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Ethics in Advertising

Ethics in Advertising – Marketing Degree Resources

Here is a guide to ethics in advertising regarding many controversial issues in the media today informing you of current and past legislation relating to advertising, while exploring the ethical implications of these themes.  This will help provide you with access to documents, organizations, and concepts that are central to the topic of advertising and the legal qualities surrounding it.  Please refer to our other valuable resources as you continue your study in marketing and advertising.

Ethics

Although in some way or another all laws deal with ethics, not all legal issues have the same sort of ramifications. While law is highly limited and confined by institutions, ethics go beyond institutional constraints and is therefore held to a higher standard. Ensuring ethical practices will  promote helpful laws.

Freedom of Speech

As outlined in the United States Constitution,  speech is not to be repressed by government. This includes all forms of expression, even what is known as “commercial speech.” Commercial speech is speech that proposes a commercial transaction, this includes advertising. Although commercial speech does not receive the same protection as other forms of expression, it is nevertheless protected by the Constitution.

As a result of this Constitutional protection, many criticisms of advertisement can not be disputed by the government. There are, however, a few instances where commercial speech can be regulated. For instance, if an advertisement contains misleading information or an illegal product it may be subject to regulation. Additionally, any advertisements with a significant government interest that would be directly advanced through regulation may be subject to change.

As long as a regulation can pass the previous stipulations it will be considered constitutional. It may be helpful to review some previous Supreme Court decisions regarding advertising. Additional sources focused on “commercial speech” have also been provided here.

Deceit

The Federal Trade Commission is a government entity that was created in order to combat deception in advertising. As outlined in the FTC Act of 1914, the FTC is responsible for regulating unfair methods of advertising. Additionally, the FTC gained the authority to regulate deceptive or commercially unfair advertisements.

Operating similarly to a court system, commissioners of the FTC hear cases regarding violations of the FTC Act. The FTC is also responsible for creating guidelines meant to advise marketers on fair advertising practices.

Foundational Principles

The FTC publishes policy statements regarding advertising, including the 1993 Policy Statement on Deception. This policy statement explains that a marketing effort is deceptive under the following conditions:

  • There is representation, omission, act or practice that would mislead consumers acting appropriately under the circumstances and that the given representation, omission, act, or practice is material.

Effectively, these conditions ensure that the given deceptive component is substantial in affecting the consumer’s choice of a certain product.

Proof

In order to counter deceptive advertising, the FTC must establish that an advertisement is indeed deceptive, and further, it must explain what is being conveyed to consumers. If the FTC determines that what the advertisement conveys differs too greatly from what it actually represents, it is considered deceptive. In order to prove this, it is necessary to examine evidence that establishes what message is provided to consumers as well as evidence regarding an actual product’s qualities.

One of the primary methods used in order to determine the message conveyed by an advertisement is the survey. The FTC will conduct surveys regarding advertisements in order to assess how people perceive them. Although this may not be the best method for understanding the effects of advertisements, it provides a great deal of insight into the meanings implied.

In determining the deception of an advertisement, it is important to assess a product’s qualities. To avoid unnecessary deceptive advertisements, the FTC requires that advertisers conduct proper research regarding claims they plan to make in advertisements. For instance, if an advertiser planned to claim the duration of a battery, it must provide research that serves as a basis for that claim. If no research is available for such claims, the advertisement will be considered deceptive.  This specific concept is also known as substantiation, and is widely discussed.

Response

A final decision regarding deception in an advertisement is rarely required by a commission of the FTC. Instead the FTC asks that certain actions be taken and the advertiser is more or less forced to accept.

When final decisions are issued concerning the deceptive nature of an advertisement, the advertiser will be confronted with three possible actions. First, the advertiser may be issued a Cease and Desist Order that requires the advertiser to no longer make the deceptive claim. Second, an Affirmative Disclosure Order that would force the advertiser to present more information to the consumer may be issued. Finally, a different form of Affirmative Disclosure known as Corrective Advertising may be put into place. This action is meant to rectify a long history of deceit and inform the consumer of said deceit.

Exaggeration

Claims that are slight exaggerations or hyperbole are typically not considered deceptive. Opinionated statements would also fit under this category. Phrases such as “the greatest” or “best” are considered to be sales talk and are not regulated. These broad statements are subjective and not especially convincing.

This acceptance can sometimes cause problems when the line between exaggeration and deception is not so clearly drawn. Some advertisers may maintain that their advertisements are not deceptive, but are instead merely exaggerations or subjective representations.

Fortunately, however, the FTC has a clear concept of “puffery.” The Commission believes that reasonable people do not believe that such claims represent true product qualities, or perhaps, these claims are impossible to prove true or false. Due to this understanding of puffery, there is little room for deception to be misunderstood. Deception would entail a misleading or distorted belief of a product, yet puffery includes claims that are either unprovable or unreasonable. Any confusion regarding the two concepts are the result of a misunderstanding of definitions.

Unfairness

As explained earlier, the FTC is also responsible for regulating unfair practices in advertising. Although deception may be one kind of unfairness, it is possible for advertisers to otherwise be unfair in their messages to consumers.

This responsibility of the FTC lead to the Commission overseeing a broad and diverse range or advertising practices. At one time the FTC had defined unfairness so that it included “immoral, unethical, oppressive, or unscrupulous conduct.”  Such a general definition resulted in an overly expanded amount of authority. In response, the FTC redefined its scope in its Policy Statement on Unfairness.

After much debate regarding the scope of the FTC, the FTC Act Amendments of 1994 made some significant changes to certain key terms. The term “unfairness” for instance, was redefined again in order to include a more specific and focused concept of unfairness. Ultimately, the definition includes acts that will possibly cause unavoidable substantial injury that is not outweighed by the overall benefit provided to consumers.

Subliminal Advertising

One of the more popular areas of advertising for the general population, subliminal advertising remains a hotly discussed topic. This concept continues to catch the attention of individuals everywhere.

Literally meaning below the threshold of consciousness, subliminal refers to the transmission of ideas without active consideration. Basically, the concept suggests that certain messages are conveyed below the conscious thought process. Furthermore, these conveyances are believed to be stored somewhere in our minds and may potentially affect our decisions or behavior. Founders of the concept maintain that advertising professionals take advantage of this in order to manipulate consumers’ behaviors without it being realized.

Originally known to some as  “subception,” subliminal stimulation does exist in some forms. Although subliminal stimulation is a real psychological phenomenon, it is unlikely that this can affect purchasing behavior in any meaningful way.

Tobacco, Alcohol and Advertising

Perhaps the most popular targets for advertising regulation, tobacco and alcohol continue to be surrounded by controversy. Due to the highly negative side effects of both products, they are subject to a great deal of debate.

Many maintain that advertisements for alcohol and tobacco result in consumption of these products. It is believed that the negative effects of these products can potentially be lessened by restricting and regulating advertisements related to both. Others, however, believe that there is no such proof, or evidence that the advertising of these products leads to an increase in consumption. They instead, maintain that the products themselves are dangerous, and that these products should be regulated.

Advertising and Children

Children are of special interest to many involved in advertising. This is true for those who produce advertisements, and those involved in regulating advertisements. Many issues of advertising laws and ethics arise from the potential effects that advertisements can have on children. There has been a great deal of activity relating to advertising and children, and they remain well protected by regulating institutions. Seeing as Television is a major means through which advertisers appeal to children, the Federal Communications Commission (FCC) is also responsible for overseeing and regulating advertisements aimed at younger viewers.

There is so much regulation involved in protecting children from potentially negative advertisements that it at times borders on unconstitutional. Although this may be an important effort to prevent children from being negatively effected, it raises important questions and issues about the Constitution and advertising. If abused, this willingness to protect children may be used to circumvent certain legal standards and regulations.

 

Privacy & Security

Historically, issues of security and privacy related to direct advertising more than anything else. Currently, however, privacy has become a major issue for many consumers. Due to the prevalence of Internet use and social media, advertising has become interpersonalized, or consumer specific. The space of the Internet poses many challenges to regulation and creates ambiguity in terms of what is acceptable and what is not. It also further questions privacy and security issues.

Intellectual Property

Trademark, copyright, and patent laws cover what is known as “intellectual property.” Historically overlooked by scholars and practitioners of law, this area is quickly becoming one of the more debated and pressing areas of law. Trademarks are frequently violated without repercussion, while intellectual property is often inadequately protected. Many advertisements are produced with no consideration of trademarks.

Games of Chance

Sweepstakes, contests, and lotteries all fit under the category of games of chance. Although games of chance have a long history in business, anti-gambling laws have resulted in their limited use in marketing. Facing a great deal of regulation on state and federal levels, games of chance require focused construction. There are many successful marketing tools that include games of chance, but in order for them to be allowed, they must not be include lotteries, or gift enterprises.

The most basic explanation of a lottery or gift enterprise includes: the distribution of a prize according to chance that requires consideration. As long as a contest does not include all of these components, it is typically acceptable.

Political Advertising

Political advertising faces different regulation than other advertisements for commercial products and services. This difference in regulation is due to the fact that political advertising is considered “political speech.” Ultimately, political speech is treated as the most valuable form of speech, and is therefore more protected than other types of speech. Although political advertising consists of advertising and political speech it is not considered “commercial speech.” Instead, all political advertisements receive the highest amount of protection under the First Amendment.

Telemarketing

New technologies have increased the ease of telemarketing, while consumers become more and more frustrated with the marketing approach. Able to make automated calls, and leave pre-recorded messages, telemarketers can solicit more people than ever before. Many people view this as intrusive and annoying. Telemarketing can also potentially cost consumers money by using up valuable minutes from their phone plans. As a result, many legal and regulatory measures have been instated in order to give power to the consumer.

Given the prevalence of telemarketing and the annoyance of consumers, many laws have been passed to make telemarketing a more controlled practice. The Telephone Consumer Protection Act for instance, is aimed at shielding consumers from excessive or unnecessary telemarketing. Additionally, a national “do not call list” has been created in order to ensure that people who do not wish to be contacted by telemarketers are not. Further legislation has been put into place that restricts telemarketers from operating in certain ways, including limits and specific requirements on calls.

Self Regulation

No concrete Code of Ethics has been created for the advertising industry. This is in part due to the nature of advertising. Because advertising relies on communication, the First Amendment protects many aspects related to it. While some professions must follow a code that is enforceable by law, there is no such thing for advertising. Any such code for advertising would conflict with free speech.

There is however a code of advertising made available by the Better Business Bureau. This is in no way an official or enforceable code, yet it does work in order to ensure ethical advertising.

Consumers can make complaints regarding false or offensive advertisements to the Better Business Bureau, who will then refer those complaints to the National Advertising Division (NAD). The NAD will then ask the advertiser to comply with the Code of Advertising, or discontinue the offending advertisements. If this fails, a panel consisting of representatives from other advertisers, a representative of an advertising agency, and a member of the public will decide whether or not the advertisement does not comply with the Code of Advertisement.

 

Miscellaneous

Other issues in advertising including the advertisement of food, and stereotypes present in advertisements.

Research Sources

Here are some other helpful resources for researching legal matters related to advertising.