04 April 2012

FTC and Alcohol Advertisements: Unchallenged Authority

As we’ve mentioned before, the FTC takes the position that advertisements that may encourage underage or irresponsible drinking are a violation of the FTC Act. This position has never been challenged by an alcoholic beverage advertiser. But, is it a stretch of authority?

What is unfair and deceptive?

The FTC is charged with protecting consumers in interstate commerce from unfair or deceptive statements, acts, and trade practices - not with generally protecting consumers.

More specifically, the FTC may declare an act or practice in unlawful if it “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.” 15 USC § 45(n).

This means that FTC will find deception if there is a representation, omission, or practice that is likely to mislead a consumer acting reasonably in the circumstances, to the consumer’s detriment.

The statement, act, or practice is considered from the perspective of a reasonable consumer. If the ad is targeted to a specific audience, the FTC will determine the effect of the ad on a reasonable (i.e. ordinary) member of that group. So, if the ad is targeted towards pre-school aged children, an ordinary 4 year-old would be the standard.

One of the legal requirements to the FTC’s findings of unfairness or deception is that the statement, act, or practice must be material - it must be likely to affect a consumer’s choice or conduct, leading to injury to the consumer. Also, recall that the practice is not unlawful if it can be “reasonably avoid[ed] by consumers themselves.”

The FTC’s position that advertisements that may encourage underaged or irresponsible drinking is a far stretch from the legal requirements for deceptive and unfair advertising.

Underaged Drinking

The theory is that children are much more easily deceived by advertisers than are adults. Is anything that encourages them to drink alcohol deceptive advertising? Or, unfair advertising because they cannot reasonably avoid drinking alcohol?

While we do not advocate that Mickey Mouse be used to sell alcoholic beverages, what is the line? Could simply seeing an alcohol ad encourage underaged drinkers to drink alcohol?

Even if you concede the point that children are likely to be deceived by alcohol ads, the truth is that alcohol ads do not target children. Much of alcohol advertising is about brands: educating consumers, convincing drinkers to switch to your brand from the competition. The target consumer is one that can purchase the product.

Irresponsible Drinking

What about the nebulous requirement that alcohol advertising not encourage irresponsible drinking? Is the FTC’s position that the ordinary person cannot understand the effects of alcohol? That the ordinary consumer cannot reasonably avoid irresponsible drinking? Or that the reasonable consumer is not aware that he or she should not operate a vehicle of any kind while inebriated? What is it that consumers cannot protect themselves against?

Requirements that correct alcoholic content be printed on labels or in any ads (which is already required by the TTB), or making unlawful ads that show people engaged in illegal acts while drinking, more clearly fall under the FTC’s authority. The vague sentiment against irresponsible drinking, however, does not. Rather than punish the product, why not punish the act and make the consumer responsible for his or her actions?

Self Regulation

In response to the FTC’s positions, industry groups have created self regulating advertising codes. The FTC’s report on the alcohol industry’s self regulation codes states that “self-regulation is a realistic, responsive and responsible approach to many of the issues raised by underage drinking. It can deal quickly and flexibly with a wide range of advertising issues and brings the accumulated experience and judgment of an industry to bear without the rigidity of government regulation.”

Self regulation also avoids having to satisfy First Amendment standards for restrictions on free speech that legislation or government regulations would otherwise have to meet. When the FTC calls for certain standards to be met in industry advertising codes, is it really an end-run around the First Amendment?

No comments:

Post a Comment

Related Posts with Thumbnails