Regulation of Advertising

Report Outline
Recent Extensions of Control Over Adversiting
Regulation of Advertising by Federal Agencies
Federal and State Control of Liquor Advertising

Recent Extensions of Control Over Adversiting

Within the last five years there has been a noticeable trend toward more extensive governmental regulation of advertising, reflecting an effort both to raise the plane of business competition and to protect the public against deception. Since 1933, existing laws giving federal and state governments general power to prohibit false and misleading advertising have been supplemented by legislation imposing special controls over the advertising of security issues and alcoholic beverages. Foods, drugs, and cosmetics likewise are to be singled out for special regulation—by the Federal Trade Commission—under the terms of a bill sponsored by Senator Wheeler (D., Mont.) and Representative Lea (D., Calif.), the conference report on which now awaits approval by the Senate. The Wheeler-Lea bill provides also for the strengthening of the F. T. C.'s powers over false and misleading advertising in general.

Increase in F. T. C.'s Powers Under Wheeler-Lea Bill

As originally offered in the Senate in 1936, the Wheeler-Lea bill was designed principally to broaden the Federal Trade Commission's power over false and misleading advertising and to expedite the Commission's procedure. Under the law by which it was established in 1914, the F. T. C. has general authority to prohibit false or misleading advertisements as “unfair methods of competition in commerce.” The Wheeler-Lea bill would extend this grant of power by authorizing the Commission to prevent “unfair or deceptive acts or practices in commerce.” This provision is intended to overcome the effect of a decision handed down by the Supreme Court, in the case of F. T. C. v. Raladam Company, in 1931.

In the Raladam case, the Court refused to uphold a Commission order directing the manufacturer of a preparation known as “Marmola” to cease advertising his product as an “obesity cure” unless the advertisements included the statement that the product should not be used except under medical direction. While agreeing that the Commission's findings warranted the conclusion that the preparation could not safely be used except under medical direction, the Court held that there was no evidence of injury to any competitor and that the advertising did not therefore constitute “an unfair method of competition.”