Student Scholarship

Document Type

Research Paper

Abstract

This paper, presented in December 1960, examines the evolution and authority of the Federal Trade Commission regarding the regulation of advertising within the broadcast industry. The author begins by detailing the historical background of the commission, noting its creation in 1914 to modify antitrust laws and establish a specialized body to supervise the competitive system. While originally intended to manage monopolistic restraints, the commission increasingly focused on the common law doctrine of unfair competition, eventually finding its most fruitful legal activity in the prevention of false advertising and misbranding. The transition from requiring proof of specific injury to competitors to a broader mandate of protecting the public interest was solidified by the Wheeler-Lea Act of 1938. 

The study further explores the history of broadcast advertising, tracing its growth from early radio experimentation in 1920 to the establishment of television as a dominant cultural and economic force by the mid-1950s. As broadcast media became the primary vehicle for reaching consumers, the potential for public deception grew. The author highlights that a series of industry scandals in the late 1950s, specifically involving rigged quiz shows and payola, served as a catalyst for the commission to intensify its surveillance of broadcast commercials. 

Under the leadership of Chairman Earl W. Kintner, the commission significantly increased its monitoring efforts and the issuance of formal complaints against deceptive practices. The document analyzes various legal actions taken between 1958 and 1960, noting a sharp rise in cases involving products ranging from dietetic bread to household appliances. Finally, the paper discusses current strategies for maintaining industry integrity, emphasizing a dual approach of rigorous law enforcement and the encouragement of voluntary self-regulation by broadcasters and advertisers to prevent the necessity of a more restrictive police state.

Research Highlights

  • The Problem: Identifying factors in broadcast advertising regulation falling under Federal Trade Commission (FTC) jurisdiction and explaining the agency's increased surveillance of commercials following industry scandals. 

  • The Method: Analysis of FTC annual reports, government publications, legal texts, and 39 specific Commission complaints; interviews with legal advisors Charles A. Sweeny and Henry Miller; and a review of speeches by Chairman Earl W. Kintner. 

  • Quantitative Finding: By 1925, false advertising orders comprised 70% of annual FTC orders; 1956 filings included 150 deceptive practice complaints; the 1961 budget sought a $160,000 increase for radio-TV surveillance; FTC complaints in this field rose from 14 between October 1958 and November 1959 to 25 between November 1959 and December 1960. 

  • Qualitative Finding: The 1938 Wheeler-Lea Act expanded FTC authority to "unfair or deceptive acts or practices" regardless of specific injury to competition; the 1950 amendment established separate daily penalties for continuing violations; industry-wide shifts from "goodwill" announcements to direct advertising led to increased monitoring of network scripts and the creation of a specialized investigating unit equipped with audio-visual recording tools.

Publication Date

12-1960

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

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