endorsements of products and services by consumers, celebrities, experts, and organizations, the FTC maintains that an endorser must have support for his/her conclusions. (i.e., an endorse cannot make any statement about a product that an advertiser cannot make).
TRUE--an endorser must support their statements. (See p. 603 for more info on the FTC's rules for endorsements).
In which of the following scenarios have you been caught in a bait-and-switch advertising scheme? a) a store advertises a sofa for $670, you buy it, but when it is delivered it is not the one you picked out. b) you buy sofa advertised for $670, but the clerk also tries to sell you other things. c) a store advertises a sofa for $670, but they're sold out and instead offer a great deal on a better model for $1900.
Scenario C represents bait-and-switch advertising. (See p. 605-606 for further clarification).
True or False: The US Supreme Court has ruled that corrective advertising is both punitive and unfair.
FALSE. There has been no Supreme Court ruling on corrective advertising, so the FTC still uses it. Corrective advertising is somewhat controversial (See p. 597-598 for more info on corrective advertising)
The third prong of the Central Hudson test says there must be a "reasonable fit" between the state interest and the government's regulation. This phrase "reasonable fit" came from the SUNY tupperware party case (mentioned briefly in class) and made it easier for the government to meet the third prong. What was the original phrase from Central Hudson used to describe how narrowly tailored the regulation must be?
"Least restrictive means"
In the Lorillard Tobacco Co. v. Reilly (2001) case, on which of the three prongs did the Massachusetts law fail?
The regulation failed on the third prong. It was not narrowly tailored enough to be a "reasonable fit." In this case, the Massachusetts law banned outdoor ads for smokeless tobacco products within 1,000 feet of public playgrounds and schools. The Supreme Court ruled that the first two prongs were met. Prong 1: The state did have a substantial interest in reducing the use of tobacco products by young people. Prong 2: There was substantial evidence that tobacco sellers boosted sales when targeting young males in their advertising. BUT failed Prong 3: The law failed to distinguish which types of signs appealed to children or adults and thus constituted a complete ban on legally protected commercial speech.
When the FTC staff lawyers sue an advertiser for false advertising, where does the suit first go for deciding (i.e., what is the legal process for lawsuits initiated by an administrative agency)?
It first starts at the commission (FTC) where they can issue a litigated order to stop particular advertising claim. From there, a hearing is held before an administrative judge. Decisions from the administrative judge can be appealed to the full commission. If the advertiser loses their appeal at the full commission level, they can then appeal it to a federal district court. Simplified: 1--Starts at commission (FTC staff lawyers issue order). 2--Administrative Judge (hearing on the order--issues decision). 3--First appeal goes to full commission (FTC). 4--Second appeal goes to federal district court. (See pages 596 & 602). *This is the process for all administrative agencies.
Which of the following advertisements would be considered false advertising by current FTC standards? a) Sticky Sweet cough syrup says it will cure your cold. b) A store ad says you will get a free camera if you buy one at regular price. c) A home furnishing company uses fake plants in the garden setting used to advertise their patio furniture in TV commercials.
(A) would be considered false advertising by FTC standards. The gray box on p. 588 provides the FTC's test/definition for false advertising.
True or False: In a consent order or consent agreement proceeding, an endorser gives consent for their testimony to be used in an advertisement.
FALSE. A consent order or consent agreement is one of the FTC's remedies for false advertisements, where the advertiser agrees to refrain from making particular claims in future advertisements. (See p. 595).
True or False: IF YOU STUDY HARD, YOU WILL ARE DO REALLY WELL ON THIS LAST EXAM!!!
TRUE!!!! You got this! And don't hesitate to ask if you need any clarification while you're studying (and during the exam)!