Ethical and socially responsible advertising: can it be achieved?

Academy of Marketing Studies Journal, Jan-July, 2002 by Rob H. Kamery, Sarah T. Pitts, Cayce R. Lawrence

ABSTRACT

Prior to establishment of the FTC, consumers had no protection against the claims of advertisers. In 1938, the FTC declared "unfair or deceptive acts or practices" to be unlawful (Preston, 1975). Since that time, regulators, consumer groups, and advertisers have wrestled with the ethical issues involved in "fair" advertising. Recently, social pressures and congressional bans on certain types of advertising have come in conflict with the First Amendment which, as the Supreme Court has ruled, applies generally to commercial speech with certain specific limitations. The paper reviews the history of ethics and social responsibility in the advertising industry in the light of free market economics. Possible incentives for proactive, socially responsible advertising are explored. Implications of the ban on tobacco advertising and proposed bans on alcohol advertising are discussed. Advertising in other industries, particularly education, consumer goods, and gambling are discussed as well. The paper concludes that advertising is protected by the First Amendment and contributes positively to the proper functioning of the free market system. Hence, regulation should be minimized.

INTRODUCTION

The advertising industry has become a vital part of the United States' economy. The Pontifical Council for Social Communications states that advertising has a great influence on a consumer's understanding of life, one's culture, and the world (Foley, 1998). Advertising encourages economic growth through information being made available about competing goods and services. However, advertising can be deceptive, encourage unlimited consumption, create confusion for the consumer, and intensify destructive desires such as lust and greed. Advertising encourages consumption by showing improvement in features and quality of products and services. It promotes products such as colas, cigarettes, and alcohol, which can cause consumers to use products in excess, causing possible dangerous side effects (Boddewyn, 1999). Advertising is only one aspect that goes into shaping consumer choices, and the role advertising plays in either initiating or reinforcing consumer trends is dubious (Schudson, 1984). Laws regulating advertisements should be minimal because the public can self-regulate false or misleading ads through the use of personal boycotts. Private and public consumer advocacy groups exist to inform the public of misleading advertisements, poor quality products, and potentially dangerous products. Government regulation has its place in protecting the consumer through the placement of warning labels on potentially dangerous products, but consumerism is ultimately in the hands of the consumer.

The church closely protected consumers in the Middle Ages (Preston, 1975). Trade was tightly controlled, and strict laws were enforced to protect the consumer. The idea of caveat emptor developed from the practice of unlawful trading, such as horse-trading. Caveat emptor became legally accepted as kings saw financial benefits from trading. This became part of the legal tapestry of the time, and eventually common law (Preston, 1975). As trade grew, consumers were offered more products, but not much of a choice within each product. This situation led to a sellerism atmosphere, where consumers had little choice but to accept the seller's claims. With the decline of church influence, sellerism became prevalent, and expectations regarding the honesty of the seller were lowered (Preston, 1975). The sellerism attitude continued throughout American history until the early 20th century. Sinclair's book, The Jungle, published in 1906, changed attitudes towards sellerism. The book revealed some of the unethical practices of the "Captains of Industry" and shed light on the plight of consumers. In 1906, President Roosevelt signed two laws to protect the consumer: The Meat Inspection Act and The Pure Food and Drug Act. Eight years later, the federal government would intervene to protect the consumer with the inception of the Federal Trade Commission (FTC).

FEDERAL TRADE COMMISSION

The commission's original purpose was to enforce antitrust laws. In its early days, the FTC deemed that a business was involved in unfair methods of competition if it falsely advertised (Preston, 1975). During this time, the only avenue consumers had to retaliate against unethical advertisements was the court system, which proved to be the seller's friend, because under common law one must prove intent on the part of the advertiser (Preston, 1975). After Section 5 of the FTC Act was passed in 1938, the FTC became the consumer's advocate. Section 5 states that unfair or deceptive acts or practice are hereby declared unlawful. Unfair and deceptive acts are determined by the FTC and are reviewed by the courts (Preston, 1975). In 1938, Section 12 was added to the Act. It states:

1) If no court review is sought within 60 days of issuance of a commission order to cease and desist, the order becomes final; further violation will result in a penalty or fine.