Previously published in Response magazine
Twenty years ago, the Federal Trade Commission's consumer protection policies were criticized by many as overly zealous and anti-business. Even the liberal Washington Post poked fun at the FTC, calling it "the National Nanny."
In the past few years, there have been many signs that the FTC is turning back to the activist philosophies that generated so much fear and loathing within the business community in the 1970's. For example, the Federal Trade Commission recently ordered an advertiser to engage in corrective advertising in order to erase the lingering effects of its allegedly deceptive ad campaign.
The FTC's target in this case was Doan's, a relatively small but well-known niche player in the over-the-counter analgesics market. For many years, Doan's has advertised and marketed its product for the relief of back pain.
The FTC had a problem with Doan's advertising because it believed that those ads made unsubstantiated superiority claims for back pain relief. For example, several Doan's ads depicted Advil, Tylenol, and other competitive pain relievers, noted that Doan's had "an ingredient these pain relievers don't have," and termed Doan's "the back pain specialist." According to the FTC, the combination of Doan's truthful statement that it did have a unique active ingredient and its characterization of its product as "the back pain specialist" communicated the claim that it was superior to other OTC analgesics for the relief of back pain.
The FTC's interpretation of Doan's advertising was reinforced by the fact that Doan's pain reliever cost significantly more than general-purpose analgesic products. After all, if consumers didn't think that Doan's was superior for the relief of back pain, why would they be willing to pay more for it?
Doan's disagreed that it had made superiority claims, but it did concede that there were no scientific studies proving that its unique active ingredient worked better than the active ingredients found in other analgesic drugs. It probably would have signed a consent agreement rather than litigating the case but for the FTC staff's insistence that it engage in corrective advertising.
What is corrective advertising? Most FTC orders aimed at deceptive advertising simply require the advertiser to stop making false claims and tell the truth. But if a false claim has created a misbelief in the minds of consumers that is likely to linger long after the false claim is stopped, the FTC may require the advertiser to put out an affirmative message that corrects that false claim.
The most famous FTC corrective advertising case was its 1975 decision involving a decades-old advertising campaign claiming that Listerine mouthwash was effective in treating colds and sore throats. To counteract the lingering effects of the long-running campaign, the FTC ordered Listerine to add a corrective message - "Contrary to prior advertising, Listerine will not help prevent colds or sore throats or lessen their severity" - to all its advertising for approximately one year. (The "Contrary to prior advertising" language was later deleted.)
The order against Doan's also requires it to add a corrective message - "Although Doan's is an effective pain reliever, there is no evidence that Doan's is more effective than other pain relievers for back pain" - to each and every one of its advertisements (except very short TV and radio spots) for at least one year.
One FTC commissioner dissented from the decision to require corrective advertising, in part because he thought that the evidence in the Doan's case was not as strong as the evidence in the Listerine case, but also because he believed that such a requirement was "an unconstitutional infringement on [the advertiser's] right to engage in commercial speech under the First Amendment."
First Amendment arguments have rarely been successful in FTC cases involving advertising. Whether a free speech argument will prove successful on appeal in the Doan's case remains to be seen. But given the FTC's increasingly zealous enforcement policies, advertisers and marketers may be forced to turn to Congress if the courts refuse to use the First Amendment to rein in the agency.