Advertising Regulation 2010

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National Advertising Review Council
Self-Regulation of the Advertising Industry

A Brief History of Advertising Regulation
The first official regulation of the advertising industry happened over 100 years ago, when in 1906 the government passed the Pure Food and Drug Act. In this era, the most common deceptive practice was to mislabel products, especially medicines, tonics, food, etc. from what the actual ingredients were in the container (FDA). Oftentimes, harmful ingredients were left off the label entirely. This law made it illegal to continue with those deceptive practices. Shifts in political power and cultural attitudes lead to new directions in the legal system.  The origin of federal regulation of advertising is a product of the Progressive Era, which was a time of at least moderate reform and restructuring in response to the industrialization, urbanization, and modernization of the late 19th century (Rabe). In 1914 the government established the Federal Trade Commission, initially to enforce anti-trust legislation. Soon they broadened their scope to include regulation of false advertising. The extent the FTC had to determine “misleading” advertising and their authority to punish the perpetrators was highly debated and took several years to establish (Rabe). With the passing of the Wheeler Lea Act in 1938 the Federal Trade Commission was amended to enforce the “unfair or deceptive acts or practices in commerce are hereby declared unlawful” (FTC). In the late 1960’s several advertising associations, some of which have been in place since the early 1900s, realized a need to function efficiently and without government involvement. They started planning a new non-government regulation entity. They grew tired of relying on government to regulate their industry and often felt they were treated unfairly (Rabe). This associational self-regulation would be a “manifestation of private-interest government which, like advertising, has to be a ‘mirror of society’ and of the community’s standards” (Boddewyn). It would need to offer an alternative to “over- or under-regulation” (Boddewyn).

The National Advertising Regulation Council was established in 1971 when the Association of National Advertisers - “ANA,” the American Association of Advertising Agencies - “AAAA,” and the American Advertising Federation - “AAF,” created an alliance with the Council of Better Business Bureaus - “CBBB,” to create an independent self-regulatory body (NARC). The NARC’s main mission is to “foster Truth and accuracy in national advertising through voluntary self-regulation” (NARC). The three main goals they use to foster advertiser compliance are: 1) Minimize governmental involvement in the advertising business 2) Maintain fairness for settling disputes among competing advertisers 3) Foster brand loyalty by increasing public Trust in advertising’s credibility (NARC) Minimizing governmental involvement: When considering self-regulation by the FTC or other government agencies, one can see the slippery slope and possible pitfalls that might ensue. Can the FTC truly be self-regulatory? However disguised, when the government is the one to self-regulate there is always a considerable possibility of infringing on First Amendment rights (Szoka). It would appear much better for the industry and consumers alike to have an industry selected regulation council. As Jean Boddewyn observed, the functions would be best performed by having social subgroups such as business associations and trade councils safeguard the public interest and set the industry public policy, provided they are properly institutionalized and supervised (20). Therefore, “governments can then focus on broad policies and impose few controls, leaving many of the latter to self-regulatory bodies” (20). Maintain fairness for settling disputes among competing advertisers: Industry and Government alike...
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