Advertising, Regulation of

The Freedom of Commercial Speech and Regulation of Advertising

Before the 1970s, the courts generally ruled that advertising was not entitled to any protection under [Page 49]the First Amendment. In a series of decisions during the 1970s, however, the U.S. Supreme Court made several landmark decisions that clearly stated that advertising can be protected under the First Amendment as a form of speech. For example, in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976), the Court voided a statute that made it unprofessional conduct for a licensed pharmacist to advertise the prices of prescription drugs. In ruling on a suit brought by consumers to protect their right to receive such information, the Court held that it is in the public interest to have such information about prices. The Court later held that lawyers, too, had the right to advertise prices.

Advertising, or commercial speech, as the Court termed it, however, is protected to a “lesser degree” under the First Amendment than other forms of speech such as political or individual speech. The Court has made it clear that commercial speech is linked inextricably to commercial activity, and thus such speech is entitled to a limited measure of protection. This leaves room to regulate advertising under certain circumstances.

Types of Advertising Regulation

By the early 1990s, the marketplace had become more complex. Consumerism and government regulations brought an end to a market governed by the classical libertarian principle of caveat emptor, “let the buyer beware,” which put the responsibility for ensuring product quality and interpreting product information on the consumer who bought the product or service. The marketplace is now under the principle of caveat venditor, “let the seller beware,” which puts the responsibility on the seller of the product or service. Thus, the government and the marketplace as a whole regulate product information, including advertising, to protect consumers as well as competition.

Advertising regulation comes from many sources. The most stringent regulation of advertising is by the federal and state government agencies that enforce the laws enacted by Congress or state legislatures. There are other institutions and organizations that regulate advertising. Consumer groups, for example, are a powerful force that regulates advertising by putting pressure on firms regarding truth and ethics in advertising. Individual advertisers and advertising agencies regulate advertising by self-policing advertising contents. Media firms also regulate advertising by screening the advertisements before placement.

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