Advertising Self-Regulation
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CHAPTER VIII
ADVERTISING SELF-REGULATION
A. Introduction
For over forty years, the United States advertising industry has
maintained a system of self-regulation designed to ensure that
advertisements are truthful and accurate. The main purposes of the
system are to advance consumer confidence and trust in advertising, to
promote fair competition, and to minimize unnecessary government
involvement and law enforcement activity. Over time, self-regulation of
national advertising has played a significant role in the development of
advertising law and consumer protection.
The Advertising Self-Regulatory Council (ASRC) has established
policies and procedures for the advertising industry’s self-regulatory
programs, including the National Advertising Division (NAD) of the
Council of Better Business Bureaus, Inc. (CBBB), the Children’s
Advertising Review Unit (CARU), the National Advertising Review
Board (NARB), and the Electronic Retailing Self-Regulation Program
(ERSP).1 ASRC seeks to sustain the highest standards of truth and
accuracy in advertising through voluntary self-regulation and, in turn,
provide guidance to advertisers and to the public.2
Other self-regulatory measures are provided by other media outlets
such as the clearance and review processes of the major television
networks. Additional self-regulatory measures are provided by other
media outlets, certain trade associations, local Better Business Bureaus
and individual marketers and advertising agencies.3
1. Until 2012, ASRC was known as the National Advertising Review
Council (NARC).
2. See ADVERTISING SELF-REGULATORY COUNCIL, http://www.asrcreviews.org
(last visited Apr. 14, 2015).
3. For example, the alcohol industry’s three trade associations, the Distilled
Spirits Council of the United States (DISCUS), the Beer Institute (BI),
and the Wine Institute (WI), have issued guidelines to address concerns
about underage exposure to alcohol marketing and to limit where alcohol
advertising and marketing may appear. FED.TRADE COMM’N,SELF-
REGULATION IN THE ALCOHOL INDUSTRY i (2014), available at
https://www.ftc.gov/system/files/documents/reports/self-regulation-
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1324 CONSUMER PROTECTION LAW DEVELOPMENTS
Industry stakeholders have recognized that misleading advertising
claims erode public trust in their products, and that ensuring truth and
accuracy in advertising has a salutary impact on competition. Industry-
wide self-regulation provides a mechanism for competitors to resolve
legal disputes related to advertising without resort to costly litigation.
Increasingly, self-regulation has become regarded by regulators as a
useful means not only of providing guidance but of fostering consumer
confidence in advertising and in the commercial marketplace. The
Federal Trade Commission (FTC) and federal courts have commented
favorably on the role of industry self-regulation in the area of advertising
and marketing.4 In one case, a federal court stayed proceedings pending
alcohol-industry-report-federal-trade-
commission/140320alcoholreport.pdf. The FTC has also praised the
electronic game industry for its strong self-regulatory code and
enforcement of restrictions on marketing, advertising and selling mature-
rated games to younger audiences. FED.TRADE COM M’N,MARKETING
VIOLENT ENTERTAINMENT TO CHILDREN:ASIXTH FOLLOW-UPREVIEW
OF INDUSTRY PRACTICES IN THE MOTION PICTURE,MUS IC RECORDING,
AND ELECTRONIC GAME INDUSTRIES (2009), available at
http://www.ftc.gov/sites/ default/files/documents/reports/marketing-
violententertainment-children-sixth-follow-review-industry-practices-
motion-picturemusic/p994511 violententertainment.pdf.
4. See Deborah Platt Majoras, Chairman, FTC, Univ. of North Carolina
School of Journ alism and Mass Communication: The Vital Role of
Truthful Information in the Marketplace (Oct. 11, 2007), available at
http://www.ftc.gov/speeches/majoras/071011UNCSpeech_DK.pdf
(noting that NARC “has earned a reputation as an effective industry
self-regulation program” that “sets FTC-like standards for truth and
accuracy in advertising”); Robert Pitofsky, Chairman, FTC, Prepared
Remarks at the D.C. Bar Association Symposium: Self-Regulation and
Antitrust (Feb. 18, 1998), available at
http://www.ftc.gov/speeches/pitofsky/self4.htm (noting references to
the NAD as an effective model of self-regulation). See also BellSouth
Telecomms. v. Hawk Communs., No. 1:04-CV-280-MHS, 2004
WL 1085324, at *3-*4 (N.D. Ga. 2004); Mead Johnson & Co. v.
Abbott Labs., 41 F. Supp. 2d 879, 890 (S.D. Ind. 1999), rev’d 201 F.3d
569, 573 (W.D. Mich. 1997) (citing NAD decisions in support of
requirement that survey subjects be potential users of the product in
question); Coca-Cola Co. v. Procter & Gamble Co., 642 F. Supp. 936,
939 (S.D. Ohio 1986), rev’d on other grounds 822 F.2d 28 (6th Cir.
1987); AMF, Inc. v. Brunswick Corp., 621 F. Supp. 456, 462 (S.D.N.Y.
1985) (court compelled Brunswick to submit the dispute to NAD for
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ADVERTISIZNG SELF-REGULATION 1325
the outcome of a NAD proceeding, deferring to the self-regulatory
agency’s own process before providing the parties with a legal remedy.5
B. ASRC and Voluntary Self-Regulation of Advertising
1. Origins
In 1971, in response to growing concerns about the erosion of public
trust in advertising, the advertising industry formed a strategic
partnership with CBBB to create an independent self-regulatory body—
now known as ASRC.6 The goal of ASRC is to sustain the highest
standards of truth and accuracy in advertising through voluntary self-
regulation and, in turn, provide guidance and set standards of truth and
accuracy for national advertisers. The self-regulatory system developed
by ASRC encourages advertisers’ cooperation and compliance by
focusing on three goals: (1) increasing public trust in advertising, (2)
maintaining a level playing field for settling disputes among competing
advertisers, and (3) minimizing the need for government involvement in
the advertising business.
Ensuring high standards of truth and accuracy increases public trust
in the credibility of advertising and enables consumers to make better
purchasing decisions. Truthful advertising also promotes fair competition
and spurs product innovation. Moreover, effective self-regulation also
frees government regulators such as the FTC and the state attorneys
general to devote their resources to investigating advertisers that engage
arbitration, lauding NAD’s “particular experience and skill” in
resolving these matters, with note that NAD “coupl[es] relative
informality and confidentiality with safeguards to ensure procedural
fairness”).
5. See Russian Standard Vodka (USA), Inc. v. Allied Domecq Spirits &
Wine USA, Inc., 523 F. Supp. 2d 376 (S.D.N.Y. 2007) (granting a
stay of federal court proceeding and commenting that “[a]llowing the
NAD, a highly reputable institution, to provide its expert view on
Stoli’s authenticity as a Russian vodka would be extremely useful in
resolving remaining claims in the complaint. The decision would
promote judicial economy and be informative to the court in its own
decision regarding the remaining claims. Furthermore, the NAD
decision would promote settlement between the parties.”).
6. The advertising industry was represented by its three major trade
associations, the Association of National Advertisers, the American
Association of Advertising Agencies, and the American Advertising
Federation (AAF).
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