Ripping Up the Astroturf: Regulating Deceptive Corporate Advertising Methods

• Author: Matthew J. Scott
• Position: J.D. Candidate, The University of Iowa College of Law, 2020; B.A. Political Science, Iowa State University, 2017
• Pages: 431-461

431

Ripping Up the Astroturf:

Regulating Deceptive Corporate

Advertising Methods

Matthew J. Scott*

ABSTRACT: Astroturfing is a practice in which a corporate sponsor pays a

non-profit front group or public relations firm to disseminate a manufactured

message to create the illusion of grassroots advocacy in support of a particular

cause or for the company itself. This Note provides necessary background

information, examples, and methods by which a manufactured message is

dispersed to simultaneously mislead the public and lobby for support. This

Note goes on to present the problems with the current regulatory and legislative

frameworks, by referencing the Uniform Deceptive Trade Practice Act

(“UDTPA”), the Federal Trade Commission’s disclosure guidelines, and the

Securities and Exchange Commission’s mandatory disclosures for publicly

traded companies. In conclusion, this Note argues that the State governments

and Federal Agencies have the capability to update the laws and regulations

surrounding the astroturfing problem, and that the states should amend the

UDTPA to include astroturfing as a deceptive practice and require disclosure

of associations between companies and front groups that disseminate

manufactured messages. Alternatively, this Note argues that Congress should

pass a law requiring public disclosure of these associations to allow consumers

and investors alike to inform themselves of these practices and respond

accordingly—thus allowing the market to self-correct.

I. INTRODUCTION ............................................................................. 432

II.THE EVOLUTION OF GRASSROOTS AND THE EMERGENCE OF

ASTROTURFING ............................................................................. 433

A.CORPORATE AND CITIZEN INFLUENCE IN SOCIETY ..................... 434

B.GRASSROOTS ADVOCACY AND CHANGE THROUGHOUT

HISTORY ................................................................................. 434

C.ASTROTURFING AND CORPORATE MANIPULATION ..................... 436

1.Public Relations Firms and Front Groups ................... 436

*

J.D. Candidate, The University of Iowa College of Law, 2020; B.A. Political Science, Iowa

State University, 2017.

432 IOWA LAW REVIEW [Vol. 105:431

2.Methods of Astroturf Advocacy .................................... 438

D.ASTROTURFING IN HISTORY ..................................................... 441

E.POLICY CONSIDERATIONS AND PAST ATTEMPTS AT

REGULATION ........................................................................... 443

III. IMPEDING MARKET INFORMATION:ASTROTURFING AND

THE PUBLIC ................................................................................... 445

A.ASTROTURFING’S EFFECT ON CONSUMERS AND THE INABILITY

OF THE GOVERNMENT TO EFFECTIVELY ADDRESS IT ................... 446

B.ASTROTURFING’S EFFECT ON INVESTORS AND SHAREHOLDERS,

AND THE ROLE OF THE SEC ..................................................... 451

IV. REQUIRED DISCLOSURES:ARMING THE PUBLIC WITH

INFORMATION TO RIP UP THE ASTROTURF ................................... 454

A.MODERNIZING THE UNIFORM DECEPTIVE TRADE PRACTICES

ACT TO COMBAT ASTROTURFING ............................................. 455

B.MODERNIZING THE SEC’S DISCLOSURE POLICIES TO INFORM

INVESTORS OF ASTROTURFING PRACTICES IN COMPANIES .......... 457

C.DISCLOSURE AND MARKET SELF-REGULATION ........................... 459

V. CONCLUSION ................................................................................ 460

I.INTRODUCTION

In recent years, the Supreme Court’s decision to grant First Amendment

speech protections has garnered significant attention.1Citizens United v.

Federal Election Commission opened the floodgates for “dark money” to flow

through elections and campaigns in the United States.2 But an analogous

issue—one that affects the average person more directly—has largely been

ignored. Astroturfing is a practice in which corporate sponsor employs a

public relations firm, or maintains a non-profit front group, to serve as its

voice while the company remains anonymous.3 This front organization

projects an image of public support for a social cause or for the business itself,

when in reality, there is minimal public support. The hope is that the front

group can convince enough people that widespread public support exists, and

those people will then support the cause in the best interests of the hidden

1. See generally Citizens United v. FEC, 558 U.S. 310 (2010) (granting corporations First

Amendment protections); Mimi Marziani, Growing Backlash Against ‘Citizens United,’ NAT’L L.J.

(Jan. 23, 2012, 12:00 AM), https://www.law.com/nationallawjournal/almID/1202539063421

&Growing_backlash_against_Citizens _United [https://perma.cc/GWF6-H5HT].

2. Michael Beckel, What is Political ‘Dark Money’—And is it Bad?,CTR. FOR PUB.INTEGRITY

(Jan. 20, 2016), https://www.publicintegrity.org/2016/01/20/19156/what-political-dark-

money-and-it-bad [https://perma.cc/T4VH-YQL7].

3. See infra Section II.C.