University of Southern California Dissertations and Theses

An analysis of the limits and responsibility for control over unethical advertising practices

(USC Thesis Other)

An analysis of the limits and responsibility for control over unethical advertising practices

PDF

Download

Open document

Flip pages

Download a page range

Download transcript

Copy asset link

Request this asset

Transcript (if available)

Content AN ANALYSIS OP THE LIMITS AND RESPONSIBILITY'FOR CONTROL OVER UNETHICAL ADVERTISING PRACTICES A Thesis Presented to the Faculty of the College of Commerce The University of Southern California In Partial Fulfillment of the Requirements for the Degree Master of Business Administration by Stewart L. Hayward June 1955 UMi Number: EP43403 All rights reserved INFO RM ATIO N TO ALL U S E R S The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI EP43403 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 4 8 1 0 6 -1 3 4 6 V> /g C o r a M BA 'S£ HMAl ^ | This thesis, written by ^ 1 H a # * I i Stewart L. Hayward ^ I I f f e 1 under the guidance of the Faculty \ ^ f $ Committee, and approved by all its t members, has been presented to and ! accepted by the Faculty of the School of Commerce in partial ful- j fillment of the requirements for j the degree of j Master of Business Administration Date__ Approved TABLE OP CONTENTS CHAPTER PAGE I. THE PROBLEM OP UNETHICAL ADVERTISING IN OUR SOCIETY . . ..................... 1 The problem........................ 3 Statement of the problem ........ 3 Importance of the study ......... 5 Organization of the remainder of the thesis 6 II. AREAS OP UNDESIRABLE PRACTICES............ 9 ? Intentionally fraudulent copy approach • • 10 j Fraud ••••• ............ ...... 12; The area of misleading implications .... 14 j Puffery .... .......... 15 ! i Deception 15 Advertising abuses stem from media growth prior to 1900 ••.••.....••*• 19 Need for controls becomes apparent ... 20 III. INDUSTRY REGULATION OP ETHICS IN ADVERTISING 24 Early media attacks on fraudulent adver tising 25 Early attack on fraudulent advertising by associations of advertising people ... 29 Codes of ethies................... 31 Printers * Ink Model Statute •••..•• 32 Advertising codes of other organized groups Advertising ethics at the retail level • • • Better Business Bureaus • •••••••• Self-regulation of advertising toy separate industries • ••••• ............ .. Proprietary Association of America . . . . The Toilet Goods Association • . ........ The beer industry • • • . • ............ Trade Practices Conferences ......... . . Radio and television Industry regulations • Self-regulation of medical advertising • . . GOVERNMENT REGULATION OP ETHICS IN ADVERTISING Supreme Court decision on misleading adver tising . . . . . . ................. Federal legislation • .......... ..... Pure Food and Drug Acts ......... Federal Postal Law ................... Federal Trade Commission Act • •••••• Wheeler-Lea Amendments .... .......... Use of word ’ ’free” ............ Securities Exchange Act of 1934 ........ Federal Ooramunications Commission • • • . Alcoholic beverage advertising ...... CHAPTER PAGE Lanham Trade-Mark Act ........... 80 Other Federal regulations governing advertising .•••••. .............. 81 State regulations....................... . . 82 California law on misleading advertising • 83 V* THE LIMITS AND RESPONSIBILITIES OF CONTROL OVER ADVERTISING ETHICS .......... 87 Limitations of publishers.............. 88 Limits and responsibilities of business «... 90 j I Responsibility of business Is to be fair • 91 I j Responsibilities of the consumer • •«••• 95 i VI. SUMMARY AND CONCLUSIONS ................... . I | Summary • ! Conclusions............* ............. . 104 i i BIBLIOGRAPHY.......................................112 i 1 APPENDIX A. Standards of practice for advertising clubs ..... ••••. 117 APPENDIX B. Printers* Ink Model Statute........... 118 APPENDIX C. Declaration of principles 119 APPENDIX D. Advertising Federation of America statement of advertising principles • • 120 APPENDIX E. Selling and advertising code of the National Better Business Bureau • • • • 121 t CHAPTER APPENDIX P. i j i APPENDIX G. APPENDIX H. APPENDIX I. !APPENDIX J. j | APPENDIX K. Proprietary Association of America self-imposed rules for advertising of packaged medicines ............ Television Code - National Association of Radio and Television Broadcasters Council rules on signs and advertising Excerpts from Federal Pood, Drug and Cosmetic Act •••«••••••• Excerpts from California Laws and Statutes pertaining to advertising regulations .............. Specific California regulations cover ing advertising conduct in several phases of business ........ PAGE 1221 i | j 123 j i 124 126! 1271 t i 129 I I i CHAPTER I THE PROBLEM OP UNETHICAL ADVERTISING IN OUR SOCIETY' An American philosopher once said: “When In doubt# j I I tell the truth* It will amaze most people# delight your ! ! friends and confuse your enemiesWhen Mark Twain said 1 i this# he was directing his remarks to the people living in j j the era of the 19th century which was the setting of his I ! many outstanding tales of adventure and American lore* His j i I 1 istatements could well apply today however if directed toward i i I i :those responsible for some of the advertising copy which ! i i i i j w e # the American people# are exposed to every day, in this j I j |the last half of the 20th century* j In this regard# let us consider Advertising as a i ! I subject in itself* Advertising and advertising alone. Ad*j i i jvertising is the phase of American business which is con- I tinually before the public. In fact * it is the only phase in most cases which is in dally contact with the consumer* |Because of this# advertising is bound to qau.se more criti- I jclsm from the public than any other phase of the nation's j Ibusiness* i } | | It may be well to consider for a moment just what I j-advertising is. We must all agree that it is a tremendous social force. Whether we personally agree with what is j / said in all advertising copy, we must agree that, in all reality, advertising is a powerful force* It influences V jmany of the activities of our populous. It is ever present in society, telling us what to eat, what to wear, where to live, and how to spend our money. Advertising is Important and essential to both producers and consumers; but, since it has a persuasive power, it has the ability to do evil as well as good* Advertising does have legitimate functions. When properly conducted, it aids in educating the consumer to buy better products and Informs him of new ones. Prom the standpoint of the producer, advertising is the broad base upon which he is able to build Increased sales* It is es sential to mass production, an inherent factor in our com- petitive system. Our economy depends on spending* In |order for people to spend, there must be a flow of goods land services available for sale. The framework of our {economic system has been based on this flow of goods and ! I jflow of spending. Advertising makes it flow. Without It, i the spending diminishes and a declining production follows. Public criticism of advertising, when It occurs, stems from tactics employed by some advertisers which mis lead the consumer to varying, degrees through misrepresenta tion of a product offered for sale. Critics of advertising 3 may be placed In two categories. There are (1), those who criticise it on economic grounds and (2), those who object ito it on ethical grounds. Our concern in this thesis is ! ■ ;not whether advertising should be used, but how it should j ^be used. This study deals with the ethical aspects of ad- i jvertising and the measures which through the past 50 years have attempted to give the public fewer grounds for ob- jectienable criticism. Our nation’s economic system is designed to take jcare of the needs and wants of our soelety. The legitimate |role which advertising plays in this economy varies direct- ! jly with the extent to which it performs its functions hon- jestly. Let us take the premise then, at the outset, that advertising is an Important part of the mechanism of our business system, and as such should be considered harmful to society only when it is misused. I. THE PROBLEM Statement of the problem. The purpose of this thesis is three-folds first, to describe the areas of un ethical practice which have developed with the growth of advertising; second, to show what has been done to curb these evils through the combined efforts of individuals, i i industry, and government; third, to evaluate the ..... . ' '.... 4 effectiveness and limitations of those measures designed to i I curb unethical practices, with recommendations for strength- i , i i ening their control* I i i ! In defining the specific criticisms of advertising j 'with which we are concerned in this study, our attention is j :focused only on those which may be termed unethical in a i {moral or business sense. Specifically, these would Include i 'advertising which is presented as follows: 1. Based upon falsehoods, including that which offers | productsthat are worthless or injurious, as well j I as that which makes false claims about legitimate . | products. j ’ Misleading through flagrant and gross exaggeration j j or omits necessary information. | | J We shall see in the pages that follow where some ] Iprogress has been made in eliminating advertising which is I I based on falsehoods. Measures aimed at curbing unethical advertising practices have shown some effect in controlling this phase of the problem although, today, we do see many examples of false claims concerning legitimate products. {Perhaps our principal problem, however, lies in the elimi- ! ; , nation of misleading advertising which employs trickery, i i i i i undue exaggeration# omission of fact, or makes use of un- j |supported claims. It is in this realm where ethical I i 'controls have been least effective. It is here where ad- ; i ivertising presentations may comply to the letter with the 5 law, but may appear misleading through Implication achieved by arrangement of copy, price, and illustrations in a j |printed advertisement, or by vocal trickery in radio and j | ! jtelevision copy. It is this aspect of advertising where J i ; |the greatest amount of reform remains to be accomplished* f i Importance of the study« Advertising has made slow , » progress toward truthful presentation since 1900. The ! i i American consumer has gained, however, some degree of con- j fidence in much of the advertising he sees or hears. This ! ; I confidence, however small it may be, has been Instilled | |through the combined efforts of industry to regulate it- j ■ ' iself; plus the creation of government legislation aimed at i ! i |protecting the consumer against fraudulent advertising or i I jthat which is misleading in a material respect. There remains today, however, no sure protection for the consumer against that type of advertising which is mis- ;leading but not in a material respect; that which through implication and exaggeration tends to mislead the. person * using ordinary prudence. Neither is there any certain protection for the consumer that he and his children will |not be exposed to all manner of trickery and falsehood eon- jcernlng products of questionable value. In order to create J i jmore confidence among readers, viewers, and listeners of i (advertising, we must find ways to strengthen those weaknesses which exist today in much of our advertising copy* To do this most effectively# we must have an under standing of the evolution of regulations which have been placed upon advertising by business and by government* We must fully understand the position of advertising and the advertiser in our society. Only then can we effectively plan for the additional improvement of advertising prac tices* I I ! II. ORGANIZATION OP THE REMAINDER OP THE THESIS j i I On the following pages is presented discussion cov- [ erlng the evolution of advertising controls in America j i since the turn of the 20th century* Chapter II contains an i 'appraisal of practices deemed undesirable by the advocates l of truth in advertising* This is followed by discussion in i I i Chapter III concerning the limits to which industry and |media have regulated themselves* Organized regulation by i |Industry to eliminate use of fraudulent advertising copy jcame into being during the first decade of this century. iHere we see how advertising made attempts to grow in ■ stature through voluntary restrictions and the self- iregulation of groups connected with the fast growing ad vertising business* The desire of those connected with advertising to subscribe to ethical standards of practice was not enough I to capture the great confidence of the public. In Chapter j I ; jlV# we see how government stepped in with federal and state i ilaws designed to offer sane protection to both business and! I ! 5 |the consumer from false advertising statements* . j In a society as complex as that of the United States* It is evident there are limitations on the extent i to which anything as widespread and flexible as advertising i | copy oan be controlled. In Chapter V* the limits and re- j I jsponslbilities for control over advertising ethics are dis-j i j cussed. By its very nature* advertising is a creative ] instrument— a product of human imagination* and its un- ! ethical use can be regulated only through the full cooper ation of individuals who comprise our industry and govern ment . i All people connected with advertising must recognize and acknowledge its weaknesses. They* through self- I jlnterest* must exert means to further benefit a more exact ing meaning to truth in advertising. The consumer also has certain responsibilities. He* through cooperative effort* holds much power in forcing better advertising copy. His * ! japathy has contributed greatly to advertising malpractice. 1 I : i The author in conclusion recognizes broad weaknesses i which remain In advertising today, and offers suggestions which may help eliminate these faults* (ghabter' AREAS OP UNDESIRABLE PRACTICES J ! i I i Advertising is basically a selling tool. There are j * . • I times when the seller of merchandise or services becomes ; i overly enthusiastic about whatever he has to sell. When ! this happens, he may resort to advertising copy which de- | I parts somewhat from the truth. The degree to which he j >• 1 departs is of concern to the consumer. £jDa this portion of j the study, several degrees of unethical copy approach are j |presented.'ft 5 I X I | Jfar shall discuss first those copy presentations | i which are intentionally designed as fraudulent. It is j i these which are the easiest to control through existing j i I measures, and as a result they do not present the most i serious problem today* Next, the problem of advertising which is misleading through implication and through flagrant exaggeration or (Mission of necessary copy is discussed. Here exists the greatest need for Improved practices in advertising today* Advertising which is misleading, but still within the law because it is not misleading in a material respect, falls within this classification. This is a borderline copy approach lying In a region between the ethical and the unethical yet, as it is not completely ethical and is not designed for the best interest of the consumer, it remains a constant thorn in the sides of those who sincerely desire I to improve further our advertising today, i * I I. INTEHTIONALE? FRAUDULENT COPY APPROACH To be fraudulent, an advertisement must claim a 1 i fact, either past or present. Mere predictions or state- j ments of opinion can not be judged as fraudulent. This I statement leads to the two general classifications of ad- I ^ ivertising representations: (1) statements and lllustra- j j 2 i jtlons of fact and (2), statements of opinion. It is I ! |necessary to establish into which class a representation j ifalls before it can be judged fraudulent, • i 1 ! An appraisal of advertising copy which has appeared during the past fifty years shows there is probably some what less direct misrepresentation of goods by most firms i I who advertise today than there was at the turn of the i | century. Much has been written which attempts to whitewash jadvertising practices and one writer of note, just a quarter ! * * ■ Glowry Chapman, The Law of Advertising (New York: ! jMcGraw-Hill Book Company, Inc., 1929), p, 24, { _ ___ _ .. _ . _ _ . _ ™ _ of a century ago, said that direct misrepresentation Is wnevern engaged in ^by a self-respecting advertiser or ! » agency.” He does not define self-respecting, however, and j ' lone has not far to look today to find examples of direct » ■ misrepresentation in the advertising copy themes for some of onr nation»s best known commodities* Cases in which some advertisers rely upon trickery and fraud to sell their merchandise or services are now, however, in many eases, halted by those agencies established to protect the con sumer against fraudulent advertising* T* Swann Harding seems to have captured the basic cause for advertising of this type in the following words: Throughout the ages there have been the credulous and those who thrived by exploiting their naive be liefs* This basic human tendency will doubtless never be eradicated though a great deal can be done to curb it.4 Whereas at the turn of the century there was vir tually no protection to the consumer against purely fraud ulent advertising, there now exists some curbing elements* Federal and state law has been the greatest factor in this ® E* T. Grundlach, Facts and Fetishes in Advertising (Chicago: Consolidated Book Publishers, Inc*, i93l), p. 4, T* Swann Harding, The Popular Practice of Fraud (Hew York: Longmans, Green and Company, 1935), p* 42• 12 control, although the moral and business codes of the var ious associations of media, advertisers, and industries ! jhave also contributed somewhat to attempts at regulating j * i ! 1 iadvertising practices during the 20th century* j | By comparison, some will point out that advertising has come a long way in establishing for itself a high degree of integrity since that day in 1657 when, in The Public Adviser, appeared the following advertisement on the ”Virtues of Coffee:” j In Bartholomew Lane, on the backside of the Old j | Exchange, the drink called Coffee, which is a very ! wholesome and Physical drink, having many excellent j | vertues, closes the Orifice of the Stomach, fortifies j i the heat within, helpeth Digestion, quickeneth the f | Spirits, maketh the heart lightson, is good against j I Eye-Sores, Goghs or Golds, Rheums, Consumptions, j Headache, Dropsie, Gout, Scurvy, King*a Evil and many I others. Is to be sold both in the morning and at three j of the clock in the afternoon.® j Fraud. Rules of law governing fraud, according to |Corpus Juris, show the elements of actionable fraud to be as follows: (1) A representation. 1 (2) Its falsity. (3) Its materiality. 5 Sir Charles Highan, Advertising, Its Use and Abuse |(New York: Henry Holt and Company, 1925), p. 557 (4) Ha© speaker*s knowledge of its falsity or ignorance of its truth* j (5) His Intent that it should he acted upon by the j person and in the manner reasonably contemplated* ; i | (6) The hearer*s Ignorance of its falsity* s j (7) His reliance on its truth* j i i j (8) His right to rely thereon* 6 (9) His consequent and approximate injury* Through the years the law has been subject to a changing interpretation as to what constitutes fraud. In j the eyes of jurors, fraud has depended on the facts and j circumstances surrounding particular cases. Corpus Juris j i j comments: j i \ ! The tendency of modern decisions is not to extend but j I to restrict the rule requiring diligence, and similar j ! rules such as caveat amptor, and the rule granting | | Immunity for dealers * talks, and to condemn the false- j ! hood of the fraud feasor rather than the credulity of his victim*7 Borden points out the effect of changing social conditions and business environment on ethical rules of selling have placed the seller in a much more powerful position than he was in when the consumer bought from the manufacturer direct, a few eenturles ago* Today the 6 H* H* Borden, The Economic Effects of Advertising (Chicago: Business Publications, Inc., 194277 p* 815. 14 sellers are far better organized for trade than are the consumer buyers* The buyer must rely on the seller today |to represent the merchandise fairly; nhence the law of j Me » j fraud has given more and more protection to the buyer."0 | It will become evident in the following pages that j whatever lessening there may have been in fraudulent ad- j vertising has been due to an enlightened social conscience;j an intelligent censorship of publishers* and government statutes invoked by Better Business Bureaus and other i / organizations and individuals. It will also become ap- / ■ / | parent that much remains to be accomplished* \ | | II. THE AREA OP MISLEADING IMPLICATIONS t I | Apart from outright intentionally fraudulent ad vertising which offers products that are worthless or in jurious , or that which makes use of intentionally false or I misleading claims* there are still other forms of objec- ] tionable advertising. Advertising* which tends to mislead through implication and mislead in a material respect* is |considered here. | The Federal Trade Commission* in its annual report I |for the fiscal year ending June 30* 1946* defined a false advertisement as follows: The term, tfalse advertisement,* means an advertise-j ment other than labeling which is misleading in a j material respect; and in determining whether any ad- j vertisement is misleading, there shall be taken into [ account (among other things) not only representations j made or suggested by statement, work, design, device, j sound, or any combination thereof, but also the extent j to whieh the advertisement^ fails to reveal facts j material in the light of such representations or material with respect to consequences which may result from the use of the commodity to whieh the advertise ment relates under the conditions prescribed in said advertisement, or under such conditions as are custom ary or usual. No advertisement of a drug shall be deemed to be false if it is disseminated only to members of the medical profession, contains no false representation of a material fact, and includes, or is accompanied in each instance by truthful disclosure of,! the formula showing quantitatively each ingredient of I such drug.9 j The Federal Trade Commission has thereby allowed for! enthusiasm in advertising copy because to be false it must be Misleading in a material respect,H This enthusiasm is called npuffery." It is harmless exaggeration. Harmless, that is, unless it becomes deceptive. mislead through a deceptive illustration or heading, or Deception. Deception is a deliberate attempt to through sly wording of advertising copy.*0 * Philip Ward Burton, Bowman Kreer, and John B. Cray, Jr., Advertising Copywriting (New York: Prentiee-Hall, j Inc., 1&49), p. 476. I 16 Puffery can lead to misunderstanding of an adver tisement fey a reader, and whether or not a misunderstanding jexists, puffery ean become illegal when inaccurate claims i I I ;of performance value are stated. | Implications which lead to overall impressions may I fee created fey telling only part of the story, thereby mis leading the reader. Aspirin, for example, may fee adver tised as "recommended for colds1 1 but, unless the qualifica tion "relief" of colds or "symptomatic relief" is added, | the reader may get the impression that aspirin will cure a ! i i {cold. A statement of this type in an advertisement today i | would fee unethical and unlawful as it is misleading in a must have full knowledge of existing advertising laws and of the interpretations of those laws. In some industries, due to the fierceness of competition, such as that of the cigarette industry, the advertiser seems to have no code of ethics against sly practices unless it is prohibited fey law. 11 Isaac W. Digges, The Modern law of Advertising (New York: Punk and Wagnalls Company, T54ST> p. 167. i io [material respect* * I It is the responsibility of the advertiser to avoid j [misleading meanings in his advertising copy. Apart from the common sense of good business ethics, the advertiser 12 Ibid., p. 172. I A Hew York attorney In 1938 said in referring to iadvertising practices In general: "Today the advertiser | looks to the courts for his code of ethics.1 1 It would I seem the same statement might very well he true today when i |we follow the advertising activities of some of the coun- i !try's largest manufacturers of national brands. Leading ! makers of the most familiar brands of cigarettes* denti frices * cold cures* headache remedies* vitamins* reducing remedies* and laxatives are Included on the list of firms against which the Federal Trade Commission has filed com- j i 14 * !plaints for misleading advertising copy* j 1 The advertiser today knows there is some degree of j i j ■ control over what he can say and what he can not say. The i ! ' greatest malpractice today among our national advertisers j seems to be therefore* not in what Is said* but in what is I |inferred. Through implication* some of these advertisers, particularly In the fields of dentifrices* soaps, and cigarettes, are stepping beyond the realm of good advertls- j ing ethics and are doing their beat to confuse, if not hoodwink* the consumer• Francis Finkelhor, Legal Phases of Advertising (New York: McGrawrHill Book Company, inc.T"* p. &31• 14 fhomas Blake Clark* The Advertising Smoke Screen (Hew York: Harper and Brothers Publishers* 1944),p. 40. i It is in this area whieh lies between what is com- I jpletely truthful and what is completely untruthful where I ; measures aimed at curbing unethical advertising copy are j I i |most difficult to apply, it Is difficult to draw the line j I I ; between pure truth and what might be termed clever sales- I i s i : man ship. It is hard to determine the line# as Gundlach j ' i states# between (1)'justification for those who claim superiority for a product which in reality Is only equally as good as others; (2) allowing some to present proofs that do not exist and (3)# permitting others to go beyond the | ; i Ibounds of mere trade puffing. I \ n v I I ~ The advertising man is not totally responsible. He I \ is charged with the job of selling a product which in many | :cases is only equally as good as that of his competitor. ! He is responsible for writing advertising copy which will f ! [sell by giving reasons why his particular product should be j purchased. In cases where there are several products of equal value and performance on the market# it becomes in creasingly difficult for him to write effective copy with out Implying at least that other products are not as good as his. The foregoing statements are in no way an attempt to whitewash advertising# but we must place a situation such! 1 R Gundlach# op. cit.# p. 498. 19 as this In Its proper focus so that we may understand, fully In order to recognise advertising as a legitimate tool of business# and to understand its significance in our economy# some knowledge of its past history and growth Is essential. By 1900# hundreds of years had transpired dur ing which time advertisers had been permitted to say just !about anything they chose to say in print, whether legit- i imate or fraudulent. The historical importance of adver- :tislng media is a subject in Itself and is mentioned here 1 |briefly only to show the evolution of the printed message. With the Invention of the printing press# the growth of advertising was stimulated. The suggestion of fraud appeared as far back as 1591 when a Dr. Laster# in a German newsbook# suggested the purchase of his monograph explain ing the secret medicinal properties of a newly discovered plant. Nathaniel Butler is credited with publishing the 16 first genuine newspaper ad in 1622. The first trade j 16 Herbert W. Hess# Productive Advertising (Phila- J delphia: J. B. Lippincott Company, 1916)#p. 9. \ III. ADVERTISING ABUSES STEM PROM MEDIA GROWTH PRIOR TO 1900 !Advertising grew slowly and awkwardly for centuries. |advertisement appeared In 1658, In a news-sheet, forerunner | of our modern press*17 The first newspaper to be establish- j ed In America was In Boston in 1690* This was followed by i |other weekly papers, but it was not until 1784 that jAmericans first daily newspaper appeared, in Philadelphia* } j |It was called The Pennsylvania Paoket and Pally Adver- I£iser.18 j i ! | Heed for controls becomes apparent. For a number of |years, the chief use of advertising in the United States i \ . was to sell patent medicines of an undesirable nature* Ad-] f ’ jvertising copy was directed to those suffering from serious] I I illls such as tuberculosis and cancer. It misled readers 1 I through false promises and testimonials into believing the I medicines would cure their ailments in place of legitimate I • i itreatment by a physician. I i Following the Civil War, the newspapers were filled i jwith fraudulent claims of all kinds* Even retail store I advertising was tinged with over-exaggeration* Financial advertising ran rampant offering opportunities for investors to ’ ’get rich quick• ” Mall order advertising remained I i j — — ^ - - - - r - - — - . - p | 17 Highan* op. clt*, p. 35. i 18 Qeorge B. Hotchkiss, An Outline of Advertising (Hew York; MacMillan, 1950, third e'di'i'idnTTpp. i6-37• __________________________________________ j i . . . . . . . . . . . . . . . . . . . . . . . . . . . . T 7 _ ' ~ “ ” " ■ ” ' ' " 21 i unchecked until the Post Office Issued fraud orders; but even then* the swindlers continued operating by merely |changing their firm name and moving to a new address. S ' | As late as 1367# the total advertising volume in the | no ; j United States amounted to only 50 million dollars and the; i iconcern of the general public over fraudulent advertising i was not too evident. By 1900# annual national volume had increased almost eleven fold to 542 million dollars and the effects of false advertising on the public were being felt. / Advertising copy at times assumed the style of a news story j I and was actually offered to the public as straight ’ ’news" j ; without the familiar label "advertisement" as we know it j I today. As late as 1900 we find such puffery and propaganda! i ' ! J i ;in the editorial columns of newspapers as the following I I ! |testimonial published by the Postum Cereal Company: | i * ! CAUSE UNKNOWN — PINALLY POUND TO LIE IN COFFEE | We had had a curious and unpleasant experience with coffee drinking# husband and I. I have been a great sufferer for several years with Indigestion and heart trouble# and did not know the cause of it until I finally came to the conclusion that it was the use of coffee. So we abandoned the coffee and took up Fostum Cereal Food Coffee# which I had seen advertised in the daily papers. Since using it, I have to my great surprise# im proved wonderfully. Husband has gained 11 pounds in two months since he left off coffee and began the use I Printers* Ink Advertisers Annual - 1955 (October | 29# 1954) #'"p.' '557............... . ............ j " ” “ “ ' ' " 22 of Posttun. He sleeps soundly at night now, whlch he does not remember having don© for several years "before on account of nervousness. It is remarkable that people go on in ill health and do not discover the cause of the trouble. i I i You may depend upon it we know how to make Postum 1 good, and that is easy, if one will use a sufficient I amount and boil it long enough. It is really an elegant and delicious drink* I don't want my name to ; appear in the papers, if you should publish this testimonial• (signed) Chattanooga, Tenn. The Postum Cereal Co., Ltd., Battle Greek, Mich*, are permitted to give the name of this lady by letter, if desired.20 Toward the end of the 19th Century, both advertising |agents and publishers realized that something must be done I to correct this condition if advertising was to become an j honest tool of marketing for legitimate goods. Heputable j advertising agencies refused to pay for ads which appeared j 0 * 1 on the same page with patent medicine ads. As magazine jand newspaper circulations grew, more and more people were becoming exposed to advertising. It fell upon the shoulders !of legitimate publishers, advertisers, and associations of I advertising people to join together in a common eausev**t© join in the fight for truth in advertising* In the following chapters we shall see how effective 5 20 | Hotchkiss, op* cit•, p* 39* I | 23- vawter Foundation Lectures, The Ethical Problems of Modern Advertising (Hew York: The Efo'nald tress Company, 19517> PP* -59• 23 op ineffective their work has been. We shall see the evo lution of regulations imposed, first by industry and then ) j by government, showing the development of curbs which have j i imade it somewhat more difficult for the fraudulent adver- | I | jtiser to operate* j CHAPTER XII i INDUSTRY REGULATION OP ETHICS IN ADVERTISING | / 'I j Duping the latter part of the 19th Century and the j |early years of the 20th Century# a great deal of talk was exhibited on the part of advertising media# retail mer chants # and associations of advertising people to put a stop to a rampant# uncontrolled advertising practice which was wilfully defrauding the consumer on a widespread basis. Advertising in general had reached a low in ethics and the J • I jlegitimate advertiser was at a point where he no longer j i ■ i jwished to appear in the same publications with the patent \ ! I 1 medicine advertiser# the mail order advertiser# and the \ ! i I get-rich-quick schemer* 1¥hile much of this talk was mere I I s j "lip service*w industry did take some steps toward correct ing advertising malpractice* Certainly much of the improvement in the ethics of advertising copy during the past half century has been due i jto the efforts of business to regulate itself. Apart from ! jthe legal restrictions placed upon advertising# reputable i | firms have learned they must eliminate unethical advertis ing from the eyes of the consumer if they expect the con sumer to believe that advertising which is honestly pre- Isented. 25 Publishers, Better Business Bureaus, advertising organizations, and trade and professional associations have each contributed to the cause for truth in advertising* ! ! jThis chapter is devoted to that portion of the problem 1 i which concerns the curative measures instituted by adver- | jtislng as an industry* These measures were deemed neces sary, not only for improvement of advertising practices, but for the outright survival of advertising as an effec tive force* I. EARLY MEDIA ATTACKS CM FRAUDULENT ADVERTISING j i f The first big step toward correcting the condition I \ \ of uncontrolled and uncensored advertising came in 1392 I 1 I when the Ladies Home Journal announced it would print no ? | ------------------- imore medical advertising. Other publications followed suit i i {and, by 1902, there was a substantial list of newspapers j and magazines that refused to accept patent medicine copy, or attempted at least to sort out the bad from the good** j Gyrus Curtis, publisher of the Ladles Home Journal, took |the lead in this direction by publishing his Curtis Adver tising code in which he stated: Frank Presbrey, The History and Development of . Advertising (New York: Doubleday, Doran and Company,“Tnc., lW)7'"p. 531. 26 Our first consideration is the protection and wel fare of our readers, and our second consideration is to conduct our advertising columns as to command the con fidence of our readers and lead them to a greater j dependence upon the printed message. The advertisement which wilfully or carelessly defrauds, becomes worse than the thief. It not only steals from its victims, but destroys the confidence which Is fundamental to all business and essential to the success of advertising.** j In 1914 and 1915/ many newspapers joined the fight j ! for truth in advertising. Louis Wiley , then business man ager of the New York Times# said in 1915: The newspaper publisher who continues to accept bad advertising in the light of the standards of today is bound to be wrecked like the vessel owner who accepts a cargo of acid that will cut the bottom out of his The Hew York Times at that time refused to accept i I jthe following kinds of advertising copy: Fraudulent or doubtful financial offerings. Bucket Shops. Attacks of a personal character. Large guaranteed dividends. Offers of something for nothing. Guaranteed cures. Massage. 2 E. Calkins, The Business of Advertising (New York: D. Appleton and Company, 1924), p.T. I 3 H. J. Kenner, The Fight for Truth in Advertising j (New York: Round Table~Fress7T9^T,"pT'To; Matrimonial offers. j I Fortune Tellers# palmists# etc. Suggestive books. Objectionable medical advertising. | Offers of large salaries. I 4 ' | Want ads which request money for samples of articles. In the years that followed# advertising media helped considerably in bringing about better standards in adver tising practice# but much more can be done today in that direction. All publishers have the right to refuse any I | j advertisement offered for publication if it fails to reach j |ethical standards# and most reputable media exercise this j \ I I right. However# publishers of "pulp" magazines and those \ of small circulations seem in many eases to provide no protection whatsoever to their readers. flood Housekeeping magazine has for many years pub- |lished a guarantee in each issue which offers product re- |placement or refund of money if the product or service is •'defective or if not as advertised herein."® Through this guarantee# the magazine emphasizes it has censored the 4 Ibid-» P* SI. * i ® G. H. Sandage# Advert!sing Theory and Practice | (Chicago: Richard D. Irwin, Inc.# 1&48)# p. • advertising which appears in each issue and has found it to j he true. As late as 1929# Advertising and Selling magazine conducted a campaign to clean up the testimonial advertis- j i ing racket. Editorials and feature articles appearing therein exposed the methods used in obtaining testimonials and urged advertisers to cease this unethical practice. The editor summed up his stand in the following statement: The widespread use of bought testimonials threatens# and has already partly destroyed# our once priceless J asset: Public acceptance of and belief in advertis- I lngts integrity* • • • | i \ \ j It is specious to argue that any advertising is good j advertising simply because it makes sales today. We must think of tomorrow# too. And the agency that handles more than one account # the advertiser who sells more than one market# must look beyond the immediate | future. Patent medicine advertising made sales in its | day. And not until its day was definitely over did i advertising as a whole emerge from its dark ages,6 Newspaper and magazine publishers in leading the fight for truth in advertising have done so on the theory that unethical advertising copy in any issue of their pub lications might logically damage the selling ability of the ethical advertising which appears on the same pages. Un ethical advertising soon destroys the confidence a reader i ihas placed in the publication. 6 Ibid., p. 68. | II. EARLY ATTACK OH FRAUDULENT ADVERTISING i | BY ASSOCIATIONS OF ADVERTISING PEOPLE i I I The first organized advertising group whose purpose j was to improve advertising practices was the Sphinx Club# j organized in 1396 in Hew York. This group consisted of j advertisers# agents# publishers# outdoor contractors# printers# engravers# and others associated with advertis ing. Purpose of the Sphinx Club was to providena clearer understanding of the problems of advertising and a better- i“ 9 n t of advertising."7 j I ! j This was the first organized indication that adver- i i ! jtisimg people as a group were Interested in righting the j jevils of bad advertising copy. It was not until 1910# jhowever# when another group# formed in 1905 and known as i the Associated Advertising Clubs of America# adopted as its slogan “Truth in .Advertising.”- This group was composed of advertising clubs whose members likewise represented all phases of advertising and the allied arts. Essentially# ithe association has remained in existence from 1905 until I I jthe present time although it is known today as the Adver tising Federation of America. It Is the only national 7 Presbrey# op. cit.# p. 541. _ _ association representing all groups and types of adver tisers,® By 1912, the Associated Advertising Glubs had or ganized a Vigilance Committee to prevent false and fraud ulent advertising. This committee was later incorporated as the National Better Business Bureau with local bureaus i i 9 affiliated in the principal cities of the nation. Through the efforts of advertising clubs, legisla- i tlon now has been passed in all but five states which is designed to make false advertising illegal. The states 5 j jwith no such laws today are: Arkansas, Delaware, Georgia, : I I 1 A j IMississippi, and New Mexico. v < \ 1 | i The forces behind the truth in advertising movement at the turn of the 20th Century and in the years to follow included organizations such as the American Association of Advertising Agencies, the Association of National Adver tisers, the Audit Bureau of Circulations, the Direct Mail Advertisers * Association, the Outdoor Advertising Associa tion, and various publishers1 associations. These groups I ® Arthur Judson Brewster, Introduction to Advertis ing (New York: McGraw Mill Book Company, lM^TT p, 4*75. i 9 Hotchkiss, op. cit,, p, 548. 10 Printers* Ink Advertisers* Annual - 1955 (October 29, 1954 )Tp.” 4 W 7 ---------------------- ------ _ • - - - - - - - - ■ 3i have had an Influence In solidifying advertising as a busi ness and have helped to raise the ethics of advertising j above the levels of earlier periods | I ( f > • \ i 1^0 | Codes of ethics* Heermance writing on codes says: j \ ] i 1. A code is designed to serve an immediate practical ! i purpose• I i ; 2. A code is with few exceptions* not a law* but a < creed. | 3. The adoption of a code is not necessarily an indi cation of a higher ethical standard. During the early years of the 20th Century* many i i i |associations of business adopted codes or creeds which* in j )part* contained attitudes on advertising practice. Perhaps I I typical of those adopted by advertising groups was the | ”Standards of Practice for Advertising Glubs*” drawn up for the Toronto convention of the Associated Advertising Clubs of the World in 1914. (See Appendix A.) In seven para graphs * the ad clubs pledged themselves to work together in order to make all advertising more truthful and more con structive and to make advertising the servant of the people in the truest sense. At the Baltimore convention of this group, the year 11 Sandage* op. clt.* p. 14. 18 Edgar Laing Heermance* Codes of Ethics (Burling ton * Vermont Free Press Printing dompanyT* 19&4) » pp. 2-3. earlier, there was a spirit of demanding honesty. News paper circulations, advertising agency price structures, retail advertising campaigns, and price maintenance clauses which manufacturers had with retailers were all the sub- s |ject of conversation. The consumer was initiating a demand |that exaggeration in advertising be eliminated. He wanted the truth spoken in connection with the articles or prop©- sitlon in which he was asked to invest his money. Printers* Ink model statute. A group of leading reformers in the field of advertising, with the assistance j \ ii i of the Printers* Ink Publishing Company, drafted a model ! | I |statute in 1911 for adoption and enactment by the various I I ' I i states. This proposed legislation was an attempt to hold the advertiser responsible criminally for false, untrue and misleading statements in his advertising without proof i i 14 of Intention to deceive. The model statute (see Appendix B) said that anyone offering goods or services in an advertisement in which was contained assertions, representations, or statements of fact which were untrue, deceptive, or misleading, shall be guilty of a misdemeanor. f .r 1® Hess, ©£. clt., pp. 335-336. j 14 Finkelhor, op. cit., p. 212. j / / " ' ' 33 The first state to adopt the legislation in this original form was Ohio in 1913. Ohio was followed closely |by Minnesota, Washington, and Nebraska, it is now the law |in twenty-five states and the District of Columbia. Laws j ' |similar to the model statute have been passed in eighteen | |additional states. They differ from the original statute only in that they make false advertising a criminal offense if the ad is published with knowledge of its falsity or 1 R > intent to d e c e i v e . I In California, where proof of criminal Intent is j i i i | necessary, enforcement of the law is much more difficult j | I sthan In the states where the Printers1 Ink code is in ! s I i • i effect and where it need not be proved that the offender i i I knew he was offending. j I | This phase of advertising control is brought out here because, although it is a legal control, it was drafted and placed into effect by Industry for the good of advertising In general. III. ADVERTISING CODES OP OTHER ORGANIZED GROUPS ! J ! Although there is still much to be desired, we have i !seen a definite move on the part of advertising people to 15 Ibid., p. 214. , ___ clean up advertising* to raise its standards* and to make it worthy of the consumers1 time. A number of organized j groups of advertising people adopted codes of ethics* i declarations of principles and standards of practice to j which their advertising was resolved to conform. i ! j The Association of National Advertisers* formerly ! t known as the Association of National Advertising Managers* j adopted such a declaration of principles on May 5* 1916. J In their resolution they declared they were opposed to ad vertising which was fraudulent or questionable; that which ! ; i 'was indecent, vulgar or suggestive; that which was ambig- | i ! iuous in wording and calculated to mislead; that which makes! ! i |false, unwarranted* or exaggerated claims* and that which makes uncalled for reflections on competitors or competi tors* goods. They were against any type of advertising j which might cause money loss to the reader or injury in health, morals* or loss of confidence in reputable adver tising and honorable business. They resolved themselves to recognize their own obligations as advertisers in conform- i ling with these principles. (See Appendix G.) In 1914, the retail division of Associated Advertis ing Glubs adopted 24 Standards of Practice based on truth in advertising. The Advertising Specialties Association, the Poster Advertising Association* the Direct Mall 35 Advertising Association# and the Financial Advertising Association all adopted standards of practice within the j next few years# and each was most insistent upon truth in ja d v e r t i s i n g j ! I | The Associated Business Papers adopted on September | i i - i ;8# 1915# as required for membership# ten standards of prac-■ i tic©, number five of which was Mto decline any advertising which ha3 a tendency to mislead or which does not conform to business integrity i The Public Utilities Advertising Association on j 5 j I December 18, 1925 adopted ten standards of practice# one j | I j of which was to stand unequivocally for truth in advertis- * ! ■ ! ling. On December 20# 1923# the National Publishers Asso- j i I !ciation adopted a code of ethics and business practice i j which was Mdedicated to truth# justice and courage in spired by a faith placed in their publications by readers•” They were dedicated , r to truth in our editorial columns and our advertising pages; and to truth in every relationship |with subscriber and advertiser • . .**1® I | In 1922# the Oregon Newspaper Conference adopted the 16 Heermance# op. cit. # pp. 8-12# 17 Ibid., p. 447 I 1 1 j 18 Ibid., pp. 443-444. j 56 Dragon God© of Ethics for Journalism. Section I, dealing with sincerity and truth, included, w. . . accuracy above all other considerations in the written word whether edi torial, advertisement, article or news story*1 1 Section VII on advertising and circulation stated, in part, | • • . we will cooperate with those social Interests whose business it is to raise the ethical standards of advertising. . .. we will discourage and bar from our eolumns, advertising which in our belief is intended to deceive the reader in his estimate of what is ad vertised.^-9 The foregoing examples are cited to Illustrate the j |type of thinking that was going on during the early part of i |the 20th Gentury in regard to truth in advertising from \ |diversified groups in media and in private Industry. There , * |was a definite outward attempt, at least, by the vast ma- j ;jority of those connected with advertising to eliminate I fraudulent advertising. This organized effort of industry i has been a step in the right direction toward the curbing |of unethical advertising copy. The scop© of advertising organizations is exempli fied today in the post World War II membership of the Advertising Federation of America. In 1947 that group was comprised of 58 clubs with a total membership near the 10,000 level. Affiliated with the group were eight 19 Ibid., p. 263. I i national associations representing the specific fields of media, advertising services, and advertising use. Also, there were 924 sustaining members as follows: 139 national |advertisers; 236 advertising agencies; 201 newspaper pub- I I I !Ushers; 67 radio broadcasting companies; 52 magazine pub- i i | ! ! Ushers; 100 business paper publishers; 18 farm paper pub- j ( Ushers; 40 outdoor advertising companies; 24 graphic-art plants; 17 equipment and supply houses, and a number of 20 miscellaneous media and services* ! The modern day purposes of the Federation are, as !follows: „ | ! | | To help make advertising increasingly effective as j j an instrument of distribution and Increasingly useful j I to the public. j | To raise continually higher standards of practice i in advertising and to enhance public good will* To disseminate better knowledge of the functions of advertising in business and a better understanding of its social and economic values* To provide a common forum and a central medium for cooperative effort in advertising. j To encourage further improvement in education and | training for men and women engaged in advert is ing«21 j In addition to these purposes, the Advertising i I ( jFederation of America on January 8, 1946 adopted a Statement Brewster, op. olt., p. 475. 21 Loc. cit. . 38 of Advertising Principles as endorsed by the membership* It is encouraging to notice the strong appeal for truth in j advertising written into these principles. There is no » j evidence, however, which shows these purposes and princi ples offer more than lip service to truthful advertising* TOaile those accepting sets of principles as fact may fully i believe them and endorse them as ideal, there is no power to prevent them individually from ignoring the best princi ples on occasion and stepping over the line from the eth- I !leal to the unethical copy appeal* 1 | I I The Statement of Advertising Principles of the APA I I t I Is, in effect, a four-point definition of good advertising*I i j |(See Appendix D.) Good advertising, the principles state, i i aims to inform the consumer and help him to buy more intel ligently. It tells the truth and makes no claims which can not be met in full and without further qualification* Good advertising conforms to those standards of good taste which are generally accepted* It does not knock competitors and avoids practices which are offensive or annoying* Finally, i jthe principles state, good advertising recognizes its i |responsibility to help reduce distribution costs and its social responsibility In serving the public interest. Evidence that these principles are merely codes and have no direct control over the actions of advertisers is seen in almost any consumer magazine or In nearly any news paper today* Flagrant violations of portions of this code j I I 1 may be seen In advertising claims which ean not be met in j t j j | full without further qualification. C^alte often, in highly! i competitive fields, advertising is certainly designed to | disparage competing brands* The phrase, ’ ’ washes clothes cleaner than any other brand,” might just as well say, wall j !other brands are definitely inferior to our brand*” j I There Is no question but what the codes of ethics j { and the principles and purposes of the various associations i i [of advertising people have had some effect on improving 1 iadvertising standards during the past fifty years* The j ■fact remains, however, that these same organizations have j I ! the power to enforce even greater reform if there were I ' ! |enough honest cooperative desire to do so* j i IV. ADVERTISING ETHICS AT THE RETAIL LEVEL i At the retail level, there seems to be less control and less willingness among businessmen to regulate bad ad vertising than there is at the national level* m 1932, Kenneth Collins, then executive vice-president and pub licity director of R* H. Macy and Company, New York, made some statements which could well be aimed at many of our retail merchants today. He said the retailer was 40 "wallowing in lies and exaggerations’ * to a greater extent titan were the manufacturers. In citing numerous instances i of fraudulent and misleading advertising* he said the re- i j tailor must he forced to the realization that the public is j i the real jury and that the public can vote him out of busi- | ness if he continues to misrepresent his merchandise through advert!sing*82 j Several fields of retailing have since adopted eth- ! ical standards of advertising practice. The situation to- I day is by no means perfect however* I ! i ; I Better Business Bureaus. An organization supported ; ; by businessmen and known as the National Better Business j i |Bureau is typical of the effort to keep advertising and I 23 .other types of selling on an honest basis* This organi- i zatlon* with branches in nearly 100 large cities in the S |United States and Canada* is Interested in maintaining the |degree of customer confidence already won and to keep it jfrom being endangered by unethical advertising practices* The local Better Business Bureaus are primarily interested gg Kenneth Collins* The Hoad to Good Advertising (New Yorks Greenberg, 1932)"* pp. lOlT^ltf* " 23 Harry P* Bridge, Practical Advertising (New Yorks Binehart and Company, Inc.* 1§4§), p* 24. 41 in retail advertising practices, but the national organiza tion, which operates on a broader scale, gives assistance to national advertisers as well. Among the factors checked on by both the national j land the local agencies are false comparisons, misleading | statements, false claims as to quality, ’ ’not for sale” and j I | Jbait advertising. The Bureau is supported by business |firms who desire to eliminate unfair practices of eompetl- |tors. Complaints are Investigated and, when found to be j true, the Bureau tries to persuade the offender to cease ; ‘ ! |his practices. Case histories are often published in the j periodical bulletins of the local Better Business Bureaus j and, when all else falls to bring an offender into line, Q4, tlegal action may be instituted. Better Business Bureaus | do not bring legal action themselves— they merely force the jaction through existing law enforcement agencies. t [ The Better Business Bureau program dates back to j I 1912 when the Associated Advertising Clubs of America organized a Vigilance Committee in Hew York to prevent |false and fraudulent advertising. This committee spread to |other cities and, in 1916, was incorporated as the National |Better Business Bureau.^® This organization today carries l j I ■■ l» I .MM,...Ml .... I I II..I. ^ Sandage, op. cit., p. 65. ^ Hotchkiss, op. cit., p. 548._____________________ 42 on research concerning the changing attitudes of public reaction to different types of advertising and advertising legislation. It also handles cases of unfair trade prac tices which extend beyond state boundaries.®® I In 1930, Edward L. Greene, then general manager of the National Better Business Bureau, listed the following ! operating methods of the Bureau with respect to fraud and to legitimate business: FRAUD — Investigation of products by type, pub licizing the fraud, reporting of facts to publishers and law-enforcing agencies. j FRAUD — Investigation of products by individual | case, publicity, reporting of facts to publishers and i I law-enforcing agencies. i i I ; LEGITIMATE BUSINESS — Investigation of unfair ad- j i vertising of legitimate products by type and the pro- ! j motion of ethical standards for the entire group. j | LEGITIMATE BUSINESS — Investigation of unfair ad vertising of legitimate products by case and the exer cise of corrective influence through negotiation, pub licity, or law enforcement*2” The Bureau has operated along those lines to the present day. In addition, much of their work lies in their assistance to retail advertisers and national advertisers i alike through compiling data which will guide the adver tisers in the preparation of their copy. 26 Sandage, op. cit., p. 65. 27 Hotchkiss, op. cit., p. 548. Their Selling and Advertising Code is one sueh guide for the aid of retailers. The ten points of this code (see Appendix E) are designed for adoption by businessmen to I guide them in the forthright operation of their own busi- ! I ness. The Code suggests that all businessmen serve the | i j public with honest values and tell the truth about what is | offered for sale. This truth should be told in sueh a manner that it will be understood by the trusting as well as the analytical minds. Goods should be sold on their own; I merits and not through attacking competitors. All tricky j 1 i devices and schemes should be avoided which might prey upon; 5 s | human ignorance and gullibility. j | In Los Angeles alone* the Better Business Bureau is i i continually Investigating the fraudulent activity in cer- j I I |tain fields of retail endeavor. In recent years* some of I | j the more flagrant violations of good advertising practice ihave occurred locally in the fields of sewing machine ! isales* vacuum cleaner sales* television set sales* and new and used car sales. To combat the widespread use of mis leading advertising copy In these fields* the Bureau has i 1 issued codes of ethical practice for retailers to follow. I | Such codes clearly state the practices which should be !complied with (in the sewing machine field for example) In i regard to (1) brand name; (2) bait advertising tactics; (3) guarantee— warranty; (4) exaggeration and use of su perlatives; (5) "used1 1 ©r H re conditioned1 1 merchandise; (6) trade-in allowance clarification; (7) advertiser*a place of i gg | business* and (8) free home trial propositions. i The Better Business Bureau takes the position that | by improving business standards in the various trades* it may be contemplated that further governmental control can be avoided. Adherence to these codes* the Bureau believes* will serve as evidence that business has the ability to keep its own house in order for the benefit of the public* I 29 ! the trade* and the American way of life.*5 i ! t [ The Bureau*s **Kew and Used Gar Advertising Princl- ! | pies" for Los Angeles automobile dealers is further evi dence of their attempt to assist reputable business firms ! in building and maintaining public confidence. This code lists practices to be complied with in general— those which pertain to new ear advertising; those which eover used cars* and those which deal with financing of auto mobiles. 28 Selling and Advertising Code for Sewing Machines (The Better I-rusiness Bureau of Los Angeles* JLtd.T* pp. S-5. 29 Ibid.* p. 1. i 30 Los Angeles Automobile Dealers Mew and Used Car j Advertising Principles "($ie Better business Bureau o f Los I Angeles * £?d.)* pp. 1-9. 45 Continued effort from the Better Business Bureaus along these lines can go a long way toward curbing uneth ical advertising copy in the future* The Bureau is an excellent example of business regulating itself. True* its success is partially due to the presence of state and federal legislation which stands as a constant threat over ! the heads of those perpetrators of unethical advertising* | but its operation is the result of a desire by business j I i Itself to set its house in order* | i The effectiveness of the Bureaus* work may be seen j I in their semi-annual reports. In summarizing the first j six months of 1953 in its July news bulletin* the National j ■ j )Better Business Bureau said 167 eases had been closed 1 j ! | through voluntary cooperation* This was more than tv/ice the number for the first half of 1952. There were only eight cases in which advertisers did not make corrections ! I .and* of these* four were turned over to the Federal Trade l 31 Commission for prosecution* V. SEEF-REQULATION OF ADVERTISING BY SEPARATE INDUSTRIES Businessmen have found that truthful advertising is of greatest benefit when all members of their trade are 51 jfews story in the New York Times* July 21* 1953* 46 j j encouraged to eliminate unethical advertising copy. A | I number of Industries have established associations whose j purposes are, in part, to ©ensor all advertising of its J members. This process consists of checking all advertising! ! ! of industry members against the standards established by 32 'that industry and also against government standards. Proprietary Association of America. An excellent example of self-regulation by an industry is that of the Proprietary Association of America. Their five self- !imposed rules for advertising of packaged medicine cover |copy dealing with guarantees: fear or scare copy— that jwhlch suggests the product may be used for the cure, pre- ! vention or relief of serious diseases which require treat ment by a physician; copy which refers to doctors, hospi tals or nurses, and that which offers prizes or other inducements calculated to stimulate unnecessarily the pur chase and use of the medicine. (See Appendix F.) In 1934, the Proprietary Association established an advisory committee who reviewed and censored all advertis- J i jing submitted by the associationfs members. The committee |recommended changes in copy when they felt such copy was (fraudulent or misleading. These suggestions for copy % o Sandage, op. clt., p. 72. 47 changes could., of course, he rejected by the advertiser, hut the work of the committee was effective in that much [ of the advice was accepted* In 1946, this association j i established their committee system on a hroader basis* j i Pour joint committees were set up. @ne group coordinated j I the work of the entire project while the other three com- ! mittees checked advertisements in radio, newspapers, and magazines. Advertising expenditure of all manufacturers in the Proprietary Association was near the $50,000,000 mark in 1945, and @0 per cent of the industry makes up its j member ship • 33 ! j | • \ i The Toilet Goods Association* A partial list of j : statements which may not generally be used in cosmetic j 1 jadvertising copy has been Issued by the Toilet Goods Asso ciation* Although the Federal Trade Ocmmlssion evaluates each case on its individual merits, the list given here were restrictions in effect In March, 1940* It can be safe to assume these statements would apply today* An advertiser should not claim his product will do any of the following: Nourish the skin Peed the skin 33 Ibid., pp. 72-73. Nourish or feed the tissues Rejuvenate the skin Renovate the skin Re-vitalize the skin or tissues Re-aetivate skin or tissues Accelerate chemical changes in the skin Build new or replace old tissues Penetrate the outer layers of the skin Dissolve fatty tissues Re-activate glands Restore glands Restore youthful contour Renew elasticity of muscles 31ve new vigor to muscles Cause wrinkles or crow*s feet to disappear Banish lines* blackheads* Whiteheads* enlarged pores wrinkles or erow*s feet Erase wrinkles Overcome blemishes* wrinkles* blackheads* enlarged pores Prevent clogging of $he pores Remove freckles Bleach the skin white and keep it so 34 Withdraw toxins from the skin 34 Burton, oj>. cit., p. 508. 49 In circulating the foregoing information to all members of their group, the follet Goods Association are providing a real service. This voluntary work on the part I I of industry goes a long way toward easing the enforcement I | job of the Federal Trade Commission, If members know what can not be said, much misleading and unethical advertising copy will be eliminated before it starts* i The beer industry* Another example of private enterprise which has taken even greater care to present ' i i ! good taste in advertising than the law compels them to take! | | Is the beer industry. They have issued six "Don’ts for j i i jBeer Advertising" which are based upon law, but also based upon the rules of good taste and good sense. They read as follows: i 1* Don’t play up alcoholic content 2. Don’t throw mud at your competitors 3* Don’t belittle law and order 4. Don't claim medical benefits 5, Don't antagonize substantial customers with questionable copy 35 6* Don’t appeal to children or minors* For the most part, these six points are observed 35 Ibid., p. 504. so closely by members of the beer Industry. As in any indus try, however, there are some members who choose to set their own standards and who will shut their eyes to uneth- j ieal advertising practices if they feel they can get a j 1 momentary sales advantage. When industry will give itself \ l i the power to regulate the application of fairness and good taste in the advertising practices of all its members, organized ©r not* there will be no need for further govern ment legislation insofar as advertising is concerned. ( i ! | Trade Practices Conferences. Evidence that industry! “r i ” 1 ~ " " " 1 ~ ~ n ; I lie making progress along these lines, however, is found in i | (the Trade Practices Conferences of the Federal Trade Com mission. These conferences are entered into voluntarily by members of a trade in an effort to maintain a high level of advertising ethics and business ethics within their own groups. Their purpose is to establish rules of fair con duct for an entire industry.®6 Industry members meeting alone to draw up trade practices and rules, without FTC approval and cooperation, would, of course, be subject to anti-trust, proceedings. (The Trade Practices Conferences work, as follows: I j Upon application to the Federal Trade Commission by 56 Sandage, op. clt., p. 74. 51 | I members of an industry* a general industry conference can j i be arranged at whieh time proposals for rules are received | j Iby the commission and are given consideration. They are ! I | I then drafted as proposed rules and presented to all inter- | i i > I jested or affected parties at a public hearing. Following j such hearing* the FTC and the industry together approve the j | rules and they become operative in 50 days, j I I In general, the trade practice rules of an Industry j i are designed to maintain fair competitive conditions in the j i I interest of protecting the industry* the trade* and the j i ; i i public. The FTC authorizes the Industry Committee on Tradei s • i ) i I Practices to cooperate with the Commission in the enforce- j ment of their rules,. The framework of the Trade Practices Conferences makes it possible for FTC members to pass on unreleased advertising copy and recommend necessary changes before it reaches the consumer. They thereby eliminate much cause for later action. Their work has helped to build up codes of behavior which may be logically accepted as normal I |guides of proper action for an Industry rather than as j police threats by a governmental agency. Such a social j mechanism can very well generate a high level of moral 37 ■ conduct• _______5?.Borden * _op. cit,,*_,p,,. 822,________________________ There are certain stipulations of the Federal Trade Commission which call for changes which may seem unduly |trivial and perhaps even unnecessary in the minds of some |advertisers. Some advertisers and their agents chafe under | | the restraints imposed upon them and begrudge the added time and labor involved in making requested changes in copy. It is questionable# however# if any stipulation of the Commission has worked great hardship on honest adver- 38 tlsers or weakened the effect of their messages. i ! VI. RADIO AND TELEVISION INDUSTRY REGULATIONS i \ t ! ! ! ■ ! ! Radio and television present advertising problems ! I ; |unlike other media. The audience reached by the broadcast |and telecast form of advertising is unpredictable in that ! |it reaehes all age groups# including the very youngest. i ,As a result, the effect differs from the printed word and can be controlled only by a high degree of cooperation be tween the advertiser and the broadcasting outlet. Radio and television are big businesses today. In 1953# according to the Central Research Department of McCann-Erickson# Inc.# the annual volume of advertising in the United States for all media was $7#809#200#000. Of 38 Hotchkiss# op. cit.# p. 551. p 53 | this amount, television accounted for #61©,500,000 and radio for another #649,500,000. Combined, these media ac counted for #1,260,000,000 of the total advertising dollar spent or 16.1# in 1953. These figures are presented here } i :because they prove the steadily increasing importance of j ! broadcasting via radio and television as an advertising ! medium. Even more significant perhaps is the January 1, 1954 total of 27 million television households in 215 major t ' | United States markets with 366 stations in operation as 40 I estimated by J. Walter Thompson Company. At that time, 1 j the number of television households had increased by j ! j 3.750.000 during the nine-month period immediately preced- i I Iing. National Broadcasting Company’s research and planning! idepartment estimated 30,717,000 television sets in use in ’ | the United States as of July 1, 1954, an increase of 7.467.000 television households during the previous 15- months* period. NBC reported 306,000 television sets were installed in July, 1954 alone, an increase of 35# over the preceding June. In November, 1953, the A. G. Nielsen Company survey showed 58# of the nation’s households owned 39 Pointers1 Ink Advertisers’ Annual - 1955, op. jClt. , pp. 58-5‘ 9J . ” i i | _______40 Ibid. , p. 212.____________ _ _ _________________ ■ - ■ - -.. 54 41 a television set. Radio also made gains in spite of the growth of television. A gain of four million radio homes was esti mated in 1954. fhere were about 47 million radio homes at i ! |the end of July# 1954 according to estimates of Radio- Electronics-Television Manufacturers Association# as com pared with 43 million early in 1953. These are in addition to the 27 million automobile radios and the nine million more in public places*42 In attempting to curb unethical advertising prac- j ! | Itices and improve the standards of program service# the 1 ! | iradio and television industries have adopted codes which# j when followed to the letter# would eliminate almost all j cause for public criticism. The Federal GammunicatIons j Commission has taken the stand that it is the stations and j f . j 'networks to which the public must turn for improved stand- i ards in broadcasting practices. The FGC as the licensing agency has the responsibility to consider overall program service in the public Interest# but the improvement of 43 broadcast practices must come from other sources. 41 204‘ | 42 Ibid.# p. 219. ! 43 Public Service Responsibility of Broadcast Licensees# Federal Communications Commission (reprinted by [Rational Association of Broadcasters# Washington# B.C.# March 7# 1946)# pp. 54-55. ~~ ~ ~ ’ ‘ " “ ' ” ~55* j Licensees can act individually in raising program | jstandards as well as through its industry trade associa- I itions. The FGC does not concern itself with advertising jexcesses other than the excessive ratio of advertising time \ to program time hut, in summing up its criticism of broad cast practices in its Blue Book in 1946, it discussed ad vertising problems which it hoped the industry would take steps to clean up through the establishment and enforcement of sound standards of practice. Briefly, these advertising iproblems included the following:44 f I (a) Length of individual commercials <b) Humber of commercials (c) Filing up of commercials ( & ) Time between commercials (e) The middle commercial <**) The patriotic appeal (g) The physiological commercial (k) Propaganda in commercials (i) Intermixture of program and advertising In citing specific abuses in each of these cate- igories, the Commission has suggested that Industry should I |take steps to clean its own skirts in the public Interest. f i _______________ t j 44 Ibid., pp. 43-47. 56 One result has been the adoption of the television Code in » 1953 by the National Association of Badio and Television Broadcasters* In the current edition of the Television Code (second edition March, 1954), the television industry |takes a stand, as follows: | | Television is seen and heard in every type of American home. These homes Include children and adults of all ages, embrace all races and all varieties of religious faith, and reach those of every educational background* It is the responsibility of television to bear con stantly in mind that the audience is primarily a home audience, and consequently that television's relation ship to the viewers is that between guest and host.45 The portion of the Code dealing with presentation of| |advertising states it should be presented "with courtesy j land good taste,” and that "advertising copy should contain | I ! ino claims intended to disparage competitors products or other industries, professions or Institutions.”46 (For a list of the seventeen points covered in the Television Code, see Appendix S.) Radio and Television as advertising media offer the advertiser dramatic effects which are not present in the printed word. Through conversation and demonstration, telecasting and radio broadcasting have a persuasive power 45 Qjke National Association of Radio and Television Broadcasters, The Television Code (second edition; Washing ton, D.G., March, 1954), p. 1. 46 Ibid., p. 5 * ____________ j | 57 ! which, can be even greater than the printed message. This is especially true in messages directed to children who as yet can not read. For this reason# the radio and tele- i i vision industry are charged with a responsibility perhaps S i greater than that of any other media group in presenting j j to the public listening and viewing matter which is free | from unethical practices. Much of the advertising we witness on television and hear on radio today makes one wonder whether broadcasters j really understand this great responsibility. The tobacco I < j ;industry# to cits an example at the national level# leaves ' imuch to be desired in the direction of truth in advertis- ! i i ling. Yet, broadcasters continue to present uncensored all I i the ridiculous and conflicting claims of cigarette manu- | facturers with no visible trend toward improvement in I |sight. At the local level# bait advertising continues at a high volume in spite of much shouting on the part of the ! |Better Business Bureau to keep it in check. The fact ! |remains that many advertisers in highly competitive fields will resort to any advertising claims which they feel they can get away with. Broadcasters can offer the ultimate cure for unethical practices if they# as individuals# will i merely exercise the rules to which they so obligingly 58 subscribe in their own industry codes. VII. SELF-REGULATION OF MEDICAL ADVERTISING ! The legitimate medical profession today has perhaps ! |the highest level of advertising ethics of any group. Ad- j vertising by members of the American Medical Association for the most part is limited to placing their names in the telephone directory. The Los Angeles County Medical Association* a branch of the AMA* on September 8 , 1958 Issued "Council Rules on Signs and Advertising*" (see Appendix H)» which follows closely the regulation placed upon all doctors of medicine in the country. In this ruling* the Association has stated restrictions on (1) the use of signs; (2) the use ©f adver tising* and (5) the use of special notices* such as opening of a new office* etc.47 Their code is stringent and can be considered a comfort to the consumer* especially in the light of the widespread malpractice of advertising doctors during the last century. In Los Angeles County* the Osteopathic doctors are governed by similar restrictions which have been initiated voluntarily within their own association. 47 Los Angeles County Medical Association* County Medical Bulletin* October 2* 1952. Questionable advertising practice still remains in one branch, of the healing art--that of the chiropractor. Hearly any issue of any daily newspaper in the Los Angeles metropolitan area, for example, contains advertising of the doctors of chiropractic. These doctors, who are licensed by the State to treat bodily disorders without drugs or j i surgery by means of manipulating the bones of the spine, j have branched into healers of everything from hemorrhoids tcj i prostate gland trouble. Colonic irrigation is a great j i favorite of these so-called doctors as a ”cure-all” treat- j s ment for patients. ’ ’Free X-Ray Examination” is another of j i the common methods by which they lure their customers into j I their offices. j Dr. L. A. Brinkley, Los Angeles Chiropractor, has | i i had numerous complaints issued against him by dissatisfied ; i 4 3 ' icustomers. He is probably the biggest offender of ad vertising in the chiropractic group, only because he adver- I Jtises on a wider scale than do his constituents. Through i • | implication, his advertising would tell the reader that a i |trip to Brinkley*s office will cure all physical ailments |known to medical science. These illnesses Include cancer, i I rheumatism, piles, arthritis, kidney disease, and just 48 Interview with Robert Sample, General Manager, Los Angeles Better Business Bureau, February, 1954* r ' ' " _ . . . . . . . . ’ " 6 0 i i | about any ailment one would care to mention. Basie treat ment for all illness is reported to be the colonic irriga- 1 1tion. | The California Chiropractic Association should insti- jtute regulations which govern the fairness and good taste j of all members of their profession. If such action is not i i i deemed necessary by the association, it seems almost cer- I tain that the pressure of an indignant public will force legislation to eliminate the misrepresentation written into the advertising of the doctors of chiropractic* | The publishers of media, the Better Business Bureaus,! |the advertising associations, and the self-regulation of ! f j jthe various Industries can go a long way toward controlling j unethical advertising copy In our day. These groups have the power to force truth in advertising If only they will do so. If they fall, there is always the constant threat of more rigid legislative control over advertising on the i ione hand, and a decline in public belief in advertising on the other* i CHAPTER IV ! ! GOVERNMENT REGULATION OP ETHICS IN ADVERTISING i i i | Self-Interest among businessmen to represent their I f | j |goods and services in an honest manner through advertising j ; i has played an important part in any general Improvement of I ! advertising ethics. They have in many Industries recog- j nized the Importance of gaining the general trust of the j consumer in order that they as businessmen might survive to j I do business with the same consumer tomorrow, j j To an even greater degree> perhaps, advertising has | I | |experienced somewhat increased consumer confidence during ! i I the first half of the 20th Century due to legislation ! i !which has been passed to restrict the sellers. Much of j i 1 i ; this legislation has been passed as a result of the demands! i of public attitudes which were aroused and created by the | editors of newspapers and magazines and other crusaders in j ! the truth In advertising movement. Early In the century, j such a movement brought about passage of the Pure Pood and | Drug Act of 1906. For the further protection of the pub- i lie, in 1935 these erusaders played an Important part In | enacting the Food Drug and Cosmetic Act of 1933. Once | again, the Wheeler-Lea Act, which provides against false I advertising in the food, drug and other fields, was 62 1 brought about by public pressure* In Colonial days and for many years following, the j Common Law took the attitude of “let the better man win0 in « 2 any business dealing between two individuals* Today, the 1 jbuyer is offered more protection* The law encourages better ! f jadvertising by discouraging the use of statements and pic tures which may deceive a consumer using ordinary prudence*®; In this chapter , the more important government regulations for advertising are discussed* i ; I. SUPREME G0URT DECISION ON MISLEADING ADVERTISING j j Consider for a moment the question “When is adver- ! Itlsing misleading?0 The United States Supreme Court had occasion in March, 1948 to examine very closely the question of what constitutes misleading and fraudulent advertising* This |was in connection with affirming a postal fraud order against Facts magazine* The decision of the Supreme Court, and the reasons why It arrived at that part of the decision 1 N* E* Borden, The Economic Effects of Advertising (Chicago: Business Publications, "Inc*, 194277 PP* 820-821 2 Ibid., p. 816. ® Clowry Chapman, The Law of Advertising (New York: McGraw-Hill Book Company, Inc., 1929), p. 24. relating to advertising, contains a basic lesson for all those connected with advertising* The following points are condensed from the Supreme Court decisions i Advertising as a whole must not create a misleading j impression even though every statement separately con- i sidered is literally truthful* j Advertising must he written for the probable effect it produces on ordinary and trusting minds, as well as for those intellectually capable of penetrating anal ysis. Advertising must not obscure or conceal material facts* i Advertising must not be artfully contrived to dis- j tract and divert readers* attention from the true na- \ ture of the terms and conditions of an offer. 1 i i Advertising must be free of fraudulent traps and \ stratagems which induce action which would not result ! from a forthright disclosure of the true nature of an j offer.4 j j Every principle mentioned in the foregoing decisions j is, as it should be, for the benefit of the consumer. In | 1 actual practice, however, they are just as important to the j legitimate businessman who dislikes the competition of those who resort to unethical advertising practices* II. FEDERAL LEGISLATION The federal government has attempted to give aid in 4 A Guide for Retail Advertising and Selling (fourth i edition; Hew York: National Association' Better Business Bureau, 1950), p* 4* / @4 protecting the consumer of nationally advertised products against misrepresentation In advertising copy. The Wheeler-Lea amendments to the Federal Trade Commission Act are the most far-reaching legislative enactments from the standpoint of advertising control, but other legislation, such as the Pure Food and Drug Acts, the Securities Ex change Act, the Federal Communications Commission Act, the Alcohol Administration Act, the Danham Trade-Mark Act, federal postal laws, and additional federal controls, are at work every day offering some degree of consumer protec tion against unethical advertising practice. Pure Food and Drug Acta. The Federal Food and Drug Administration keeps tabs on the labeling and advertising * i i !of drugs, cosmetics, patent medicines, and food products of I I ! 'all kinds. The present Federal Food, Drug and Cosmetic i I Act, which became law on June 2b, 1938, supplemented a less; effective Food and Drug Act of 1906. The Act applies pri- 5 jmarlly to the labeling of such products. Enforcing agency of the Act is the Food and Drug Administration, which formerly functioned under the Depart ment of Agriculture but which, on June 30, 1940, was i ® G. H. Sandage, Advertising Theory'and Practice | (Chicago: Richard D. Irwin, Inc., 1948), p. 7l. 6 transferred to the Federal Security Agency. j The present law regarding drugs, cosmetics, and j i therapeutic devices prohibits false or misleading labeling, 1 and also forbids the followingi j Prohibits traffic in drugs, cosmetics and devices j which may be injurious to users or dangerous to health | under the conditions of use prescribed in the labeling, or under such conditions as are customary or usual, except poisonous coal tar hair dyes which would be exempt if they bore the warning label prescribed by the statute; Requires drugs intended for use by man to bear labels warning against habit formation if they contain certain narcotic or hypnotic habit-forming substances j or derivatives thereof having the same properties; j | ' i | Requires the labeling of drugs and devices to bear warnings against probable mis-use which may be danger- I I ous to health*7 i \ ( ! 1 In Appendix I, the term t t labelw is defined together j with quotes from the Act which determine whether or not the label is misleading. Labels, generally speaking, are de fined as any reading material which accompanys the article jpackaged for sale. In determining whether the label is mis leading, there is taken into account what the label does say, and also whether it fails to reveal material facts i ® United States Government Organization Manual, 1 1952-55 (Washington, 1).$.'* Government Printing office, 1952), p. 623. 1 n ! 7 A Guide for Retail Advertising and Selling, op {Pit * , p. 154. : 66 with respect to consequences whieh may result from the use of the article. The Federal Food and Drug Act makes false statements concerning the curative effect of drugs and false state- j ments about foods criminal offenses. It subjects the j particular articles involved to confiscation. Limitations j i of the act are that they apply only to the misleading j statements which appear on labels or which appear on the 3 cartons in which the article is packed. | Members of the cosmetic industry were told in' 1939 j ! S jby the Food and Drug Administration that certain terms of j I | |cosmetic advertising are misleading and are considered jfalse. Labels# such as the following# could no longer be ! ! j (used: i 1 i 1 ; Contour Cream j i Grow*s foot cream j t i Eye Wrinkle Cream Hair Grower Hair Restorer Muscle Oil Nourishing Cream Skin Conditioner ! 8 Francis Finkelhor, Legal Phases of Advertising j(New York: McGraw-Hill Book Company# Inc.# 1938)# p. 226* ... _ Skin Pood Q Tissue Ore am • It should he remembered that the Food and Drug i Administration has jurisdiction only over the labeling of products mentioned* Jurisdiction over false advertising claims on these elasses of goods remains with the Federal Trade Commission. Labeling, however, has sometimes been 1© held to be the same as advertising* t 1 Federal Postal Law. Postal Fraud Laws were first i jpassed in 1890. They were aimed at advertisers who were jusing the malls to defraud the public by false and fraudu- i ilent representation. Section 338 of Title 13 of United i {States Code provides that anyone so participating in a scheme to defraud the public is subject to criminal prose cution.^ j A further provision of the Code states in Section 259 of Title 39 that the Postmaster General upon proof of satisfactory evidence may deny the use of the malls to any 12 person using them to perpetrate a fraud on the public. 9 H. W. lepner, Effective Advertising (New York: McGraw-Hill Book Company, inc., 1&49Jf , p. 529. 10 Isaac W. Digges, The Modern Law of Advertising ; (New York: Funk and WagnaTTs CompariyT"T9¥i?) * p. '$S>. 11 Finkelhor, op. clt., p. 220. 1® Loc. cit. When a person has been defrauded by mail, he should j write the Post Offloe Department or visit any publie prose-1 1 cutor. If fraud is indicated, a ”fraud order” is issued. j i i This prohibits the promoter’s privilege of receiving mall | i { » ! |or cashing money orders, The case may also be turned over I 1 I 1 It© the U. S. Attorney General’s office if prosecution on I 13 I criminal charges is deemed desirable. Proof of intent toj i deceive is required for successful prosecution. j Federal Trade Commission Act. The most powerful !force in regulating advertising copy is the Federal Trade | I ! jCommission. This Commission was established by Congress ( ! in 1914 to protect against unfair trade practices. Under j the terms of the original Act, the Commission was limited i primarily to the prevention of ”unfair methods of competl- [ i i tion in commerce.” While this gave the Commission reason for acting in cases of false and misleading advertising, the Supreme Court had decided in 1931 that possible injur ious effect upon the consumer was not enough. It was necessary under the Act to show injury to a competitor.^ Kenneth Groesbeck, Invitation to Advertising (New York: Simon and Schuster, 1951j, p. 3SST i i a i George B. Hotchkiss, An Outline of Advertising ! (third edition; Hew York: MacMlXlan, 1950J7 p. 550. ! _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I TOieeler-*Lea Amendments. In 1938, the government recognized the necessity t© protect the public as well as ! i | the businessman and passed the 'Wheeler«*Lea Amendment to the j | \ I Federal Trade Commission Aet. It Is recognized as the j 1 i i ■ ; j most Important governmental action on advertising to date. This important change in the Act was made follow ing the fight of the FTC against Raladam Company, makers of a weight reducing ’ ’remedy1 1 called Marmola which had proved to be injurious to the health of many users. The company i i won the case in the Supreme Court on the grounds that, j ' although the product may have hurt many customers, It had j 1 \ i j | never hurt a competitor since the advertising elaims of I 16 ! ! all competitors were also false. : I | The Wheeler-Lea amendments were designed to control ] ! I ’ ’unfair or deceptive acts and practices in commerce.” They I | speed up the process of correcting unethical advertising i I practices in the following manner: t t Cease and desist” i I orders become effective In sixty days, unless the person charged with offending has applied to the U. S. Circuit Court of Appeals for review. The burden of proving 15 Groesbeck, op. clt., p. 370. Thomas Blake Clark, The Advertising Smoke Screen (Hew York: Harper and Brothers Publishers, 1944), p. 1$. H “. ' ".. " “ 70 17 innocence has thereby been placed upon the advertiser. In general* the Wheeler-Lea amendment provides for the following: S 1. It forbids the dissemination of any false adver- I tisements about foods* drugs* cosmetics. 2. It defines the dissemination of such advertisements as 1unfair trade practice** thus making them sub ject to the Commission*s older powers. 3. It empowers the Commission to seek an injunction against an advertiser while his case is being tried. 4. It defines false advertising as that which is mis leading as to material fact. The merchandise sold must be the merchandise advertised: offering one thing and selling another (rayon for silk* for j S example) is fraud. Representing a product as i J *best* and contending that its qualities are super- j I ior to similar or even better goods of other manu- ; i facturers is fraud.*® i When the Federal Trade Commission believes an ad to be misleading it proceeds by first writing to the adver- j I I itiser requesting a sample of the product advertised; its j | f Iquantitative formula if compounded, and samples of its advertising. An appropriate government agency* upon examining these samples and formulas* reports to the FTC its scientific opinion. When substantiating evidence exists* the FTC forwards to the advertiser a list of adver tising claims considered misleading, along with portions of 17 Hotchkiss, op. cit.* p. 550. 18 groesbeck* op. cit., p. 370. 71 the supporting scientific opinion. The advertiser is in** jvited to submit in opposition any evidence he so chooses* i ' |Before issuing a formal complaint, the FTC allows the ad* vertiser to sign a stipulation that he will not repeat such advertising. The advertiser is allowed 20 days to affirm j or deny the charges. Most eases are settled at this point ! by stipulation. 3 1 If the accused advertiser enters a denial, a Commis** i |sion trial examiner hears the case. If the Issuance of a complaint is still believed proper after the hearing, the charges usually stand the test of Court review. Very few i | companies have cleared themselves of the charges made in j I i IFTC complaints, and cease and desist orders have been is* j I » ■sued. The advertiser may take his case beyond this point to the Circuit Court of Appeals and finally to the Supreme 1 Court if he so desires. When an order is final, each ' i further violation subjects him to a fin© of not more than j u @0 #5,000. ; During 1953* the FTC examined 550,663 advertisements i ! |which had appeared in newspapers, magazines, radio and i television broadcasts. Only 72 complaints were Issued and 19 e* F. Seehafer and J. W. Laemmar, Successful i Radio and Television Advertising (Hew York: he(xraw~Hlll Book Company, Inc., 1951), p. ^35• : 80 Clark, oj>. cit., p. vii. 72 82 eease and desist orders were entered, most of which were j f based on complaints filed in earlier years. Among these orders, 10 were against companies who failed to disclose the foreign origin of sewing machines; four were against |shoe manufacturers who made unwarranted orthopedic claims; j < ( , ! eight involved lottery devices in distribution plans, and i ] I seven concerned the misleading labeling of wool products."' | In granting the Commission the power to regulate the |statements of advertisers in the interests of consumer wel- jfare, the Wheeler-Lea amendment has opened the way for jrulings which have come to form a "sort of policeman*s j S I jguide” as to phrases that should not be used in advertis- j ! g2 i sing. The Federal Trade Commission, for example, has brought out its own list of non-acceptable claims in adver-j Itising copy on hair preparations and dentifrices. The fol lowing may not be applied in blanket fashion as all claims are judged ©n their individual statements, but they serve as a real guide for all advertisers in these fields: Uon-*aeeeptable claims In Hair Preparation copy: Removes, cures or remedies dandruff Ends, cures or stops baldness ^ Printers * Ink Advertisers * Annual - 1955, op. cit*, p. 474. _______22 Borden, op. cit., p. 822.____________ __________ _ ; 7 3 -j Cures alopecia Gives new life to the hair | Rejuvenates the roots of the hair | Stops or prevents falling hair I Produces or brings about new growth of hair Revives dormant hair roots j Forces nature to replace hair Produces or brings about a vital, strong or healthy scalp Reaches the cause of all hair troubles. j | Ron-acceptable claims in Dentifrice copy: j ! I ; Makers of ammoniated tooth-cleaning preparations mayj ! talk about decay prevention; but a manufacturer of i | ordinary tooth powder or paste cannot say that his j j product ’fights decay, removes film, keeps gums firm j j and healthy, assures white and sparkling teeth, pro- j | vents decay, keeps mouth thoroughly clean and healthy, I I ©r assures sound teeth.*23 j | In Chapter III a list of non-acceptable advertising i claims as proposed by the Toilet Goods Association was presented. In addition to these, the Federal Trade Com mission has in several cases forbidden the use of wskin food' 1 or any synonym thereof. Use of wnonallergieH has also been banned. Claims based on the presence of hormones or gland extracts are also forbidden on the grounds that ! 23 Philip Ward Burton, Bowman Kreer, John B. Gray, j Jr., Advertising Copywriting (Hew York: Prentice-Hall, j Inc. , 1^49), p • 50®. i i ..... ' ' “ “ 74 these elements "are not absorbed through the skin In thera- 24 peutically significant amounts•" Use of word "free." In 1948, the Commission had made an administrative ruling that anything advertised as "free" had to be "in truth and in fact a gift or gratuity" which was given by the advertiser without requiring the consumer to buy other merchandise or perform any service which would "directly or indirectly benefit the advertiser or the seller." On September 11, 1953, the FTG reversed ! |its earlier stand and ruled that goods given without cost |on purchase of other goods may be advertised as "free." j |It requires, however, that all conditions of the offer be i j !plainly explained and that no changes be made in "price, |quality, amount or size of merchandise sold" in order to !compensate the seller for the value of the article offered 25 as free. The National Better Business Bureau was pleased with the new ruling permitting non-deceptive use of conditional "free" offers as it supported the position the Bureau had maintained for years. The old ruling was described by the i New York Times as a "widely flouted" and "apparently ^ Hepner, op. cit., p. 530. _______25 News story in the New York Times, September 19, 1953. Y3 23 unenforceable ruling.” The great hulk of the work of the Federal Trade jCommission deals with the printed or spoken message. In I practice# it ha3 operated as a policing agency of business | igenerally and has not confined itself to fighting mono- i i jpolistic practices. Since passage of the Tllflieeler-Lea amendments to the Act in 1938# there has unquestionably been Improvement in advertising practices. Advertising claims in the fields of food# drug and cosmetics certainly have been bettered. The amount of exaggeration has been lessened. There has been some criticism that this super vision of advertising Is dangerous in principle beeause it I involves some curtailment in the rights of free speech and I gy la free press. Such criticism seems unwarranted In the jlight of the purpose of the Act. It Is designed to curb I ithose unfair and deceptive acts and practices in commerce which# in the Interests of fair play to both the consumer and the competitor alike# are undesirable in any society. It Is designed for the good of all but the unscrupulous. It is administered with fairness to all. Securities Exchange Act of 1954. In 1934, the 26 News item in the New York Times# October 1# 1953. 27 Hotchkiss, op. cit., p. 550. 76 Federal Trade Commission's powers In connection with the advertising and marketing of securities was transferred to the Securities and Exchange Commission. Basically, their j powers are designed to ”assure that the public will be j truthfully, accurately and adequately advised” in the OQ ] purchase of securities offered in commerce, j ' ; Section 77 of the Act prohibits false and untrue OQ advertisements of securities. The Securities and Ex change Commission is Important to advertising because it | controls the advertising of those who sell stocks and bonds.: :The Act requires the filing of registration applications !and annual reports with the Commission by all companies jwhose securities are listed upon the exchange. The Act |also requires registration with the Commission of all those i engaged in the selling of securities. Enforcement activ ities are designed to prevent fraud in the purchase and i 1 I sal® of securities. This is accomplished by a staff of in-' jvestigators who investigate complaints or other evidences I t |of securities violations. Such evidence is referred to the i i ;Attorney General for criminal prosecution of the offend- ; 3 0 era. ' , , - - I : i • 2 8 M g g e s , £ £ . c i t . , p . 3 5 . j ‘ I 29 Finkelhor, op. cit., p. 226. \ 3 0 united States Government Organization Manual, op. cit., pp. 2:— ; ---------- — ---— ----- - The Commission thus has the power to protect against "bucket shops." By 1941 their prosecutions had put nearly 700 stock swindlers behind bars and stopped another 850 persons and firms from further violating the law by means 31 of injunctions. Federal Communications Commission. The Communica tions Act of 1954 established the Federal Communications Commission, The new Commission replaced the old Federal Radio Commission which had functioned since 1987. The FGC is important in the control of advertising jthrough its power to deny renewal of a radio or television Jstation*s license after reviewing past programs and finding jthey were not in the public interest. The Commission does I jnot have the power to censor radio or television programs. | Censorship is accomplished by industry self-regulation; by the public, and through the Federal Trade Commission^ control over advertising abuse. The general guide for all programming and governing the granting of licenses is that it must be in the "public interest, convenience and neces- 32 sity." The Act provides a three-year maximum term for broadcast licenses. 31 Groesbeck, up. cit., p. 371. 32 seehafer and Laeramar, op. cit., pp. 331-332. Although the PGO has no direct powers over advertis-« lng, it has shown much concern ahout what it terms ”adver~ j i tising excesses” and has moved to exert itself more in t 33 ithls direction* j ! ! I ! Alcoholic beverage advertising. The Alcohol and j I ! Tobacco Tax Division of the Bureau of Internal Revenue# j Treasury Department, through the Alcohol Tax Unit, adminis ters the provisions of the Federal Alcohol Administration i Act of August 29, 1935, relating to the regulation of ! 1 I ! Interstate and foreign commerce In distilled spirits, j r I ; { jwlnes, and malt beverages, and the labeling and advertising j I ! jthereof. It is responsible for the ”investigation, detee- j I ' jtion, and prevention of willful and fraudulent violations j |of internal revenue laws relating to liquors.”34 The Secretary of the Treasury Is given the power to prohibit advertising which Is calculated to Induce sales of spirituous beverages in interstate commerce; if the advertising is false, misleading or deceptive; If It fails to show the content of neutral spirits or if it contains statements disparaging to competitive products.®5 ®® Charles H. Wolfe, Modern Radio Advertising (Mew York: Funk and Wagnalls Company, 1§49), p. 1&4. United States Government Organization Manual, op. i cit., p. 1 0 1. : The Alcohol Division has life-and-death power over | j ' 1 j distillers and vintners- It can put them out of business any time It doesn't like their advertising, destroying not only their right to produce, hut their right to sell. It | jhas less power over brewers however. Only In the 14 states |where laws match federal law can the Alcohol Division turn offenders over for criminal prosecution by federal attor neys. In the other 34 states it must rely on cajolery. i This cajoling power is substantial, however, because the j i j iDivision is authorized to police advertising in all media j I i jin interstate commerce, or advertising calculated to pro- I I ■ i jduce sales in Interstate commerce, or advertising that ; 1 ' 36 i jtravels by mails. This authority Is far reaching becausej i < i jail recognized newspapers and magazines have second class i |mailing permits with which at least a portion of their circulations are mailed. Advertising claims that the Alcohol Division objects to Include the following: 1. wno hangover” 2 . ffIt's good for you” 3. r t no harmful effects” 4. anything obscene or indecent 36 Printers'Ink Advertisers' Annual, op. cit., p. 475. 80 5. ”our brand will help you to success” 6. pictures of athletes with the implication that j alcohol helps in sports j ! 7. disparagement (”less sugar,” ”contains no neutral ! spirits”) i 8* health claims or mention of vitamins or chlorophyll I (although both have been added to alcoholic drinks | by some producers) The Aleohol Division works with advertisers on pro posed advertising campaigns, consulting with them at any time to clear their copy, nearly all distillers* advertis- jing is submitted to the Division before it is run, but this! ! ! I action is purely voluntary. ! i | ' I Lanham Trade-Mark Act. Additional federal legisla- j i tlon aimed at curbing unethical advertising in the inter- j ests of the consumer is present in portions of the Lanham Act, which became effective July 5, 1947. The portion of the Act which is of greatest Interest to the public is found in Section Two wherein the FTG retained its right to curb misleading trademarks, as follows: ”A mark must not so resemble another mark in use as to be likely to cause 38 confusion or mistake or to deceive purchasers.” 37 Loc. cit. D. M. Phelps, Sales Management (Homewood, Illi nois: Richard D. Irwin,~ihc7, 1^53), p. 125. ' " “ “ 81 Other Federal regulations governing advertising* The federal government has additional controls over certain 39 phases of advertising such as the Robins on-Patman Act * i which provides that cooperative advertisement payments or ! allowances must be mad© available on proportionally equal terms to all competing customers of the purchasers* The Seed Act Division of the Production and Market ing Administration of the Agriculture Department has the power to take action against misleading labeling and ad vertising of agricultural and vegetable seeds* The Internal Revenue branch of the Treasury Depart- j j ment has the power to rule over questions involving taxa- |tion as it concerns advertising. How much advertising may I | be properly deducted as a business expense* and the ques- I | tion of how much advertising support may be contributed to i !public service or political campaigns and deducted in tax returns* lies within Its province* In addition to these* there are laws and regulations of the Department of Defense and the Renegotiation Board controlling the advertising expense of military producers. Also, the Treasury Department regulates the use of pictures 39 Marshall E. Dimock * Business and government (Hew j I York: Henry Holt and Company, 1951) * p. -4l57 82 40 of currency and government bonds in advertising. It can be seen here that the federal government*s power over advertising is spread out among a number of agencies# with the greatest responsibility resting with the! | Federal Trade Commission. i i III. STATE BEGUhATIONS j Advertising statutes, as enacted by the states# are of two types. There are those which provide for knowledge of a false statement on the part of the advertiser or of an r |intention to deceive in an advertising claim In order to jhold the advertiser guilty# and there are those which do not require such knowledge. In the first type# proof of criminal intent is necessary. The courts have held there |can not be a conviction without the proof of scienter t j(intent to deceive). California is one of the 18 states ! 41 jwith such a statute• x | The second type# where knowledge of a false state ment or intent to deceive is not required for prosecution# holds the charge is sufficient when It shows that a false and untrue ad was published. The Printers* Ink Model 40 Printers* Ink Advertisers* Annual, op. cit., p. 476. ’ “------- 41 Flnkelhor, op. cit.# p. 216._______ _ _ . _ . .. . _ Statute, described In Chapter III, Is an example of this type of legislation. ' In cases where attempts have been made to rule such |laws unconstitutional, the courts have held the purpose of I i I the act is indicated by its title. It is an act to provide i 42 iagainst false advertising. j i Legislation currently exists in 43 states and the | i District of Columbia which is designed to make false ad- j i ! vertising illegal. It would not be appropriate to discuss j |each state law in detail in a study such as this, but only j to point out the two broad classif ications in which they ! I jfall and to offer as an example perhaps a general diseus- ! sion of such laws in the writer*s own state— California. i California law on misleading advertising. In i • i California, the legislation regarding misleading advertis ing is widespread in scope. It covers many specific fields of business. The basic legislation is contained in Section |17500 of the California Business and Professions Codes and j provides the making or disseminating of untrue or mislead- i ling statements unlawful* (See Appendix J.) In California, the article on false advertising in 42 Ibid., p. 214 84 general does not apply to f , any publisher of a newspaper, magazine or other publication, who publishes an advertise ment in good faith, without knowledge of its false, decep- 43 tive, or misleading character.” It applies only to the advertiser. An example of general legislation which has been passed in California to help control advertising practices is found in Section 17501 wherein "Worth” or "Value" and j "Former Price" are defined. The law specifically states j i ! • ! the worth or value of anything advertised is the prevailing i imarket price at the time of publication of the advertise- j ! I jment in the locality wherein the advertisement is published#! i ' ! ■Former price, according to the law, means that the price of ■ |an article listed in an advertisement as a "former price" j w a s the prevailing market price within the three months i i immediately preceding the publication date of the ad, un less the date when the former price did prevail is clearly stated in the advertisement. (See Appendix J#) In addition to these general state regulations on advertising, there are specific California regulations cov ering eonduct in the several fields of business and the ^ California Laws and Statutes, peeringa Business and professions Codes of the State of California Csan Francisco, 1944), p* 7lX# 85 professions. The subjects covered by some of these more specific regulations include advertising of chiropodical servicej advertising of coal; deceitful advertising in the i jmedical profession; advertising of defective merchandise; j i use of word wdrug, f in advertising; injunctions against j i violation of advertising codes; advertising the regulation i i or reestablishment of menses; advertising medicine or of fering service to produce miscarriage (a felony); mis representation of newspaper and periodical circulations; advertising of cures for venereal disease# lost manhood# i I |lost vitality# impotency# seminal emissions# self-abuse# ! J | |varicocele or excessive sexual indulgence; petroleum ad- I I | vertising; real estate advertising; advertising by vet erinarians, and many other subjects. (Appendix K lists i |many such subjects and provides reference to where legis- i jlation may be found in Deerings Business and Professions r i Codes of the State of California.) The foregoing sections of the California Code# plus others such as those regulating the advertising conduct of optometrists# dentists# chiropractors, and funeral direc- Itors# have been established to aid in the control and i regulation of particular phases of business. They are used | to strengthen further the grounds for prosecution of vio lators under Section 17500# the legislation regarding misleading advertising in general. Government eontrol ©f advertising until 1938 was designed primarily to prevent unfair competition. With the j i passage of the Wheeler-Lea amendments to the Federal Trade Commission Act, it now functions in the protection of the consumer as well. Legislation of our federal and state governments is not completely ironclad in its effective ness but, because of these laws, our society is offered more protection against the unethical advertiser today than at any time in history. f CHAPTER V THE LIMITS AND RESPONSIBILITIES OP CONTROL j OVER ADVERTISING ETHICS ! In Chapters III and IV we have seen what has heen done in an effort to control advertising ethics. We have seen attempts toward supervision for truthfulness by ^ad** vertlsers; by associations; by media; by Better Business Bureaus, and by government agencies. We now should be aware that, while advertising has made some progress toward ! truthful presentations during the past fifty years, there j jis still an area of advertising which needs further 1m- } i !provement. It Is that intangible area which lies within ! |the law, but not within the realm of high ethies^that area j which exaggerates the truth in advertising copy and through Implication misleads the consumer. In searching for an answer on how to further im prove advertising ethics, it would be well to consider what limitations are present in existing measures and where definite responsibilities lie. We are faced with a situa tion which we know can not regulate itself. History has jshown us, as Dana Bennett so aptly phrased its ”As long i as men are. materialistic, there will always be a conflict „1 between business integrity and the money changers.” In , this consideration, we must concede that those who adver- j ! j itise are apt to be less inclined to police their competitor , i | |with more than lip service than are other groups which are j ;connected with regulation of advertising practices. She {group of advertisers which comprise the largest problem I today are those who stay just within the law, those who joverstep the bounds of good ethics only so far as do their competitors. Further control of advertising insofar as they are concerned must originate from without the industry J I. LIMITATIONS OF PUBLISHERS ) i I | Ralph Starr Butler stated in a lecture delivered at i ; Northwestern University in 1930: i the power of advertising is so great, either for good or for ill, that it should perhaps be held to a higher standard of honesty than other phases of business prac- j tiee that are less far-reaching in their influence.2 ,He believed that the source of advertising ethics lay in jthe "commercial*1 morality of the business community. It jwas his belief that the publishers were the hey to future Jcontrol against fraudulent advertising. I 1 Editorial in Advertising Agency, May, 1952, p. 69. 2 Vawter Foundation Lectures, The Ethical Problems of Modern Advertising (New York: The Ronald Pres a 6 ompany, ' j j p. 3( 9. "89 History has proved that in a society of free compe tition such as ours it is virtually impossible to expect I several thousand individual publishers of advertising media j and hundreds of operators of radio and television stations ! ito reject all misleading advertising copy. Publishers i | I unquestionably have found after rejecting unethical copy that their competitors would accept it for the revenue in- ! volved and would close their eyes to the ethical aspects. Publishers of media, of course, can not survive without 1 advertising revenue and, in some instances, publishers of I small newspapers and magazines, and owners of independent 1 I ! radio and television stations, are forced economically to j I accept questionable copy in order to stay in business. ! 1 I John R. Buckley, publisher of Good Housekeeping I — — ;magazine, speaking to the 39th annual conference of Better !Business Bureaus at Palm Beach, Florida in 1953, said in referring to misleading and double-talk ads: Although leading media are getting more particular about what type of ads they publish or broadcast, there is still much to be done in this direction. Media owners are rejecting as much as a million dollars a year in advertising. But the Better Business Bureaus report that three per cent of the 24,000 ads questioned by them in 1952 had to be turned over to the authorities for further action. This represented |180,000,000 in advertising which *ought to go.*3 3 Article in the Hew York Times, April 21, 1953. 90 When It comes to deciding the difference between profit and loss* it is not difficult to understand how some I ' publishers were willing to accept this #180*000*000 worth |of questionable advertising. Publishers then* as they now exist* can not be the key to future control of misrepresentation in advertising lin our day. They can* of course* continue to be of tre- 11cations* but collectively they can act only as each in dividual publisher sees fit to act. II. LIMITS AND RESPONSIBILITIES GP BUSINESS 1 Carl Taeusch said in 1931: the controlling agency of business advertising must* however, in the last analysis be business itself, the functions of which must complement and transcend law and government and cannot be determined by standards supplied by the professions or the church.^ If this statement had been written in 1955* Taeusch may well have added that* while business may be charged with the duty of controlling advertising* it remains* in actual practice* the function of an impartial government jmendous assistance in censoring unethical copy. Individu- [ally they can control advertising ethics in their own pub- Garl P. Taeusch* Policy and Ethics in Business ■ (New York: Me@raw-Hlll Book Company * Inc . , TUsl )'* p. ' 4 ' 8 8 . i .. , 91 agency to regulate tiie practices of advertising within the several industries of business. Mo matter how determined business as a group may be to control the ethics of adver tising, the fact remains that all business is not organized.j |In the case of the Proprietary Association mentioned in ! i Chapter III, for example, it was shown that only 80 per i cent of the Industry was active in the association and could be governed by the advertising principles the group set forth. Self-regulation within each trade is important to the control of all advertising, but it can not be one j I ! hundred per cent effective in Its execution without the j I I ! - - | ! complete cooperation of the entire industry. j Responsibility of business is t_© be fair. The eth ical problems of advertising are a part of the general jproblems of business ethics and can be somewhat controlled i by fairness and good taste on the part of each individual 5 advertiser. The ethical problems of advertising, there fore, may be to determine and define the limits of fairness and good taste— to determine what is ethical and what is unethical. I At one level, some businessmen might attempt to tell 5 Ibid., p. 460. 92 6 I the "full truth” in their advertising. As Borden indi- { joatesf such a code would require him to reveal all short- I } M I I comings as well as the merits of his product, and to avoid 1 jail ”artful appeals.” Such a businessman might he forced i •under the dictates of a code such as this to reveal that his product was not the best buy for the consumer. At another level, an advertiser»s code of ethics could dietate that he reveal nothing about his product. Advertising would consist of mentioning the name only, such as ”Cadbury»s Cocoa.” He would take no chances of stating | something which might not be true and, by stating nothing, j he would avoid dishonesty. While there is some advertising j ! today that does conform t© this simple announcement prAc- \ j i ! ? it ice, most businessmen deem it ineffective and wasteful j ! I n ibecause it ”fails to produce a profitable volume of sales.” The codes more generally practiced by businessmen today apply a utilitarian basis for judging the honesty of | statements. Such codes require the advertiser to: (1) offer honest merchandise; (2) reveal material facts only if their concealment might mislead and (3), tell the truth ! 6 N. H. Borden, The Economic Effects of Advertising !(Chicago: Business Publications, Inc., 19427*7 p. 824. 7 Log. cit. 3 !about what he offers* j Where businessmen follow a code of telling the ! |complete truth and where every claim is fully conceded by | every competitor, we have no problem at all* The purely |ethical approach dictates, furthermore, that we never ’ ’knock” a competitor. In practice, however, a gentle knocking seems to be part of the code of selling of many businessmen. It is often considered a part of salesmanship and is carried forth in much advertising* i | In the purest sense, the phrase "our brand is bet- j |ter” is, in itself, Indirectly a knock at competition. If 1 |businessmen can avoid an indirect condemnation of every- ! |thing everybody else makes, the less likely they will be to 9 |overstep the line of good business and advertising ethics* t I Gundlach suggests an example of advertising copy i ! iwhich could be used by the majority of the nation*s manu facturers of standardized products without fear of over stepping that lines Others may be able to give you equal quality. Some do and some do not. But who is who? When you insist | upon our widely advertised brand, established for years, on which we must maintain our r 'r " < ! 8 Ibid., p. 825. t — — | ® E. T. Gundlach, Pacts and Fetishes in Advertising (Chicago: Consolidated Book Publishers, Inc., p. 494. 94 reputation, you take no chances • . • you get always positively at least as good a brand as any that your money can buy. • . .10 j The above suggestion was published 24 years ago in 11931. This approach to advertising is seldom used today, j jwhich would suggest it has not proved effective enough in our highly competitive business world. Providing the advertiser offers honest merchandise, tells the truth about what he offers, and reveals material 1 |facts only if their concealment might mislead the reader, ;he may go about his advertising in an enthusiastic or |boastful manner. He may play upon the reader*s desires and I jhopes and, providing his product gives satisfaction, he S !will not be dishonest. He does not have to reveal whether S |his product is a better buy or a poorer buy than that |offered by competitors because he may not be in a position j to honestly know.H i j Businessmen generally have learned to guide their i conduct toward others on a plane which is higher than the !minimum standard required by law. MThe great bulk of buy- j jing and selling transactions involving consumers is carried 1 i p i on with a high degree of trust and satisfaction.w 10 P* 515. 11 Borden, op. clt., p. 825. 13 Ibid., p. 823.___________ ........... " " ‘ “ " " ” “ ' 95“ Advertising is a necessary part of doing business* The ethical aspects of advertising deal with the extent to ; ; ! iwhieh and the direction in which it Influences a potential j ' I 'buyer and the means in which this influence is exerted* J | ; j The ethical viewpoint regarding advertising substitutes | an outside judgment as to what consumers ought to j i prefer and ought to choose for the consumer * sown ^ I judgment as to what he himself prefers and chooses* | I The ethical aspects then are concerned with what is fair and what is in good taste in the manner in which influence is exerted* ! I i it would seem that a business whose code of ethics j | 1 jwas set on a high plane would project these ideals and j i I practices to prominence in its advertising copy* Such a j ] practice could logically be true in the majority of the j nation’s businesses* | i ! * III. RESPONSIBILITIES OP THE CONSUMER There is a limit to the extent to which government |or industry should be expected to control advertising ! jethics. The consumer has certain responsibilities as a jmember of society. While it is the opinion of the writer |that the consumer point of view is the most important of t jail in this problem of advertising ethics, he can not be 13 Albert W. Prey, Advertising (New York: The Ronald Press Company, revised I9S5T) , p* 645. j coddled to a point where advertising looses all effective ness. True, he should he protected against misleading |presentations and those whieh are in had taste, hut he must | 1 |he expected to use some amount of judgment in analyzing J t jadvertising copy. Advertising hy its very nature will i |never he reduced to a situation where there is no puffery I i |or exaggeration. The consumer must make his own decisions. j !He must learn to read carefully into the advertising. | | When a consumer is in douht as to the authenticity |of an advertising presentation, his solution is to refrain j ifrom buying the article or service advertised. When claims! I | I are not supported or when information furnished is not j i • i judged to he sound, relevant, and correct, it is his 14 responsibility not to buy. While the consumer should he required to display ordinary prudence in judging advertising copy, he should not he forced to exposure with certain abusive advertising ! I practices such as the following: ! i j 1.. Phony testimonials hy persons not technically | competent to judge the product. \ ! 2. Misleading use of marketing data (so-called con- | sumer surveys)• i i 14 1 1 Manufacturers Should Furnish Proof of Claims,” Consumers Research Bulletin, April, 1953, p. 27. 3. Misleading us© of scientific tests by drawing un warranted conclusions from limited data with sup pression of unfavorable findings. 4. Phony contests, 1 i 5. Bait advertising of rebuilt vacuum cleaners, sewing • machines, television sets, furniture, and automo- | biles. s i J 6. Use of endorsements by public celebrities of I products for children that their parents may not wish them to have.^5 There is little quarrel with the theory that the consumer should be protected against advertising practices such as these. Yet, additional controls of advertising ethics may be assured only if the consumer sincerely de sires them. In many cases which would be deemed by some as unethical, the advertiser’s aim is not actually to deceive the public, but to be imposing or entertaining. The con- Isumer has contributed his lack of concern by applauding the i jcleverness of borderline copy and proving that he is not ■hoodwinked at all but a party to the habit of cultivating I IS •false concepts of salesmanship. To restate the phraseology of the Supreme Court, nAdvertising must be written for the probable effect it produces on ordinary and trusting minds. . . .M These 15 «off the Editor’s Chest,'1 Consumers Research Bulletin, November, 1952, p. 23. I | _______3.6 Gundlach, op. cit., p. 582.___________ _ _ _______ _ r ". “ ." " ' " ■ 98! I I f ordinary and trusting minds are the ones which need the j i |greatest protection as we may assume those minds which are j s jintellectually capable of penetrating analysis are also thej ! ] jones with abilities to possess skepticism, and can deter- j 'mine for themselves that advertising which is likely to be ! ! | !questionable and that which may be accepted as fact* j In the final analysis, it must be conceded that business can not regulate itself fully. It remains for the federal and state governments to enforce the laws pertain- i ing to false advertising. But, even these are not com- { i I ipletely effective. Public attitudes concerning false ad- \ \ jvertlsing can force, if necessary, additional legislation j ! ’ aimed at curbing unethical practices. Should such pressure 1 ( I |come to bear, it may be logical to assume It will be aimed I :at local and state legislation where the need Is apparently i the greatest. A great problem lies in defining the limits of fair ness and good taste. This, again, is most difficult to do, because what is ethical In the eyes of one group may be unethical in the eyes of others. Businessmen, through organized effort, must take the lead in establishing the | jlimits of fairness and good taste. If they fail, the con- i 1 sumer will receive additional protection only through I |additional legislation* 99 The wide variety of economic, social, and legal factors with which we are faced In the control of adver- ; tlslng make the solution to the problem most complex. One | ;writer on this subject suggests the problem of advertising ! i jethics is one which will probably never be solved with a | i 17 universally satisfactory solution# This may quite pos- j sibly be true, but those persons Interested in fostering a more universal acceptance of advertising can not drop the i matter at this point. There must be a continuing effort by media, industry, and government to keep advertising in ! 1 \ ! check and to make the phrase t t truth In advertising’ * an ! I | |operational guidepost rather than merely a high ideal for | £ 5 ‘ I I which some strive, but toward which all too many fall i I short• I i i i i i 1 ( I | I I I H. K. Nixon, Principles of Advertising (New York: iMcGraw-Hill Book Company, Inc., 193T) , p* 66# j CHAPTER VI i | SUMMARY AND CONCLUSIONS | i ! Summary. The author has discussed, a number of meas- I lures In which government, industry, and media have attempt- j jed to bring about a general improvement in advertising I jpractices during the 20th Century. The result of these jineasures falls far short of the desired goal in several I iareas. t .... i i A study of the history of advertising shows there I ! existed a rampant, uncontrolled malpractice in advertising I at the turn of the century which was wilfully defrauding |the consumer on a widespread basis. At the turn of the ‘ century, advertising had reached a rock bottom in ethics I land the legitimate advertiser, in protest, refused to place his copy in the same publications with patent medicine ad vertisers, mail order advertisers, and get-rich-quick | schemers. Worthless and sometimes injurious merchandise |was being offered through advertising which was outright |fraudulent• | | Publishers of advertising media were the first to !act toward curbing these evils. Although they acted in- jdlvidually, their efforts were felt and, by 1902, there was ia substantial list of newspapers and magazines that were 101 refusing to accept patent medicine and other questionable advertising copy* Groups of organized advertising people also con- j ! Itributed in their efforts to curb fraudulent and misleading; j \ j advertising. The first such group was organized in 1896, i !with its purpose to develop a clearer understanding of ad- j I vertising problems. Other groups followed, adopting as j ! their slogan in 1910 ’ ’Truth in Advertising.” I I In 1911, leading reformers in the advertising field,j t iwith the aid of Printers* Ink Publishing Company, drafted I 5 | I i a model statute for adoption and enactment by the various j i j ;states. Today this statute is the law in twenty-five j ! t j states plus the District of Columbia. It holds the adver- j |tiser criminally responsible for false, untrue, and mis** i j I leading statements in his advertising. Similar laws have i jbeen passed in eighteen additional states, differing from i ]the original statute only in that the advertiser must have i !knowledge his advertising is false. During the early years of the 20th Century, other I advertising groups and associations adopted codes of ad vertising ethics, declarations of principles, and standards of practice to which their advertising was resolved to con form. The collective desire of these groups to clean their own skirts has had some effect on improving advertising | 102 I ethics. Through the work of the Associated Advertising Glubs t jin 1912, a Vigilance Committee was organized in several jcities to prevent false and fraudulent advertising. This 1 •group was later incorporated as the National Better Busi- i 1 Iness Bureau. They operate today in the nation's principal cities, endeavoring to keep advertising ethical and within the law, an outstanding example of business regulating itself. j j Numerous associations within industry have estab- i I i i ; 11shed censorship boards to regulate the advertising prac- j jtices of their members. The Proprietary Association of j lAmerica and the Toilet Goods Association are cited as j examples of associations where all advertising is censored I | land checked against the standards established by the Indus- | ; i jtry and the Federal Trade Commission rulings. The Federal Government has power in regulating ad- i j ivertising practices. This power is spread out among a i jnumber of agencies— the Federal Trade Commissionj the Post |Office Department; the Internal Revenue Service; the Food jand Drug Administration; the Federal Communications Com- imission, and the Alcohol and Tobacco Tax Division of the •Treasury Department. Each agency is limited to regulate iadvertising within its own province, but the Federal Trade I iCommission is authorized to act directly against deceptive I advertising in nearly all fields. \ i | State laws governing use of misleading advertising ! ;have been established in all but five states. While not j } 5 |uniform in design, their purpose is to regulate that adver-j jtising which is beyond the control of the Federal Trade j i Commission and other federal agencies* Steps taken during the past 50 years can account for some improvement in the advertising ethics of many firms* jbut there are still many advertisers who continue to mis- | ! Ilead the public. The problem facing society today is one jwhich would place additional control on those businessmen j I I Iwho refuse to subscribe to any ethical or legal code. Pub-j i J I jlishers as a group can control advertising ethics to a i 1 I 1 | .degree but, as individuals, control has not been complete, j s i Industry is not completely organized within its various i Itrade groups and likewise has caused problems which keep i |law enforcing agencies busy. The greatest need for a more j jconcerted control is at the retail level where understaffed I I land underfinanced Better Business Bureaus are falling short ! jof performing the vigilance desired by advocates of truth t jin advertising. ! i i I | Although advertising must be written for the prob- I jable effect it produces on ordinary and trusting<minds, if jit Is to continue to gain in the public confidence# the \ j consumer has certain responsibilities. Even though he is I ! |the one to which all effort toward ethical advertising is j I I i • (directed# he can not be pampered to sueh an extent that j \ jadvertising loses all effectiveness. He must try to under-! !stand advertising. He must learn to decide for himself ! i which is good and which is questionable. He must# of j course# be protected against the outright malpractices of \ certain advertisers# but he can do his part by assuming some of the responsibility himself. j \ Conclusions. Evidence presented in the foregoing ] \ ■ j |pages indicates the elimination of much intentionally j j . J |fraudulent advertising has taken place due to an enlighten-j ed public# a self-interest among businessmen# and the j :presence of federal and state legislation. The problem j !confronting society and business alike is what to do about j i ! those areas of misrepresentation which lie within the law i but not within the realm of good ethics. How can they be controlled for the further protection of the consumer? In arriving at the solution, we must face the truth that s i (1) There are certain groups of advertisers# or i igroups of product lines# that continually offer queatlon- j able advertising. Among the principal offenders are the ! ” _ “..... " ' ” “ ' “ ' ' " “ 105" i manufacturers of cigarettes, soaps, detergents, dental creams, headache remedies, and laxatives. These are all highly competitive industries where advertising claims, although inaccurate, can give a firm an immediate sales advantage. j i (2) There are other groups of advertisers, or j I groups of product lines, that continually offer good ad- j vertising. Among these are included the automotive indus try (at the national level), the railroad industry, the !petroleum industry, most of the food industry, the shoe f ? i ] iindustry, the watch industry, the steel and aluminum * f j ! * jindustries, and countless more. j It must toe understood and agreed that the principal offenders are repeat offenders within a relatively small I jgroup of industries. 1 Immediate control and elimination of advertising i which is unethically misleading, untruthful or fraudulent in any manner, can most certainly toe applied toy the media in which the advertising is presented. We have seen, how ever, that media groups will not voluntarily control the problem to much greater an extent than they have already done so. They are only as effective as each individual i ;memtoer of their group chooses to toe in curtailing undue i jmalpractlee in advertising. - 106 Beyond a certain point, industry too is powerless to jregulate advertising ethics within its own groups as its 1 j various associations comprise something less than one ! ! hundred per cent of all firms engaged in business within jthese industries, i Where self-government breaks down, government must assert Itself. On a national scale, this has been done, but only within the limits of the extent of work which the staff of the Federal Trade Commission is physically capable |of handling. Thousands of cases are handled by the Com- i •mission each year, but thousands more are left untouched, i In summarizing, we (1) know the offenders and (2), j i jwe know what remedies for control now exist. Let us re- | jstate the principal offenses before going on to offer pos- jsible solutions. Today the most flagrant weaknesses in i advertising remain in two areas: the first, that which is based upon falsehoods with full intent to defraud the con sumer whether offering a worthless or legitimate product, still exists, although measures aimed at eurbing this sort » i jof advertising are quite effective; the second, that which misrepresents through exaggeration, implication, omission i Jor unsupported claims, employing trickery or deception to ! mislead the consumer, exists to even a greater degree. i What is the criterion for control? Government alone i i i 107 I j can not solve the problem. Industry has been unable to do |so. We are dealing with, an Intangible, flexible situation— | the regulation of morals and, while some progress may have j i ; |been made in the advertising practices of the nation’s j i j |business, the regulation of morals will always be difficult | 'and somewhat short of perfection in the eyes of everyone. It is impossible to set down a criterion of behavior in advertising ethics which would be acceptable to everyone. Some conclusions and recommendations which may lead |toward a solution to the problem of unethical advertising i jin our society are, as follows: 1. The weakness can be at least partially corrected through greater activity from Better Business Bureaus at the retail level. This would entail more support from retail businessmen and additional funds with which to operate. 2. At the national level, a higher per cent member ship in national trade associations by members of the separate industries will aid in gaining better advertising. In cases where such trade associations are not interested in advertising practices, such an interest should be in stilled and its active functioning should be forthcoming. | 3. Self-regulation of industry with governmental I I guidance is probably a most potent method to maintain jreasonable control over advertising practices* I 4* The consumer may eventually be the key to a more jcomplete curbing of unethical advertising practice, yet a 'lack of organized interest has thus far caused no measur able effect on the decline in sales of advertisers whose jethics are questionable. The consumer has taken the stand that mere exaggeration in advertising copy probably does no real harm just as long as there are no hidden qualities in the product which are harmful. His final criterion for acceptance of a product lies in the reputation of the manu- f jfacturer and his own personal like or dislike for the I |product offered* j j 5* Advertising controls would be generally more 1 I effective if state legislation were uniform in all the i .states and were to include the five states that presently i lhave no laws controlling advertising. Such legislation j |should be modeled after the Printers* Ink Model Statute, land should hold the media publisher of misleading adver- I ' jtislng also at fault* | 6* Certain control over misleading advertising can jbe forced through publishers and owners of broadcast media, but it must remain with some outside agency to force them to act individually. There is a danger in this method, Ihowever, as the ’ ’Freedom of the Press” factor would be 109 Involved• Existing measures aimed at curbing unethical adver tising copy have shown some effect, but for a greater pro- i | 'tection to the non-skeptic and the person with the ordinary |and trusting mind, the evolution of regulation in advertis- | !ing can not be at an end. An excellent topic for further study would be the measurement of advertising's effect on the motivation of people to buy, to determine to what degree of acceptance the various unethical or ethical copy iapproaches are received by consumers, both from the stand- | I ;point of national advertising copy and at the more bombas- j * I $ |tic retail level* Results of such a study could well show jour existing controls of advertising are adequate* They I might show further the consumer has built up concepts toward advertising which permit him to believe only what She wants to believe and to regard with complete unconcern I i r 1 most of the enthusiastic claims, exaggerations, and puffs jof superiority which exist in our advertising copy today, i | Modern merchandising methods and the increasing use of self-service in many retail establishments is causing the consumer to choose for himself the brand he buys. He must rely more and more on what is said in advertising and in what is printed on the package. Additional responsibil ity has therefore been placed upon the manufacturer to represent himself and his product in a manner which will merit the consumer »s trust* In the United States today we have the framework for! | reasonably good controls over unethical advertising prae- J ■tiees if all curbing measures are enforced* All enforcing i i ! agencies, advertising and media groups must be alert for i constant changes which may call for changes in their regu- j lations. This is a problem which must be continually checked* A more constant check on the enforcement of existing regulations in the field of advertising, and a «more universal membership in groups dedicated to that j j ; cause, can bring about greater gains in our progress toward truth and fair play in advertising* BIBLIOGRAPHY BIBLIOGRAPHY A. BOOHS A Guide to Retail Advertising and Selling. Hew York: i Hational Association Be11 er“2usiness Bure au , fourth i edition, 1950. 180 pp. ; 1 i | / Borden, H. H., The Economic Effects of Advertising. j 1 j Chicago: - Business Publications, Inc., 1942. 987 pp. i iBrewster, Arthur Judson, Introduction to Advertising. Hew j York: McGraw-Hill Book Company, 1§5V“ 510 pp. I iBridge, Harry P., Practical Advertising. Hew York: ! Rinehart and Company, 1949. &42 pp. /Burton, Philip Ward, Bowman Kreer, and John B. Gray, Jr., i v : Advertising Copywriting. Hew York: Prentice-Hall, j j H e T r r a i r ’ "bstw * I i | j Californla Laws and Statutes, Peerings Business and Profes- | ' sions Codes of 'the state of California. Revised 1944 j j I San Francisco. j i jcalkins, E., The Business of Advertising. Hew York: D. j Appleton and Company, 19257 563 pp7 ^Chapman, Glowry, The Law of Advertising. Hew York: Harper I and Brothers, 1929. 595 pp. v/jdark, Thomas Blake, The Advertising Smoke Screen. Hew j York: Harper and Brothers, 1944. 228 pp. ! i !0ollins, Kenneth, The Road to Good Advertising. Hew York: | Greenberg, 19327“ 217 pp. Jpigges, I. W., The Modern Law of Advertising. Hew York: i^\ Punk and Wagnalls Company,"T94S7 299 pp. j jPimock, Marshall E., Business and Government. Hew York: | Henry Holt and Comp any, 19487 840 pp. /jpinkelhor, Francis, Legal Phases of Advertising. Hew York: 1/ | McGraw-Hill Book Company, Inc., 1989. 345pp. ! “ ~~ “ ' 113 ! ! t ;Frey* Albert Iff.* Advertising. Hew York; Tine Ronald Press j Company# revised 195&. 746 pp. iGroesbeck* Kenneth# Invitation to Advertising. Hew York: j I Simon and Schuster# " l 9 5 l 3 § 2 pp. I L j j^Qundlach, E. T.* Facts and Fetishes in Advertising. ' j Chicago: Consolidated Book Publishers, Inc., 1931. j 1 672 pp. | Vj Harding* T. Swann * The Popular Practice of Fraud. Hew York: I Longmans* Green and Company# 1935. 576 pp. ! i l i ■ j jHeermance# Edgar Laing# Codes of Ethics. Burlington# | Vermont: Free Press Printing Company* 1924. 525 pp. luepner* H. W.# Effective Advertising. Hew York: MeGraw- | Hill Book Company# Inc.# 1949. 728 pp. i |Hess* Herbert W.* Productive Advertising. Philadelphia: j j J. B. Lippincott Company# 1915. SBo pp. | jHighan* Sir Charles# Advertising* Its Use and Abuse. Hew | ^ York: Henry Holt and G ompany* 1925. 256 pp. j I I jHotchkiss# George B.* An Outline of Advertising. Third j I edition; Hew York: kaeMIIl'an* 1956. 605 pp. \ i ! Kenner* H. J. # The Fight for Truth in Advertising. Hew \ j York: Round liable Press# 1956. 296 pp. | Hixon# H. K.* Principles of Advertising. Hew York: Me- | | Graw-Hill Book Company * 1937. 541 pp. I ! !Phelps# D. M.* Sales Management. Homewood# Illinois: Richard D. Irwin, Inc7# 1963. 902 pp. Presbrey* Frank# The History and Development of Advertis ing. Hew York: Doubleday * Uoran and Company# Inc.'# j TS29. 629 pp. i jsandage, G. H.* Advertising: Theory and Practice, j Chicago: Richard 3b. Irwin, inc.*1946. 614 pp. j Seehafer# E* F. and J. W. Laemmar# Successful Radio and ! Television Advertising. Hew York: ScCxraw-Eill Book | Company* Inc.* 1951. 574 pp. Taeusch, Carl F., Policy and Ethics in Business. New Yorks McGraw-Hill Book Company > Inc* , HJ3TI 624 " pp* The National Association of Radio and Television Broad casters, The Television Code* Second edition; Washing ton, D. C.s March, 1&64. & pp* i United States Government Organization Manual 1952-53. 1 Washington, D* C.s Government Printingoffice, 1952* j 742 pp. i ;Vawter Foundation Lectures, The Ethical problems of Modern Advertising. New York: "ihe honald Press bompany, rotrTRTpp. Wolfe, Charles Hull, Modern Radio Advertising. New York: Funk and Wagnalls Company, 194^1 7S5~pp7 B. PERIODICAL ARTICLES !Bennett, Dana, An Editorial, Advertising Agency, 45:69, | May, 1952* |nCouncil Rules on Signs and Advertising," A Report, The j Bulletin of the L. A. County Medical Associati on, ! October 2, 1952* i I"Manufacturers Should Furnish Proof of Claims," Consumers Research Bulletin, April, 1953, p. 27. I"Off the Editor's Chest," Consumers Research Bulletin, i November, 1952, p. 23* iPrinters* Ink Advertisers * Annual - 1955, October 29, 1954. C. NEWSPAPERS ■New York Times, April 21, 1953* I New York Times, July 21, 1953. ! / , New York Times, September 19, 1953. f iNew York Times, October 1, 1953. 115 D. PAMPHLETS Los Angeles Automobile Dealers Hew and Used Gar Advertising Principles. Los Angeles: The Better Business Bureau or Los Angeles, Ltd* 14 pp. Public Service Responsibility of Broadcast Licensees $ i Federal Communications Commission. Reprinted by: j ! national Association of Broadcasters, Washington, D*G., | March 7, 1946* 59 pp# Selling and Advertising Code for Sewing Machines* Los j ■ Angeles: irhe Better Business Bureau of LosAngeles, f Ltd* 8 pp# APPENDIX j APPENDIX A i \ \ i STANDARDS OP PRACTICE FOR ADVERTISING CLUBS Adopted by the Toronto convention of the Associated Advertising Clubs of the World in 1914. We Pledge ourselves to remember that advertising is and“shouidbe, first of all, an exponent of the square deal, and that it is only when business men put the Interest of the buying public first that they take the best advantage of their opportunities". We will not at any time knowingly do anything whieh will injuriously affect advertising, nor will careless- ; ly speak ill of any advertising medium. j i j 1 We will work together to the end of making all ad- j | vertising more truthful knowing it will then be more j j effective and of greater benefit to the buying public, j | We will exercise care, individually, at all times, j | to see that every advertisement with which we have any-j | thing to do shall measure up to the plain, simple J truth. We shall stand firmly for constructive adver- j tising and condemn, without reserve, all forms of I destructive advertising. i To each other we pledge patient service toward the upbuilding of advertising in this community. To all business men of this community, we pledge cooperation toward the advancement of the community's | business along sane and proper lines. I j To the public, whom we as the club serve primarily, we pledge our best efforts to make advertising the j servant of the people in the truest sense. f i | — — m mmmmmi — ■■ m m m tm m m m m m m m s I Source: Edgar Laing Heermance, Codes of Ethics. (Burling ton, Vermont: Free Press Printing Company, 19S4), p. 8. APPENDIX B PRINTERS* INK MODEL STATUTE j Any personj firm, corporation, or association, who | |with intent to sell or in any wise dispose of merchandise, j isecurities, service or anything offered by such person, ! iflrm, corporation, or association, directly or Indirectly I jto the public for sale or distribution, or with intent to J !increase the consumption thereof, or to induce the public j jin any manner to enter into any obligation relating there- I |to, or to acquire title thereto or an interest therein, I makes, publishes, disseminates, circulates or places before jthe public, or causes, directly to indirectly, to be made, ! published, disseminated, circulated or placed before the !publie, in this State, a newspaper or other publication, or jin the form of a book, notice, handbill, poster, bill, | |circular, pamphlet, or letter, or in any other way, an ad- I ivertisement of any sort regarding merchandise, securities, | |service, or anything so offered to the public, which ad- j |vertisement contains assertions, representation, or state- I Iment of fact which is untrue, deceptive or misleading, shall be guilty of a misdemeanor* I Source: C* H* Sandage, Advertising Theory and Practice I (Chicago: Richard D* Irwin, Inc., 1&48), pp* 65- 64* APPENDIX G DECLARATION OF PRINCIPLES of the Association of National Advertisers (Adopted May 5, 1916) Resolved that we, members of the Association of INational Advertisers are opposed to advertising of the 5 ! following kinds: j i All advertising that is fraudulent Or questionable, j whether financial, medical or any other; all advertising j that is Indecent, vulgar or suggestive either in theme or treatment; that is ’ ’ blind’ 1 or ambiguous in wording and calculated to mislead; that makes false, unwarranted or exaggerated claims; that makes uncalled for reflections on competitors or competitive goods; that makes misleading j”free” offers; all advertising to laymen of products con taining habit-forming or dangerous drugs; all advertising j Ithat makes remedial, relief or curative claims, either j ! directly or by inference, that are not justified by the j |facts or common experience; and any other advertising that j jmay cause money loss to the reader or injury in health or j morals or loss of confidence in reputable advertising and j honorable business* j ! Resolved that we recognize our own obligation as J advertisers to conform to these principles* I Resolved that we urge upon all publishers and upon all sellers of“advertising space or service, a strict ad herence to these principles and that Insofar as the exigen cies of our individual businesses will permit, we direct 1 our advertising to those mediums which make the observance of these principles their rule and practice* ;Source: Edgar Laing Heermaaee, Codes of Ethics (Burlington, | Vermont: Free Press Print ing"TXompany, 1924), p* I I 269* | APPENDIX D ADVERTISING- FEDERATION GF AMERICA STATEMENT GF ADVERTISING PRINCIPLES (As adopted, January 8, 1946) | l. Good advertising alms to inform the consumer ' i and help him to buy more intelligently# 2. Good advertising tells the truth, avoiding mis- statement of facts as well as possible deception through implication or amission. It makes no claims which can not be met in full and without further qualification. It uses )only testimonials of competent witness# j - 3. Good advertising conforms to the generally ac- | eepted standards of good taste. It seeks public acceptancej j on the basis of the merits of the product or service adver-j j tised rather than by the disparagement of competing goods, j lit tries to avoid practices that are offensive or annoying#j ; | | 4# Good advertising recognizes both its economic j I responsibility to help reduce distribution costs and its j 1 social responsibility in serving the public Interest. : i I S ! Sources Arthur Judsoh Brewster, Introduction to Advertis ing (New York: McGraw Hill Book d'ompany, 1947), | p • 51 # APPENDIX E SELLING AND ADVERTISING CODE OP THE NATIONAL BETTER BUSINESS BUREAU 1. Serve the public with honest values* 2* Tell the truth about what is offered. 3* Tell the truth in a forthright manner so its significance may be understood by the trusting as well as t |the analytical* j ! . j ! 4. Tell customers what they want to know— what they! |have a right to know and ought to know about what is offer-j led so that they may buy wisely and obtain the maximum ’ |satisfaction from their purchases. 5* Be prepared and willing to make good as promised; and without quibble on any guarantee offered* 6* Be sure that the normal use of merchandise or f iservices offered will not be hazardous to public health or j life. 7. Reveal material facts* the deceptive concealment of which might cause consumers to be misled. merits and refrain from attacking your competitors or re flecting unfairly upon their products* services* or methods jof doing business. i I 9. If testimonials are used* use only those of I competent witnesses who are sincere and honest in what they |say about what you sell. ! 10* Avoid all tricky devices and schemes such as de ceitful trade-in allowances* fictitious list prices* false and exaggerated comparative prices* bait advertising* mis leading free offers* fake sales and similar practices which prey upon human Ignorance and gullibility. 8. Advertise and sell merchandise or service on its National Better Business Bureau* A Guide for Retail Advertising and Selling (New York:T fourth eHrrfonTT^oy, P: r . ----- APPENDIX P j PROPRIETARY ASSOCIATION OP AMERICA i | SELF-IMPOSED RULES FOR ADVERTISING OP PACKAGED MEDICINES ! I i I i i ! 1* When advertising oopy for proprietary medicines j I contains either the term guaranty or an offer to refund ! j money paid by the purchaser, the impression should not be I | conveyed that the product is guaranteed as a cure or as an i !adequate treatment for the conditions mentioned unless such jis the fact. ! 2* Advertising copy for proprietary medicines | should contain no statement which can be calculated to j create fear on the part of the reader or listener that he I or she is suffering, or may without treatment suffer, from j any serious ailment. \ ) \ \ j 3 * Advertising copy for proprietary medicines may j ;not be construed as holding the product out for the pre- | jvention, cure, or relief of serious diseases which require j |treatment by a physician. i | 4. Advertising copy for proprietary medicines ishould contain no reference to doctors, hospitals, or |nurses whether American or foreign unless such representa- 'tion can be substantiated by Independent evidence which can -!be produced if the manufacturer or advertiser is called I upon to do so. t 5. Advertising for proprietary medicines should omit prizes, competitions or other similar devices calculated to |stimulate unnecessarily the purchase and use of the medi cine. Source: Philip Ward Burton, Bowman Kreer, and John B. Gray Jr., Advertising Copywriting (New York: Prentice- i Hall, Inc.,' 1^49), p. 5G1. APPENDIX Or TELEVISION CODE - NATIONAL ASSOCIATION OP RADIO AND TELEVISION BROADCASTERS * 1954 (An Outline of Points Contained Therein) 1. Advancement of Education and Culture 2. Acceptability of Program Material 3. Responsibility toward Children 4. Decency and Decorum in Production 5. Community Responsibility 6. Treatment of News and Public Events 7. Controversial Public Issues 8 • Political Telecasts 9* Religious Programs 1 0. Presentation of Advertising 1 1. Acceptability of Advertisers and Products 12 . Advertising of Medical Products 13. Contests 14. Premiums and Offers 15. Time Standards for Advertising Copy 16. Dramatized Appeals and Advertising 17. Sponsor Identification Source: The National Association of Radio and Television Broadcasters, The Television Code (Second edi tion j WashingtonTHD.C.V I954T), i pp. I APPENDIX H COUNCIL RULES ON SIGNS AND ADVERTISING The following report, submitted t© the Council ©f |the Association at Its meeting September 8, 1952 by Doctor IRoyston, Chairman of the Committee on Professional Rela- j itions, on the Amplification of the Code of Medical Ethics | ; Regarding.Advertising, was adopted, I i I, Use of Signs The Committee feels It is not improper for members of the Los Angeles County Medical Association to make known their location and Identity by the use of signs. It is felt that the Doctor of Medicine should not be penalized, ! when other branches of the healing art, duly licensed by ithe State of California, are not hindered In advertising I Jthemselves to the public, ] | I j \ The Committee recommends that j S I I 1, Members may use a sign, illuminated or otherwise I jdesignating the name of their building. The size of the j lettering not to exceed eight Inches square for each letter,' but nowhere in the sign may the doctor*s name appear. J ! i ; 2, Members of the Association may use an outside jsign, illuminated or otherwise, with each letter of their |name occupying a space not over four Inches square, and may iadd beneath the name the words "physician and surgeon" or the doctor * s specialty, using letters each not to exceed four inches square. 3. The letters "M.D," should be used following his name, rather than the title "Doctor,1 1 or Its abbreviation "Dr," preceding his name, 4. Members may display their name inside a building in letters each not exceeding two inches square, and may add beneath the name the words "physician and surgeon" or the doctor*s specialty, usihg letters each not to exceed : two inches square, i I 5. Appropriate changes on existing signs shall be made by December 1, 1953, 125 II. Advertising That advertising by members of the Association be limited to placing their name in the telephone directory only. All other forma of advertising# including newspaper | write-ups on so-called special eases and the placing of | cards in newspapers# church and fraternal magazines# direc- I tories and other publications# are not approved and are j | considered unethical. | ! That the placing of name in the telephone directory j follow the recommendation of the Committee on Telephone Directory Listings. III. Special notices— such ass 1. Opening of a new office i 2. Removal or change of office ] i | 3. Association or dls-associatlon with other phy- ■ j sicians j » { | 4. Resumption of practice after a military or other I leave of absence j A. May be placed in the County Medical Bulle- j tin# but not to exceed three issues | ! B. May be sent through the mall to members of I the profession and to former patients G. May not be sent to members of the general public other than former patients D. May not be placed in the public press# ex cept that it is recognized that in eertain small and remote I areas of the County it might be necessary to announce the jarrival of a new doctor. In such a ease# with special |permission of the Executive Committee# a notice may be ;placed in the local newspaper. i i :Source: The Bulletin of the Los Angeles County Medical I Association (reprint from Oetober 2# 1952 issue). V APPENDIX I Excerpts from Federal Food, Drug and Cosmetic Act pertaining to Labeling, and elements which determine whether or not a label is misleading* k) The term "label” means a display of written, |printed, or graphic matter upon the immediate container of Iany article; and a requirement made by or under authority of this Act that any word, statement, or other information appearing on the label shall not be considered to be com piled with unless such word, statement, or other informa- ; tion also appears on the outside container or wrapper, if . any there by, of the retail package of such article, or is ; ieasily legible through the outside container or wrapper. j ; l) The term "immediate container" does not include j Ipackage liners. ; I I m) The term "labeling" means all labels and other j 'written, printed, or graphic matter (1) upon any artiele or j any of Its containers or wrappers, or (2) accompanying such j ! articles. i > i . 1 i n) If an artiele Is alleged to be misbranded be- j jcause the labeling Is misleading, then in determining I 'whether the labeling Is misleading there shall be taken in-j to account (among other things) not only representations made or suggested by statement, word, design, device, or any combination thereof, but also the extent to which the labeling fails to reveal faets material in the light of such representations or material with respect to conse quences which may result from the use of the article to which the labeling relates under the conditions of use prescribed in the labeling thereof or under such conditions of use as are customary or usual. !Sources C. H. Sandage, Advertising: Theory and Practice ' (Chicago: R1chard D. Irwin, Inc., 1548), pp. I 72. I APPENDIX J EXCERPTS PROM CALIFORNIA LAWS AND STATUTES | PERTAINING TO ADVERTISING REGULATIONS I ) Section 17500 - Making op disseminating untrue or j misleading statements* unlawful | 1 S j It is unlawful for any person* firm, corporation or j i association, or any employee thereof, with Intent j directly or indirectly to dispose of real or personal j property, or to perform services, professional or other wise, or anything of any nature whatsoever, or to indue© the public to enter into any obligation relating there to, to make or disseminate or cause to be made or dis seminated before the public in this State, in any news- I | paper or other publication, or any advertising device, j ; or by public oratory or proclamation, or in any other j manner or means whatever, any statement concerning such ; ! real or personal property or services, professional or j otherwise or concerning any circumstance or matter of I : fact connected with the proposed performance or disposi-! j tlon thereof, which is untrue or misleading, and which \ | is known, ©r which by the exercise of reasonable care | should be known, to be untrue or misleading. (Added by j Stats. 1941, ch. 63, Sec. 1, p. 727.) i i ! , i Section 17501 - Worth or value: former price i | (Worth or value defined.) For the purpose of this I article the worth or value of any thing advertised is | the prevailing market price, wholesale if the offer is i at wholesale, retail if the offer is at retail, at the | time of publication of such advertisement in the local- | ity wherein the advertisement is published. t J (Former price.) No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above j defined within three months next immediately preceding j the publication of the advertisement or unless the date j when the alleged former price did prevail is clearly, j exactly and conspicuously stated in the advertisement. (Added by Stats. 1941* ch. 63* Sec. 1* p. 728. iSource: Peerings Business and Professions Codes* I California taws and Statutes’ . APPENDIX K SPECIFIC CALIFORNIA REGULATIONS COVERING ADVERTISING CONDUCT IN SEVERAL PHASES OF BUSINESS I(Listed by subject and by code number for reference. A 'partial list, from Deerlngs Business and Professions Codes# California Laws and Statutes.) Sec. 2410 Sec. 17532 Sec. 2380 Sec. 17531 Sec. 4037 Sec. 17535 Sec. 2381 Sec. 601 Sec. 17533 Sec. 600 Advertising of Chiropodies! service at stipulated price. Advertising of coal under other than its true name of description. Deceitful advertising and unprofessional conduct in the medical profession. Advertising of defective merchandise, re jected merchandise and second-hand mer chandise. Use of words "drug" or "drugs” in adver tising. Injunctions against violation of adver tising codes. Menses, advertising the regulation or re establishment of, unprofessional conduct. Advertising medicine or offering service to produce miscarriage. A felony. Misrepresentation of newspaper and peri odical circulations. Advertising of cures for venereal disease lost manhood, lost vitality, impotency, seminal emissions, self-abuse, varicocele or excessive sexual indulgence. Sec. 5311 Prohibition of advertising displays as nuisances. 130 j See. 20880 20893 Petroleum advertising. See. 17530 Making or disseminating false statements as to real estate. Se o. 4882(j) False or misleading advertising by vet erinarians . Se c • 17533.5 Use of word MArmyM in surplus materials advertising. Sec. 17531.5 Surplus materials advertising. j | Urth/6rslty of Southern California Libre# i................. i ,Source: Deerings Business and Professions Codes* i California taws and Statutes.

Linked assets

University of Southern California Dissertations and Theses

Conceptually similar

PDF

The development of a marketing program for a downtown Los Angeles club and its attendant problems

PDF

An analysis of cooperatives as a solution to the basic social and economic problems of the Philippines

PDF

The marketing of large-scale electronic business data processors

PDF

An investigation of the cooperative movement in India

PDF

Training salesmen: A study of principles and methods, and their application to a specific training program

PDF

The marketing characteristics of the Southern California chemical industry

PDF

A study of state regulations affecting the alcoholic beverage industry

PDF

An investigation of certain pricing practices in restraint of trade

PDF

An investigation of the causes of promotion problems of room air conditioner manufacturers and distributors

PDF

An investigation of consumer acceptance of the Consumer Cooperative Society of Santa Monica

PDF

A market analysis and trade study of Santa Ana, California

PDF

The cigar industry: Cooperative methods employed to counteract a declining demand

PDF

A study of the United States maritime industry and effects of the subsidy program

PDF

An investigation of the development and growth of baseball farm systems: With special reference to its inventor, Branch Rickey

PDF

A study of the history of fairs and markets and their influence on modern retailing

PDF

A survey of Los Angeles interviewers' attitudes toward research concerns

PDF

Polyethylene: Its history and markets: The future

PDF

A comparative study of the public relations of the different foreign industries in the Philippines

PDF

An analysis of product design in modern manufacturing

PDF

The use of public relations activities by management as a means of securing stockholders' cooperation

Asset Metadata

Creator Hayward, Stewart L. (author)

Core Title An analysis of the limits and responsibility for control over unethical advertising practices

Degree Master of Business Administration

Degree Program Business Administration

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag business administration, marketing,OAI-PMH Harvest

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Mead, Richard R. (committee chair), Dockson, Robert R. (committee member), Gilchrist, Franklin W. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-133036

Unique identifier UC11262593

Identifier EP43403.pdf (filename),usctheses-c20-133036 (legacy record id)

Legacy Identifier EP43403.pdf

Dmrecord 133036

Document Type Thesis

Rights Hayward, Stewart L.

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA