Chapter 3

1. Chapter 3 Legal and Ethical Implications

2. Federal regulation Federal Communications Commission • Sponsorship identification … Must sponsor’s name be mentioned in a commercial? • Yes, public must be aware that it’s listening to an advertisement. Sponsor’s name must be mentioned at least once. • Payola and Plugola … What are they? Payola …Penalty, $10,000 fine and year in jail … Plugola … announcer “plugs” product, not mentioning that he has received payment or some inducement. • Station-conducted contests … What do you always hear about contests on the radio? • Station must disclose the terms of the contest (What are they?)

3. Political sponsorship identification …. What do you always hear at the end of a political ad? • Sponsor of a political ad must be clearly identified … listeners must know they are listening to a political ad and understand who paid for the broadcast time. • In Radio spots, announcement at the end … in TV ads, sponsor information may be presented visually. • What is “Equal time”? ….If a station carries an ad for one candidate, it must carry ads for others.

4. Liquor advertising … Why did liquor advertising not appear on TV until 1996? Liquor industry voluntarily refrained from broadcast advertising … never a law against it. • Stations cautious about liquor advertising, fearing backlash against beer and wine advertising (cigarette advertising banned in 1971). Federal Trade Commission … protects the public from unfair and deceptive business practices, including false and misleading advertising • Deceptive advertising … What makes advertising deceptive? Deliberately false demonstrations or statements … or true statements that convey a misleading implication.

5. Rigged demonstrations … FTC expects advertisers to show a product as it really is … not altered for effect. • FTC tolerates a certain level of exaggeration … What about the statement: “Bayer works wonders”? … Such exaggerations are known as “puffery” – broad, vague, laudatory language. • FTC believes everyday consumers are intelligent enough to recognize puffery and not take it seriously. • Volvo fined for misrepresenting the strength, crashworthiness and structural integrity of its automobiles … Pickup driving over a row of automobiles, all crushed except the Volvo … Volvo was structurally reinforced, others not.

6. Testimonials … must celebrity endorsers use the product? Yes, testimonials and endorsements must be genuine. • Actors need not actually use a product … but if you identify a person as “Mrs. Jones of Omaha,” she must be Mrs. Jones of Omaha (unless an obvious spoof). • Comparative advertising … comparative ads should not disparage or unfairly attack competitors. • Research data ….claims based on research must not be false or misleading

7. Truth in lending … Why the rushed reading of legal information at the end of an ad? Advertiser must fully disclose all credit terms. Self-regulation – ethical questions • Stereotyping – What is it? Shorthand used for convenience. Help to avoid character development. Guy in the black hat (bad guy) … young man with thick glasses (geek) … burly college athlete (dumb jock). • Viewers may come to believe stereotypes are true, or almost always true. • What are some stereotypes of women? • What are some ethnic stereotypes? Complaints about the Taco Bell chihuahua (“Yo quiero Taco Bell.”) Others liked the Chihuahua and the character survived. • Avoid blatant and unflattering stereotypes.

8. Cable advertising • Cable is regulated more by local franchising than FCC. Not required to observe the FCC rules for sponsorship identification and contests. • But cable must observe FCC political sponsorship identification rules. • FTC may regulate advertising in all media.