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Commercial Speech. What is commercial speech? Commercial Speech is an expression, economic in nature, by a person or business entity persuading the audience.

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Presentation on theme: "Commercial Speech. What is commercial speech? Commercial Speech is an expression, economic in nature, by a person or business entity persuading the audience."— Presentation transcript:

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 Hudson’s 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. 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.

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 2012Consumer Fraud Complaints more than 2 million complaints overall Identity Theft 369,13218 percent Debt collection199,72110 percent Banks and Lenders132,340 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 Operated by Stephen Barrett, M.D. Barrett, M.D Your Guide to Quackery, Health Fraud, and Intelligent Decisions For example: 25 Ways to Spot Quacks and Vitamin Pushers.


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