For the past decade, the advertising industry has kept a nervous eye on the Federal Trade Commission, often complaining that the agency was going too far in regulating false and deceptive commercials.
Today, advertising firms are still watching the agency anxiously--but now because they are concerned that President Reagan's commission chairman may be going too far in trying to deregulate them.
The industry strongly supports Chairman James C. Miller III on his legislative proposals that would make it harder for the FTC to crack down on deceptive and unfair advertisements. However, many advertising executives are becoming increasingly unnerved about Miller's suggestions that the agency change its decade-old policy which now requires that before advertisers launch a commercial, they conduct detailed scientific tests to prove that all its claims are true.
"We welcome a review of the policy," says Charles F. Adams, executive vice president of the American Association of Advertising Agencies. "But we are very, very strong believers in ad substantiation and its benefits." He said that his organization would not want to see the program weakened in any way. "The program has worked well and has helped bolster the believability of advertising."
Their concern was heightened this week when Timothy J. Muris, director of the agency's Bureau of Consumer Protection, issued a background paper explaining why changes should be made.
Muris, an economist and lawyer who has worked with Miller for the past two years, contended that he had no desire to abolish the program. Yet he called for several key changes, arguing that the substantiation program requires such extensive testing that it "has sometimes caused the commission to harm, not help consumers."
For one thing, Muris noted, the amount of testing required often deters advertisers from making truthful claims -- such as statements that a low-cholesterol diet may reduce the risk of heart attacks -- that consumers could find useful but which can't be made because they can't be verified by scientific testing.
"If you make it hard for false claims to be made, you also make it easier for true claims to be stopped," said Muris in a telephone interview. "It's the same as trying to make it harder to convict an innocent person. In the process, you make it easier for guilty people to be let free."
Additionally, Muris argued, "the cost of developing substantiation for claims that are made must be considered, for consumers ultimately bear these costs as well."
As a result, Muris has urged the commission to attack inaccurate claims only if they are likely to injure consumers. "There is no reason to spend public resources, except to protect consumers. When consumers are not likely to be injured they do not need protection."
Additionally, Muris said the commission should not always require advertisers to complete all the tests before a claim is made. If the advertisers had a "reasonable basis" for making a claim, then they should be allowed to go ahead and make it -- pending completion of more detailed tests.
Unlike many other deregulatory proposals, Muris' are not being hailed by the affected industry.
"I don't subscribe to the view that a lie is okay if nobody is hurt," said Howard H. Bell, president of the American Advertising Federation.
What's more, Bell said, "we feel very strongly that there be prior substantiation of claims before an advertisement is released . It has had a salutory affect on protecting the marketplace -- consumers as well as advertisers -- making sure that competitors don't make false claims to unfairly gain a share of the market."
Relaxing the prior substantiation rule "will place the honest advertiser -- which is most advertisers -- at a terrible disadvantage" as unscrupulous advertisers make false claims and win customers before the claims can be proven false, Bell said.
Despite the industry's skepticism, Muris and Miller are intent on getting the commission to review the ad substantiation program, "It's been around for 10 years. It is time for the commission to take stock," Muris said.