Unfair Advertising Defined for FTC: After a Decade of Wrangling, Advertisers and the Government Agree on a Definition to Be Used by the Federal Trade Commission

Article excerpt

IDENTIFYING FALSE OR misleading advertising is relatively simple, as its merits are based on fact.

But when it comes to what constitutes unfair advertising, the issue becomes amorphous.

After more than a decade of wrangling, advertisers and the government have agreed on a definition of unfair advertising that will be employed by the Federal Trade Commission in its regulatory actions.

"Everybody recognizes the government has a duty to stop false advertising and deceptive advertising. The question is, 'Should government have the authority to stop advertising that is truthful but that people don't like?'" commented American Advertising Federation president Wally Snyder.

The FTC has regulatory power over advertising, but the issue of what defines unfair practices has bottled up FTC reauthorization for more than a decade.

The issue came to a head over advertising directed at children, Snyder explained. Was truthful advertising directed at children and aired during children's programs unfair because children might not understand the message?

"That proceeding went on for a couple of years," said Snyder, himself a former FTC commissioner. "They concluded there was not enough evidence to prohibit ads to kids. This stirred up a lot of controversy."

Since the early 1980s, Congress has forbidden the FTC from applying unfairness rules industrywide, but reauthorization has been stalled by the inability to reach a compromise with legislators who want it opened up.

Earlier this year, the issue came up again. In the House, the proposal was to give the FTC this authority without restriction, while in the Senate, the industry-wide authority was opposed.

The AAF and other interested groups decided it was time to really push for an agreement.

"We did not want to go through another year of this," Snyder said. "We did not know how it was going to come out. We didn't want the FTC to have this authority without restrictions. …