Student Scholarship

Document Type

Research Paper

Abstract

This research paper, written in 1963, examines the effectiveness of the Federal Trade Commission Act in regulating false and misleading advertising, particularly within the burgeoning medium of television. The Federal Trade Commission, or FTC, operates as a regulatory body with jurisdiction over a vast portion of the United States economy, tasked with protecting the public from unscrupulous business practices and preserving fair market competition. The paper outlines the organizational structure of the agency, noting the roles of its various bureaus in investigation, litigation, and consultation to ensure adherence to federal laws. 

Central to the discussion is the impact of the 1938 Wheeler-Lea Amendment, which expanded the authority of the FTC to prohibit deceptive acts regardless of whether they caused direct injury to competition, thereby prioritizing consumer protection. The author analyzes specific litigated cases to illustrate these regulatory challenges. These include the use of moisture drops or flavor gems on Blue Bonnet margarine to simulate butter, the misleading comparison of Crest toothpaste against a non-commercial regular toothpaste concoction, and the infamous Palmolive Rapid Shave sandpaper demonstration, which utilized a plexiglass mock-up because real sandpaper could not be shaved in the time depicted. 

The evaluation concludes that while the FTC Act is fundamentally adequate due to its flexible and general wording, the rise of sophisticated psychological advertising and technical television demonstrations necessitates rigorous enforcement. The author advocates for the FTC to receive power to issue temporary cease and desist orders to prevent deceptive ads from causing harm while litigation is pending. Ultimately, the paper suggests that protecting the free enterprise system requires a combination of federal regulation, industry self-correction, and organized consumer advocacy to ensure that choices in the marketplace remain based on factual information rather than manufactured needs or false demonstrations.

Research Highlights

  • The Problem: Ineffective and deceptive television and print advertising practices, specifically those utilizing false demonstrations and misleading comparisons, required more rigorous enforcement of the Federal Trade Commission Act of 1914.

  • The Method: Analysis of the Federal Trade Commission’s (FTC) jurisdictional powers, organizational structure, and 1961 fiscal data, alongside a review of three specific litigated cases: Standard Brands (Blue Bonnet), Procter & Gamble (Crest), and Colgate-Palmolive (Rapid Shave).

  • Quantitative Finding: Federal appropriations for the FTC increased from $6,840,000 to $8,009,500 in fiscal year 1961; staff size grew from 782 to 855 employees; 465,324 radio and television commercials were reviewed by the Radio and Television Advertising Unit; deceptive practice complaints totaled 292 with 272 cease and desist orders issued.

  • Qualitative Finding: Deceptive advertising often utilizes "mock-ups" (e.g., plexiglass "sandpaper") or misleading comparisons (e.g., "regular toothpaste" not commercially available); internal industry codes like the National Association of Broadcasters' standards are frequently bypassed by "puffing" or psychological "need" creation; the Wheeler-Lea Amendment of 1938 expanded FTC authority to protect the public interest regardless of direct injury to competition.

Publication Date

1-1963

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

Faculty Sponsor

Archive

Download

Share

COinS