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Commercial Speech and Advertising

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This Commercial Speech and Advertising playlist is centered around false claims and false advertising. These false claims can be made by either an individual, company, or other organization. As advertising is a form of speech, the restrictions on it raise questions of constitutionality.


In order to determine if a restriction on an advertisement is constitutional, four questions must be answered:

1. Is the activity being advertised legal and not misleading?

2. Does the government have a meaningful interest at stake?

3. Does the restriction on speech advance that interest?

4. Is the restriction the least restrictive course of action in advancing the interest?  


The governing body that handles false claims and misleading ads is the Federal Trade Commission. Among many things, the FTC aims to protect both American consumers from being deceived by businesses as well as working with foreign agencies to protect consumers of the global marketplace. If the FTC believes a false claim has been made or that consumers have been deceived, they can conduct an investigation, sue individuals or companies, and enact new rules and regulations to prevent such behavior from occurring again.


  • 1 Blogging and Advertising

    by Arielle Weg. When it comes to producing your own content online, the line can be thin between sharing your own thoughts and feelings as opposed to promoting a product. There are times where someone who owns a personal blog can talk about a product as a real consumer, but often they are given products for free or paid to discuss an item in a positive way in order to advertise to their followers. In this section of commercial speech and advertising, I look at the legality of discussing a product on a person blog that was either given to the blogger for free or the blogger was paid to discuss the product. I include Federal Trade Commision (FTC) documents on how to properly disclose this kind of situation on a blog for transparency, FTC documents on how to properly endorse a product on a blog, FTC response to a letter by Hyundai asked permission to reward bloggers for advertising, and the real life case of FTC vs. Lunada Biomedical inc. with a video. 

    • 1.1 FTC Guide: How to Make Effective Disclosures in Digital Advertising

    • 1.2 Annotation of FTC Guide: How to Make Effective Disclosures in Digital Advertising

      Annotation of How to Make Effective Disclosures in Digital Advertising

      By Arielle Weg

       

      -The FTC rules that laws restricting other media also apply online. The FTC laws on endorsement are additions to these general laws for all media outlets. These additions encourage clear, transparent endorsements to protect the audience from reading claims that are paid advertisements.

       

      -This article depicts specifically how to disclose information about payment or relationships to a company. The article includes these as guidelines; use clear language, disclose physically close to the clame on the page, consider the platform of the advertisement to ensure the disclosure is clear, include the disclosure in the ad or at least on the page you are writing the endorsement on, follow specific guidelines for linking to a disclosure, avoid scrolling to get to a disclosure, know research about where consumers will look on a screen, make sure disclosure are before the option to purchase, repeat disclosures as needed depending on website format, keep disclosures separate from lengthy sections such as terms of use, keep disclosures noticeable, and keep disclosures to the format presented (audio disclosure in an audio advertisement).

       

      -The article begins with an explanation of how  these regulations came to be, and how they were processed and fixed over time to be completed in this one comprehensive document.

       

      -The endorsements must follow the three general laws of advertisement; advertising must be truthful and not misleading, advertisers must have evidence to back up their claims, and advertisements cannot be unfair.

       

      -It is the advertiser’s responsibility to ensure that the endorsement from the blogger is truthful and accurate and that the relationship is properly disclosed by FTC guidelines of disclosure.

       

      -The purpose of a disclosure is to make endorsement fair and non-deceptive to the audience. This being said, there are additional guidelines that indicate the disclosure is for the reader, therefore the disclosure must be placed and presented in a way that is as clear as possible for the reader to see, comprehend, and consider when reading the endorsement. The document presents ways to consider if a disclosure is clear to a reader, but understands that every advertisement is different. There is no clear cut law on what qualifies as a “clear and conspicuous” advertisement, but a blogger is required to follow the rules closely as they can.

       

      -The document includes mock advertisements as examples for the advertiser and blogger to consider. These sections repeat details of how to properly disclose information regarding payment or relationships for product endorsement by making a clear disclosure and place in an eye-catching location prior to product purchase. Concepts to consider with including a disclosure is proximity and placement, prominence, avoiding distracting factors to draw the eye away from the disclosure, repeating when necessary, multimedia messages and campaigns and the use of understandable language. Each of these sections include linked examples to avoid any misunderstanding of how a disclosure should be placed on an ad or on a blog page.

       

      Citation:

      FEDERAL TRADE COMMISSION. How to Make Effective Disclosures in Digital Advertising. Ftc.gov. Federal Trade Commission, Mar. 2013. Web. 04 Apr. 2016.

    • 1.3 FTC Guide: Endorsements and Testimonials in Advertising

    • 1.4 Annotation of FTC Guide: Endorsements and Testimonials in Advertising

      Annotation of FEDERAL TRADE COMMISSION Guides Concerning the Use of Endorsements and Testimonials in Advertising

      By Arielle Weg

       

      -These are FTC guidelines for endorsement of products online where products are provided as an advertisement. The guidelines are set to protect the consumers, and are subject to be reconsidered on a case-by-case basis.

       

      -An endorsement is defined as “any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a part other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser and may be an individual, group, or institution.” (this comes directly from the linked guidelines) This definition is necessary to help identify what is deemed an endorsement as opposed to mentioning a product or service. Despite this clarity, there is still some discrepancy as to what actual defines an advertising message.

       

      -Eight Examples are used to in the first section to discuss what is considered an advertising message. The 8th example is a perfect scenario for this topic. The example depicts a woman who tries a new dog food brand and writes about it positively on her blog. If she bought it on her own time it is not advertising, if she was sent a free bag due to the company tracking her purchases it is not advertising, if she joins a network marketing program and receives the dog food through that it is considered advertising and endorsement.

       

      -The next section discusses specific rules of what the endorsement can be. The endorsement must be an honest reflection of the experience, as well as coming directly from the blogger. Additional rules clarify that the endorser is an actual, present user of the product they are endorsing. Advertises may only use the endorsement to their advantage if the endorser falls into that category.

       

      -In example five of th second section, the company is liable for any claims the blogger makes (even if they do not tell them the claim), and the blogger is liable if they do not disclose they are paid for their review. It is up to the advertiser to monitor bloggers and to ensure they are speaking truthfully about their products.

       

      -If a result of an endorser is atypical of a product, the advertiser must disclose that the information is atypical for the situation. Whatever the endorser conveys to the audience must represent the reaction of the general population, or be specified that it is an unusual or special case.

       

      -If an endorsement indicates the endorser has some professional experience with the field related to the product, they must have relevant professional experience. If a blogger claims they are a doctor and can endorse a weight loss program, they must be a medical doctor with some knowledge of the topic. They cannot have a PhD in an unrelated field, or this would be considered deceptive.

       

      -Any connections between the advertiser and the endorser must be fully disclosed. If a connection is created after the endorsement, this does not need to be disclosed (payment after making positive comments without knowledge this could happen)

       

      -The final example seven explains that a blogger who receives free items (without asking for a review) should disclose the relationship to the company and that the item was free if they choose to review it. The company should inform the blogger of this standard expectation.



      Citation:

      FEDERAL TRADE COMMISSION. Guides Concerning the Use of Endorsements and Testimonials in Advertising. Ftc.gov. Federal Trade Commission,Web. 04 Apr. 2016.

    • 1.5 FTC Statement on Hyundai and Bloggers

      FTC
    • 1.6 Annotation of FTC Statement on Hyundai and Bloggers

      Annotation of FTC statement regarding a letter from Hyundai asking if they can use bloggers to advertise

      By Arielle Weg

       

      • This is a letter that was sent to the FTC from the staff of the Bureau of Consumer Protection to Hyundai Motor America who uses bloggers to advertise their cars. They asked about using gift certificates to give to bloggers in return for encouraging them to link to Hyundai videos or comment on upcoming Super Bowl ads on their blogs.

       

      • Acording to the FTC statement, section five of the FTC Act requires the disclosure of any material connections encouraging the endorsement of a product.

       

      • The statement said, the FTC closed the case, seeing that Hyundai didn’t know about the use of the incentives, not many bloggers received these gift cards, and those who did recieve the cards generally disclosed the information.

       

      • The individuals who work for the media firm hired to conduct the blogging campaign were those at fault, not necessarily Hyundai, according to the FTC statement. These actions did not reflect the Hyundai social media policy, which calls for bloggers to disclose any deals, thus not breaking FTC rules.

       

      • Companies who want to comply with the FTC Endorsement Guidelines must mandate disclosure policies, make sure people who work with and for them understand these policies, and monitor what those people do. It is up to the company to strictly follow the FTC guidelines, according to the FTC statement.

       

      Citation:

      Fair, Lesley. "Using Social Media in Your Marketing? Staff Closing Letter Is worth a Read." Federal Trade Commission, 22 Dec. 2011. Web. 05 Apr. 2016.

    • 1.7 FTC v. Lunada Biomedical, Inc.

    • 1.8 Annotation of FTC v. Luanda Biomedical, Inc.

      Annotation of a real life court case: FEDERAL TRADE COMMISSION v. LUNADA BIOMEDICAL, INC.

      By Arielle Weg

       

      -The trial took place at the United States District Court in the Central District of California.

       

      -The plaintiff is the FTC who sued the defendants Lunada Biomedical, Inc. a corporation, Donna Kasseinova, sued as an individual and as an officer of Lunada Biomedical, Inc., Roman Trunin, sued as an individual and as an officer of Lunada Biomedical, Inc., and Emily Arutyunov, sued as an individual and as an officer of Lunada Biomedical, Inc.

       

      -The FTC brings this action under  the Federal Trade Commission Act to obtain permanent injunction due to the violation of the FTC Act that require the defendant to disclose connections with labeling, advertising, marketing, distribution, and sale of Amberen, a dietary supplement that allegedly causes menopausal and perimenopausal women to lose weight and belly fat.

       

      -The plaintiff is the FTC who outlines laws regarding advertising and media. They reserve the right to federal district court proceedings with its own attorneys if laws of the FTC are violated.

       

      -The defendant is Lunada Biomedical, Inc., a California corporation, which labels, advertises, markets, distributes, and sells Amberen to consumers throughout to U.S.

       

      -The defendant Donna Kasseinova owns 50% of Lunada, and is the company’s Chief Financial Officer. She has had partial control in the acts and practices relevant to this complaint.

       

      -The defendant Roman Trunin owns 50% of Lunada and is the Chief Executive Officer. He has had partial control and participation in the alleged practices relevant to this complaint.

       

      -The defendant Emil Arutyunov is the Chief Marketing Officer. He has connections to actions relevant to this case.

       

      -Amberen is a dietary supplement that contains ammonium succinate and calcium disuccinate, developed by scientists at the Institute of Theoretical and Experimental Biophysics at the Russian Academy of Sciences. They received rights to market and sell the drug in the U.S. This was done through radio commercials, TV commercials, websites (including carolsblog.com), emails, and other marketing materials.

       

      -The product was represented as a substantial weight loss product that could helps loss of belly fat, and increase in metabolism in women over the age of 40 who are permenopausal or menopausal. The endorsements claimed t be clinically proved to cause substantial weight loss in these women. The product also comes as a complementary risk for trial of a 30 day supply for the first 50 callers. There is no financial risk or obligation to this 30 day free trial.

       

      -In December 2009 Lunada Inc. entered a Consulting Agreement with International Marketing Company (IMC) and the president Carol Nicholson. Under this agreement, the parties would perform marketing services for the product, which included maintaining a blog about menopause-related issues and to appear in other forms of advertisement. They compensated Nicholson $2,000 per month in addition to daily and hourly fees for other endorsements.

       

      -From this the “Ask Carol: A Menopause Blog” was created. The blog deceptively appeared as a personal account of Nicholson’s personal experiences with menopause. The reality was that Lunada discussed what would be on the blog, and pre-reviewed any postings without reader’s knowledge. In the posts, Nicholson openly endorsed the use of Amberen, stating it solved a multitude of problems such as weight gain, hot flashes, irritability, and sleeplessness. She referred to her own background as a registered nurse, which gave her a level of expertise in the recommendations. Blog posts included a number to call and a hyperlink to the website for consumers to purchase the products. There was no disclosure on the website that Carol’s Blog was paid for by Lunada through IMC. Lunada paid IMC and Nicholson more than $37,000.

       

      -The actual violations of the FTC Act  regarding the blog posts include unfair or deceptive acts or practices and misrepresentations of a product. The specific problem over all was that the “clinical studies” promising weight loss and belly fat loss didn’t actually measure this in women taking the drug.

       

      -In relation to this specific topic, “failure to disclose material connections with endorses” is the most relevant complaints. Other complaints in this trial include; false proof claim, false claims concerning Amberen’s success and customer satisfaction rates, and false risk free trial claim (required customers to return product, and did not compensate shipping fees).

       

      -The plaintiff requested that the courts enter a permanent injunction to prevent further violations of the FTC Act and award such relief as the Court finds necessary to compensate injury to consumers due to Defendant’s violations of FTC Act.

       

      - Proof of these claims are presented in transcripts of advertisements for the product.

       

      -Exhibit I includes the Ask Carol blog post. The blog posts highly recommends the use of the drug over all other options, and links to the product to purchase. There is no indication on the blog of Carol’s paid connection to the product. She even includes a anecdote about her life, and responds to reader’s questions.

       

      Citation:

      FEDERAL TRADE COMMISSION v. LUNADA BIOMEDICAL, INC. 1-57. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA. Ftc.gov. Federal Trade Commission, Web. 04 Apr. 2016.

    • 1.9 FTC Advertising Violation Example

      Video: “Amberen for Menopause Review” that showcases deceptive advertising. This commercial violates all of the FTC rules including deceptively introducing the endorsers as real-life users, unfairly giving authority to Carol as a registered nurse, and having her claim a “good friend” gave her the medication. This ad has no indication that this is a paid productive and the stories are not true. It is unfair and deceptive to the audience.

  • 2 FTC v. Kellogg

    by Shayna Keith. The Federal Trade Commission (FTC) is an independent agency of the U.S. government (established by the Federal Trade Commission Act). Its principle mission is to promote consumer protection and eliminate and prevent anticompetitive business practices. The FTC prevents consumers from undergoing fraudulent, deceptive, and unfair business practices and provides information to help identify, halt, and prevent them (FTC File No. 0823145, 2009).

     Kellogg Company, the world’s leading producer of cereal, agreed to settle FTC charges for falsely advertised their products as enhancing children’s cognitive abilities as well as immunity, however there was no research proving their statements.

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