Friday, June 12, 2009

REGULATION

REGULATION
Advertising is subject to both government regulation and industry self-regulation to prevent deceptive advertising or to limit the visibility of advertising. Advertising is heavily regulated in the United States, Canada, and a number of European and Asian countries.

In the United States Government Regulation
Federal, state, and city governments have all passed legislation restricting advertising in various ways in the United States. The Supreme Court of the United States has overturned some restrictions, however, ruling that advertising is protected under the free speech provisions of the First Amendment to the Constitution, although to a lesser extent than political speech. In a landmark 1976 ruling, Virginia State Board of Pharmacy v Virginia Citizens Consumer Council, the Court declared advertising to be a semiprivileged form of free expression, subject to some regulation. In the Virginia case the Supreme Court struck down a ban that prohibited pharmacists from advertising drug prices. The ruling removed bans that had applied to other professionals, such as physicians and lawyers, and enabled them to advertise their services.

In the United States the main government regulatory agency for advertising is the Federal Trade Commission (FTC). The FTC enforces a variety of consumer protection laws to eliminate ads that deceive the consumer. The FTC defines deceptive advertising as any ad containing a misrepresentation or omission harmful to the consumer. An advertisement does not have to be untrue to be deceptive. For example, ads for a certain bread product claimed that it had half as many calories per slice as its leading competitors. The advertiser failed to say, however, that each slice of its bread was also half as thick as the competitors. The ads were ruled to be deceptive.

The key to the FTC's regulation of advertising is its power to require that advertisers substantiate the accuracy of their claims. So if advertisers say that "tests prove" or "physicians recommend," they must be able to show test results or affidavits from doctors. Moreover, companies cannot misuse evidence. For example, claims that a particular brand of dog food provided all the milk protein a dog needs were ruled to be misleading because dogs do not need milk protein.

Products that can affect health receive special regulatory attention. The U.S. Congress banned cigarette advertising from radio and TV in 1971 under the Public Health Cigarette Smoking Act. In 1998 the tobacco industry and the attorneys general of 46 states agreed to ban outdoor cigarette advertising and the use of cartoon characters in advertising, a practice that many thought had encouraged young people to start smoking.

Advertising directed to children has received considerable scrutiny. In 1990 Congress passed the Children's Television Advertising Practice Act. Among other things, it set limits on the amount of advertising that could be included in children's television programming and barred hosts of children's shows from selling products.

State laws and enforcement bureaus impose additional regulations on certain types of advertising, particularly those involving contests. These regulations may differ from state to state. Consequently, advertisers planning a national contest through newspapers may have to prepare several different versions of an advertisement to comply with the varying laws. In some states the media are themselves regulated. For example, it is illegal in a number of states for radio and television stations to broadcast distilled-liquor advertising; outdoor billboard advertising is banned in certain other states.

Industry Regulation
The advertising industry has resorted to self-regulation in a serious effort to stop abuses before they occur. These self-imposed codes of ethics and procedures aim principally to curtail not only bad taste but also misrepresentation and deception in copy and illustrations, as well as derogatory and unfair representations of products of competitors.

Several advertising trade associations are concerned with maintaining high standards. The associations believe it is good public relations to do so, inasmuch as advertising that weakens public confidence damages the impact and influence of all advertising.

Individual media and media groups often establish their own codes of ethics. Some newspapers and magazines refuse to publish advertising for tobacco and alcoholic beverages; most of them, in varying degree, investigate the reliability of advertisers before accepting their copy. Some publishers have strict rules about the presentation of advertising to prevent the publication of false or exaggerated claims and to preserve the aesthetic tone of their publications.

Radio and television stations generally try to investigate the company and its product before broadcasting advertising messages that might cause unfavorable reactions. The networks and the National Association of Broadcasters have established codes regulating the advertising of medical products and controlling contests, premiums, and other offers. All the networks maintain so-called acceptance departments, which screen both commercial and noncommercial scripts, either deleting or challenging for substantiation any questionable material. Most magazine publishers have their own strict rules on acceptance of advertising copy.

The American Advertising Federation, an organization of leading national advertisers, has long campaigned for “truth in advertising.” Other organizations that promote ethical standards are the American Association of Advertising Agencies and the Association of National Advertisers. The Institute of Outdoor Advertising encourages its members to improve the design of their advertising posters and signs and, more importantly, to make sure they do not erect advertising billboards in locations where they will mar the landscape or otherwise offend the public. The best-known and most active watchdogs in the advertising field are the Better Business Bureaus, which bring pressure to bear on unethical advertisers through persuasion, publicity, or, in extreme cases, legal action. The fact that local and national bureaus are subsidized by both advertisers and media reflects the conviction of modern business management that “good advertising is good business.”

In Canada
Canadian advertising regulations are even stricter than those in the United States. The Competition Act is the Canadian federal statute that seeks to prevent false and misleading advertising. The act is administered by the Bureau of Competition Policy which is part of Consumer and Corporate Affairs. If the bureau finds advertising to be misleading, it may simply ask the advertiser to stop running the ad or it may ask a company to take certain steps to correct the impression made by the false claims. The bureau may also take legal action against the advertiser in which case it will turn over its evidence to the Attorney General of Canada who will decide whether the evidence warrants a criminal prosecution.

Canada’s self-regulatory body, the Canadian Advertising Standards Council, has the right to take a commercial off the air if it offends taste and public decency. Moreover, in Canada ads that deal with products regulated by the government (for example, food, drugs, alcohol, and children's products) have to be approved before they air and can also be pulled if complaints arise after they run. In the United States, action can only be taken after the advertisement runs. Finally, beginning in 2001 tobacco advertising in Canada was limited to direct mail and to adults-only environments such as bars.

In Other Countries
Advertising is often heavily regulated in other countries as well. But the regulations vary from country to country. For example, in Mexico advertising for tobacco and alcohol is limited to late evenings after children have gone to bed. France prohibits any reference to health in tobacco ads, and Italy allows alcohol advertising to promote the brand name but not product attributes such as "cold filtered" or "smooth tasting."

Advertising regulations in other countries are often designed to protect culture and morals. France prohibits the use of foreign expressions where there are equivalent French terms as a way of protecting the French language. Advertising regulations in Malaysia bar the depiction of nudity, disco dancing, seductive clothing, and blue jeans in ads and require ads to project the Malaysian culture and identity. Varying regulations present numerous challenges to multinational corporations that advertise their products in many different countries.