The Reagan administration announced its support yesterday for the proposal by the chairman of the Federal Trade Commission to dramatically curb the agency's powers to challenge unfair and deceptive advertising.
In a letter to Congress, the director of the Office of Management and Budget, David A. Stockman, said it "would be desirable" to adopt the changes proposed by Chairman James C. Miller III to limit the FTC's broad authority to stop misleading, false and exaggerated ads.
Redefining the law "would clarify the vague and subjective standards of the current law, provide greater certainty to private parties and the commission's own enforcement officials and ensure that the FTC Act is focused on actual cases of harm," Stockman wrote Rep. James Florio (D-N.J.), the chairman of the House subcommittee that oversees the FTC.
The letter arrived the same day the subcommittee began hearings on the FTC's future--a hearing in which all other FTC commissioners and congressmen sharply criticized key elements of Miller's proposal.
However, all commissioners were united in at least one position: they all vehemently denounced a proposal by the American Bar Association, American Medical Association and other professional groups to bar the FTC from regulating the activities of professionals, such as restrictions on advertising.
The White House also indicated its opposition to exempting the professions from the FTC's jurisdiction--but only if Congress agreed to Miller's proposed advertising changes.
Although Miller has long opposed any efforts to limit the FTC's crackdown on professions, he also stated that "the strength of his opposition" to the professional exemption "is based on the degree to which Congress" adopts his changes on unfair and deceptive advertising.
A Reagan appointee, Miller has repeatedly argued that the agency has brought trivial and unreasonable advertising cases in the past. Only a change in the law can prevent future abuses, Miller contends. Specifically, he wants to bar the FTC from bringing cases against unfairs ads and practices--such as high-pressure sales tactics--unless the commission can first prove that these activities caused "substantial" injury and were not outweighed by any benefits.
Additionally, Miller wants to limit the commission's authority to crack down on deceptive ads. Before the commission could act, it would have to prove that the ad was so false and exaggerated that a reasonable consumer was actually harmed by the promotion.
"Changing the definition of deception will not prevent a rogue commission from instigating harassing and burdensome investigations, or bringing complaints which are trivial," charged FTC Commissioner Michael Pertschuk, who also served as FTC chairman during the Carter administration.
Echoing the comments of the two other commissioners--all appointed before the Reagan administration--Pertschuk said that all a change would do would be to create uncertainty and make it difficult for the commission to bring any cases, no matter how reasonable they may be to Chairman Miller.