Sunday, October 7, 2012

Deceptive Advertising: Where the FTC is focusing its regulation efforts on


                

Deceptive advertising is one of the few forms of speech that is not protected under the Constitution’s first amendment. To define, it is “Any advertising or promotion that misrepresents the nature, characteristics  qualities or geographic origin of goods, services or commercial activities.” The agency in charge of regulating companies and advertisers which use deceptive advertisements is the Federal Trade Commission. However, companies are still trying to find ways to deceive the consumers. Over the years, the FTC has begun increasing the punishment for companies, especially in the health and fitness industry, who attempt to deceive consumers through their advertisements.

In March of 2012, Sketchers was forced to settle with the Federal Trade Commission for a whopping “$40 million to settle claims that deceptive advertising was used to sell Sketchers’ toning shoes and apparel”. The Federal Trade Commission’s penalty was the largest ever settlement fee given out. The substantial punishment highlights the FTC’s increased oversight of advertisers that use unsubstantiated health and fitness claims to lure unsuspecting consumers. Sketchers was charged with violating federal law by falsely representing clinical studies backing up claims that Shape-Ups, Resistance Runner, Toners, and Tone-ups would help people lose weight, and strengthen and tone their butts, lets, and abdominal muscles.


In trying to appeal to health enthusiasts, Sketchers advertisements had lines saying “get in shape without setting a foot in a gym” and “make your bottom half your better half.” David Vladeck, the director for the FTC’s bureau of consumer protection, said that “Sketchers put its foot in its mouth by making unproven claims. People didn't lose weight, they gained weight. Either shape up your substantiation or tone down your claims.”

It has been a year since the FTC began to step up their efforts in forcing marketers to shape up healthy and fitness claims. Jeffrey Greenbaum, a managing partner with Frankfurt Kurnit Klein & Selz, said that “They are sending a very strong message to the big national advertising industry that the free press is over.” This mission began with the FTC’s $25 million settlement with Reebok in mid-2011 for deceptive ad practices. In Reebok’s unprecedented case, they were charged with using a “lack of laboratory tests to prove that its EasyTone and RunTone shoe line would, as they claimed, improve muscle tone and strength in the butt, hamstrings, and calves.” In increasing their oversight on health advertisements, the FTC is now even telling companies that in order to make accurate claims in the future, advertisers may need to get preapprovals by the Food and Drug Administration.


The health and fitness industry seems to have gotten the picture as it now appears that the Federal Trade Commission has turned its focus onto trumped-up green marketing claims. Just one week ago, the FTC “announced the final revisions to its Guides for the Use of Environmental Marketing Claims.” These guides, more commonly referred to as the “green guides” helps marketers and advertisers avoid making deceptive eco claims without proof. The reason that these guides have been currently revised is because the last time they were updated was in 1998. Since then, the United States has seen a “green revolution” with a myriad of companies jumping on the eco bandwagon and developing greener products. Companies have a significant advantage over their competitors if they are producing green products. A 2009 study by Green Seal, the nation’s original green seal of approval company, showed that almost 80% of consumers are buying green products.

 

As these guides become more well-known around companies and advertisers, consumers will begin to see a lot less deceptive environmental claims in media. And more companies can expect to receive citations from the FTC for making the unsubstantiated claims. Regarding the new regulations, Christopher Cole, a partner in Manatt Phelps & Phillips, said that “It is certain that the new guides will change behavior among marketers over time. For those who ignore the rules, one can predict that rigorous law enforcement activity will begin soon.”

I wanted to address the topic of deceptive advertising because in class this week, we will be discussing the subject of “Ethics and Persuasion.” I've always been interested in the regulations that are given to companies/advertisers who use false claims because it is a very unethical practice. In the book we read that in order for advertisers to determine the “ethical worthiness of a message”, they need to pass all the levels of “TARES” which stands for Truthful, Authentic, Respect, and Equity. It appears as though the FTC is finally coming around the a more rigorous TARES stance. 


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