The Chilling Effect of FTC Enforcement on Advertisers’ First Amendment Rights

By Theodore F. Monroe, Bradley O. Cebeci, and William I. Rothbard

In our last article (Oct. 2005), on double-standards in FTC advertising enforcement prejudicing direct response marketers, we alluded to the Commission’s practice of imposing “bans” on claims it believes are inherently untrue and incapable of proof. These include bans on the so-called “red flag” claim of weight loss without diet or exercise. In the Propolene case, for example, involving a product proven to deliver weight loss without change in lifestyle, the FTC nevertheless imposed a ban on claims of “rapid or substantial weight loss” without diet or exercise because it believed the marketer had exaggerated the weight-loss benefits.

The FTC’s insistence that marketers agree to such claim bans in settlement negotiations raises troubling issues of prosecutorial power and undue restraint on lawful commercial speech.

We start with the established legal principle that product advertising is “free speech” entitled to First Amendment protection as long as it is truthful and there is no compelling governmental interest justifying its restraint. Further, a lawful restriction on commercial advertising may be no greater than necessary to achieve its objective, so as not to infringe on otherwise constitutionally protected speech.

With these principles in mind, we now ask whether it is fair, necessary or even, ultimately, constitutionally permissible for the FTC to use its power to coerce advertisers to agree to bans on claims (or else face an expensive court fight), just because, in its opinion, the claims are not true and, more to the point, never will be.

For the rightful exercise of this power, the factual premise of the Commission’s belief that a permanent ban is required must be indisputable, not only now but in the future. For example, it must be true not only now, but forever, that a person taking a weight loss dietary supplement cannot lose more than two pounds a week without dieting or exercising (the FTC definition of “rapid and substantial” weight loss). Even if this is true today, how does the Commission, a non-scientific body, know with certainty it will be true for the ages? For that matter, how do the scientists the Commission consults know this to be true for all time?

Science is dynamic, not static. The obesity epidemic is real, and researchers are working feverishly to develop easier and more effective weight-reducing treatments. It is conceivable they will succeed in discovering a product that will enable people to lose more than two pounds a week without dieting or exercising. It is conceivable a DR marketer will obtain marketing rights to such a product. Yet under the FTC’s current policy imposing permanent bans on such claims, a company under order, or others fearful of FTC action, can’t or won’t make the investment to commercialize such a product.

If this is so, then why couldn’t an advertiser simply ask the Commission to agree to lift a ban on a now truthful claim or, failing its assent, ask a court to lift it? This may not be as easy as it sounds. The company is likely to meet resistance on both fronts -first from a governmental agency that will probably be dubious about the claim and is not known for weakening orders, and then from a court that could be unsympathetic to changing the terms of a voluntary settlement, no matter how meritorious the argument. In this event, an advertiser will be prohibited from making a provably true and important product claim -despite its 1st Amendment right to do so.

Such a result not only is unfair to the advertiser and consumer, it is unnecessary. The Commission does not need to employ the remedy of claim bans because it already uses a lesser but equally effective tool to ensure advertising is truthful. FTC law and orders already require that marketers avoid making misrepresentations and have a “reasonable basis” for their claims. If they violate these requirements, they are subject to heavy punishment, including contempt citations, stiff monetary penalties, and even broad conduct bans for a “recidivist” offense.

Strong enforcement of the requirement that an advertiser not misrepresent and possess substantiation for its claims is more than enough to protect the public against false advertising. The FTC does not need to engage in “overkill” and categorically ban claims that are or could be true, potentially chilling an advertiser’s constitutional right of free speech and denying consumers valuable information and products.

The FTC’s job is to ensure truthful commercial advertising, not stifle it. Just as it should drop the double standard it employs against DR marketers, it should abandon its practice of requiring claim bans -a remedy that is unfair, unnecessary, and contrary to the spirit (and perhaps even letter) of the First Amendment’s protection of commercial speech.