If you’ve turned on the television or radio recently, chances are that you’ve heard at least one advertisement that made you sit up and say “what the…?” From bogus weight-loss products, to suspicious tax “advice” firms, to “free” cruises to the Bahamas, it often seems difficult to avoid ads that are misleading, if not outright fraudulent. At the federal level, the Federal Trade Commission (FTC) is charged with protecting consumers from unfair and deceptive advertising.
Over the years, the agency has brought hundreds of cases against companies that have made dubious claims in their advertisements. In addition, in cases where there is evidence of fraud the FTC can also shut down operations under its “unfair and deceptive acts or practices” authority. State attorneys general also have authority to go after deceptive advertising and fraudulent operations.
Unfortunately, given the limited resources at their disposal, regulators are often only able to go after the most egregious cases of deception and fraud. The result? Ads for all kinds of deceptive and fraudulent products and services continue to proliferate on the public airwaves and on cable TV.
So what can be done to better police the airwaves for deceptive and fraudulent content? As part of its recent enforcement action against four bogus weight-loss companies, the FTC sent a letter to publishers and broadcasters asking them to refer to the FTC’s guidance on spotting phony weight-loss claims when advertisers submit ads.
While this action is a step in the right direction, we think the broadcasting and publishing industries can and should do more to vet the ads they run before they run. The FTC has largely steered clear of putting pressure on publishers and broadcasters to take this common-sense step. The Commission’s last significant effort on this was back in 2003, when former chairman Tim Muris asked cable television advertisers to strictly screen weight-loss ads.
As the Washington Post’s Lydia DePillis noted in a recent article on this topic, publishers and broadcasters usually cite two big reasons for resisting ad screening: their First Amendment right to publish and broadcast what they wish and the expense of setting up a screening program. With the proliferation of Internet-based advertising, the problem becomes even harder to control.
That said, we don’t think that these excuses are reason enough for the industry not to even try. Consumers tend to trust the ads they see on the radio or on television to a greater extent than online ads. When a fraudulent or deceptive ad runs, it undermines confidence in the advertising industry generally. More concretely, when a deceptive advertiser goes under due to enforcement actions, it can leave media outlets holding the bag. For example, when “tax resolution” company TaxMasters went bankrupt in 2012 after being investigated by the Texas Attorney General’s office, it owed CNN and Fox News Channel more than $3.5 million in unpaid advertising.
Doing a better job of screening out deceptive ads is not only the right thing to do from a public interest point of view, but it makes good business sense too. That being the case, why aren’t more companies doing it? Consumers deserve no less.