Heaven help the beer company that runs a commercial on a TV program a staff member of the Federal Trade Commission happens to be watching with his or her child.
That’s what happened when a spot for Stroh Brewery Co.’s malt liquor showed up on an early evening MTV show aimed at teenage girls–an incident that Stroh has said was a mistake.
It turned out to a big mistake. The FTC’s five commissioners voted to have the agency’s bureau of consumer protection investigate advertising by Stroh, along with that of Joseph E. Seagram & Sons, the liquor company. Seagram last year was the first major liquor company to break the industry’s voluntary ban on television advertising when it bought time for Crown Royal whiskey on some independent stations.
Now the investigation has been expanded to include the advertising practices of other major brewers, including Anheuser-Busch Co. and Miller Brewing Co.
The beer and liquor probe–like the reopening of the case concerning Joe Camel ads from R.J. Reynolds Tobacco Co.–is attracting national media attention. But scrutinizing all kinds of advertising for unfairness, misleading consumers or perpetuating fraud has been on the rise at the FTC over the past two years.
The bureau’s new aggressiveness is clearly demonstrated by the staff’s recent recommendation that the commission bring a complaint, or lawsuit, against Reynolds, alleging Joe Camel is unfair advertising. The staffers already have done their investigation, which was started after the FTC received a petition from 67 members of Congress last summer asking the agency to reopen its investigation.
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The FTC decided in 1994 not to pursue a case against the cartoon ad campaign, but the staff contends there is new evidence indicating the ad campaign targets children.
Observers on both sides of the issue say this step and others indicate the agency is venturing into the realm of “unfairness” issues after abandoning it for nearly 20 years.
“They have been treading softly with that since they were whacked over the head a long time ago,” noted Joel B. Cohen, professor of marketing at the University of Florida at Gainesville and director of its Center for Consumer Research.
The “whacking” was at the hands of Congress, which blocked agency efforts in 1978 to restrict television advertising aimed at children.
“That was the end of the FTC’s focus on the fairness issue, and it moved over to the `deceptive’ issue,” said Dale Kunkel, professor of communications at the University of California at Santa Barbara.
What has changed is the overall political climate and the public’s attitude toward such industries as tobacco and alcohol.
Under the direction of FTC Chairman Robert Pitofsky–who served as director of the agency’s consumer protection bureau in the 1970s–and his 1995 appointee to head consumer protection, Joan Z. Bernstein, major advertisers in many businesses from food supplements to sunscreens have been forced to stop practices that have plagued consumers for decades.
“We think the FTC is manned by strong regulators who are long-term experts both within the government and as private litigators in this area and nobody can pull the wool over their eyes,” said Daniel Jaffe, executive vice president of the Association of National Advertisers, which represents the country’s big-time marketers.
Cases the bureau has wrapped up in the last year include:
– Stopping Abbott Laboratories from promoting its nutritional beverage Ensure to healthy, active adults.
– Ending the claims by the marketer of Promise margarine that use of the product was linked to a healthy heart.
– Forcing Schering-Plough Healthcare Inc. to stop deceptive claims about the sun protection offered by its Coppertone sunscreens for children.
– Charging Gerber Products Co., the leading baby food marketer, with misrepresenting pediatricians’ recommendations.
– Winning a $5 million settlement for consumer redress from Computer Business Service Inc. after the company ran false ads about the potential earnings from a home-based computer business.
In choosing cases to pursue, the FTC looks at whether the ad is about a product or a service that is health- or safety-related, whether the misleading nature of the ad could cause significant economic harm to consumers, and whether the campaign is a national rather than a local one, said Bernstein, who likes to be called Jodie.
“Also, we try to package things so that they have a broader impact than simply bringing one case,” she said. “Sometimes, though, we do bring one case because it is a significant one and one that we think will make a point that the segment of the economy that is affected by it would take a significant message from, and so we would get more deterrence,” she said.
One of the bureau’s cases last year involved several of the country’s biggest oil companies and their advertising for high-octane gasoline.
“We knew from surveys that most consumers believed they really need high-octane gasoline for all kinds of cars, which cost them a boatload of money,” Bernstein said. “And as every automobile manufacturer will tell you, that is not the case.”
Amoco Corp., Sun Co. and Unocal Corp. all agreed to stop running the ads, but the agency filed suit against Exxon Corp. The case is scheduled for an administrative trial.
Though Bernstein said she couldn’t comment directly on the current probe into alcohol advertising, she said the focus in cases like these is “to look at whether or not they are targeting underage consumers who are not permitted to buy or consume these products. We would also look at the question of unfairness as a combination of placement and content.”
The FTC has the power to subpoena every document that has anything to do with the creation or placement of the ads. So if, for example, the question is whether the beer or cigarette marketer used imagery that it knew through its own research would appeal to an underage audience, the FTC could ask for records of all meetings leading up to the approval of a campaign.
“If we found that three months ago they inadvertently had an ad in one place it should not have been, we probably would not recommend to the commission that they file a charge. If we found that there were systematic placements where content and placement rules had been violated,” the commission would begin a dialogue with the company that could ultimately lead to charges, she said.
Jaffe, of the Association of National Advertisers, supported the FTC’s efforts.
But not everyone thinks so highly of the FTC’s new militancy.
Washington lawyer William MacLeod, an FTC official during the Reagan and Bush years, thinks the agency is stepping onto marshy turf.
“In my tenure, the focus was on hard-core fraud,” said MacLeod, whose firm counts R.J. Reynolds among its clients. “Now the commission is bringing aggressive law-enforcement (techniques) and applying them to advertisers in relatively traditional national advertising cases. . .and that’s a disturbing development, I think.”
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Others, among them Bobby Calder, a professor of marketing at Northwestern University’s J.L. Kellogg Graduate School of Management, think the FTC’s shift in approach could raise some free-speech issues.
“You don’t want to restrict people’s ability to advertise to legitimate targets,” he said, “and it becomes a very subjective issue as to whether the affect on someone who is not targeted is so detrimental that you limit an advertiser’s ability to communicate with someone it is legal to communicate with. It’s a real thorny issue.”