Paper Example on Advertising Laws: Regulating Unfair Practices in the Digital Age

Question 1

One of the marketing tool used by companies and individual businesses to promote their goods and services is advertising. Various laws and regulations have been created to regulate the conduct of companies while using this tool. Advertising Laws are existing enactments and regulations governing deceptive and any form of unfair advertising. Recently, with the rise of social media and affiliate marketing, we have seen the Federal Trade Commission (FTC) crackdown on some of the somewhat deceptive advertising tactics (whether they meant to or not) of specific social media influencers and brands/agencies.

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It is vital to regulate the current landscape simply because marketing has become a 24/7 365 type of thing (Huffman, 2009). Before smartphones and the popularity of the internet, you could only be marketed to if you wanted to. If you turned on the radio, or picked up a newspaper/magazine, or turned on the TV. Now literally every image you see can be some ads, and its sitting in your back pocket. That said, the FTC guidelines and regulations involving affiliate marketing are beneficial in that they give some power back to the consumer, and allow them to make an informed opinion about the goods and services they want to purchase.

Regulations are necessary, and for the most part, don't hinder these brands or the influencers messages. It just allows for those who don't understand the playing field make more informed decisions. Considering the high rate of deceptive advertisements, laws governing ads and marketing have been established. The two recent cases on misleading advertisements - FTC v Ross in 2014 and FTC v Bronson Partners LLC in 2011 by United States court of appeal is a clear manifestation of how much deceptive ads can cause the consumers and the general public. In the case between FTC v, Ross, and FTC v Bronson Partners LLC, the facts presented are involved in deceptive advertisements and failing to abide by the United States laws regarding advertisement. The two cases were decided by the US court and the two parties, Ross and Bronson's company were held liable for equitable monetary consumer redress.

Question 2. Facts That Led to The Complaints by FTC

Within the Federal Commercial Commission Act ("FTC Act"), businesses engaging in deceptive and unreasonable internet activities are susceptible to injunctions and big financial harm prizes. Equally significantly, business operators and managers can be kept individually responsible. The tribunal sued the database holder $163 million in the situation, FTC v. Ross. In that event, for operating an online "scareware" system, the FTC prosecuted a software and internet business and several of its high-level managers and its creator. According to the proof, the plaintiffs sent advertisements to web users showing them that their pcs had been scanned to detect a range of hazardous documents, such as viruses, spyware, and "illegal" pornography.

Nevertheless, Consumers were forced to purchase computer security software from the plaintiffs as a consequence of the "scareware" advertisements. The tribunal passed a brief decision against the commercial defendant and conducted a bench hearing on the company's founder's guilt. The trial judge ruled after the trial that the founder, Kristy Ross, had the authority to control the company and that she managed and participated directly in the scheme. The tribunal observed that Ms. Ross funded monetary costs, supervised a significant amount of staff, and was engaged in producing the deceptive advertisements privately. From that, it became apparent that Ms. Ross had a real understanding of the fraudulent "scareware" advertising system and permitted its use. As such, the tribunal discovered her personally responsible for more than $163 million in judgment against her.

In the case of FTC v Bronson Partners, LLC, the FTC filed complain against Bronson partners and Howard alleging false advertisement and marketing of Chinese diet tea and Bio - Slim patch by violating section 5A and section 12 of FTC act. The FTC challenged the company for deceiving the consumers in their advertisement of the value of Chinese diet tea in the body. In the ad, the company asserts that Chinese diet tea can enable individuals to reduce weight in a short span without necessarily engaging in exercise or taking other diets. The advertisements state that this uniquely Chinese diet tea can prevent a higher percentage of fat absorption in the body, double metabolic activities in an individual's body to help release excessive calories and can help one stop snacking. Many other comments in the Chinese diet tea ads suggest unequivocally that consumers will lose several pounds of weights instantly. The truth, however, is that Chinese diet tea is no different than other green teas in the market. The labeling of their product contained misinformation about the product's usage to the consumers, and this is against section 5 of FTC act and food, drugs, and cosmetic safety act (Terrell, 2009). Also, they fraudulently misrepresented the quality of the products to consumers. The two partners were found guilty of false advertisements and fined heavily.

Question 3. How The First Amendment Can be applied in these Cases

One of the many questions that have been asked is whether the first amendment protects consumers from false advertisements or not? Indeed, advertising is shielded by the United States ' First Amendment. Constitution.

Nevertheless, publicity or "business expression" receives less security from regulatory intrusion from the First Amendment than other kinds of expression. For example, the Federal Trade Commission (FTC) can regulate speech that is found to be "deceptive," and the FTC continues to increase the types of trade speech it regulates. Also, it utilizes a range of instruments to do so. The commercial address now obviously plays a prominent role in the First Amendment privacy freedoms. A 1993 view of the Supreme Court described the overall values governing the privacy of business expression: the constitution states that, just like other areas of our social and cultural lives, the business marketplace offers a forum where thoughts and data thrive (Brandon, 2016). No restriction on the regulation of "strictly business marketing" is imposed on the state by the constitution. The two firms were involved in a false advertisement by spreading incorrect information on their products and breaching their agreement by consumers. Since the first amendment calls for punishment for the spread of false information, the court's outcome was valid. This was an intentional tort and penalizing the two companies under the first amendment is justifiable (Huffman, 2009).

Question 4. Preventing Future Occurrence of Deceptive Advertising

Under the FTC Act, businesses engaged in deceptive internet business activities are susceptible to injunctions and big financial harm prizes (Cheeseman, 2001). Just as effectively, the managers and business managers can be kept individually responsible, as shown above. However, these laws should be fully implemented, and evaluation is done on companies and individual businesspersons who do not pay heed to the requirements of such laws. That is what I would do as a chairperson of FTC. It will help deal with scenarios in these cases to prevent future claims.

Moreover, considering that most companies and individual businesspersons are not well conversant with laws regarding the sale of products and advertisements, I would create public awareness to all both companies and businesspersons regarding product and safety act, false advertisement and product and liability act. It would enlighten them and eventually help avoid using malicious means to get their products in the market and ultimately put an end to deceptive advertising. Also, I would tighten my belt and fiercely act on any claim of false advertising by providing hotline numbers where individuals can call in case they notice misleading information on products' labels. Many manufacturers have now devised and implemented skillful ways of advertising to sell harmful products to consumers. Alerting the consumers to stay vigilant and report any false information on the product label would help significantly.

Furthermore, some scrupulous lawyers have found their way to delay the hearing of some instances related to false advertising. Such lawyers receive a bribe from companies that practices false advertising. To such lawyers, I would recommend to the Congress to pass laws that check on the intention of lawyers while representing their cases in the court system. Any lawyer found involved in delaying the judicial process or buying their ways into winning would be fined dearly.

Question 5. Drawing Conclusion

In conclusion, from the two cases, one can deduce that the effect of false advertising cuts across. It negatively impacts both the advertiser and the end-user of the product. Companies that engage in false advertising ends up paying heavily through hefty fines inflicted on them. Users, on the other hand, may end up using products of low quality and goods that may destroy their lives. Whichever way, false advertising is heinous malpractice that is prohibited in the United States and other parts of the world. The law shields buyers from unethical practices by businesses to help promote consumer's economic welfare and well - being. Levying high fines by a court, as seen in the two cases was justified. Nevertheless, the government et and consumers must stay vigilant of any company or individual business holder who persuades customers to purchase their products through false advertisement.

References

Brandon Waselnuk. (2016). What is product regulatory compliance? Retrieved 23 July 2019, from https://www.youtube.com/watch?v=1OISd5llbtE&feature=youtu.be

Cheeseman, H. R. (2001). Business law: Ethical, international & e-commerce environment (Doctoral dissertation, Univerza v Mariboru, Ekonomsko-poslovna fakulteta). https://dk.um.si/IzpisGradiva.php?id=28873

Huffman James. (2009). Tort Law Project: Introduction to negligence. Retrieved 23 July 2019, from https://www.youtube.com/watch?v=u6ynTbY944Q&feature=youtu.be

Terrell Hogan. (2009). Product Liability. Retrieved 23 July 2019, from https://www.youtube.com/watch?v=9z1G290ZnZ0&feature=youtu.be