Commercial Speech in the United States has a history that dates all the way back to 1931 in the case Near v. Minnesota. Although Commercial Speech was not a phrase that was used by the Supreme Court until 1942, this case was the beginning of the idea. It was in this case that the idea of "Prior Restraint" was deemed unconstitutional, and individuals could not be silenced beforehand for what they post online. "Subsequent Punishment" is when you punish an individual after the fact, and the court deems that fully constitutional in this case. This is where the idea of Commercial Speech protected under the First Amendment came about.
While you do have protection to post what you wish on social media, there are three exceptions to that statement:
Publications that are...
1) Obscene
2) Incites violence or Government overthrow
3) Threatens national security in wartime
Before I continue talking about Commercial Speech and specific court cases that fall in the timeline of Commercial Speech, individuals need to know more information on who controls Commercial Speech and when a person should realize that it is either unfair or deceptive. The FTC (Federal Trade Commission) has their own standards when looking at Commercial Speech.
*This link will take you to the FTC website to explain in detail the Investigative, Law Enforcement and Rule making Authority of the FTC.*
The FTC's definition when regulating Commercial Speech is as follows, "Unfair methods of competition and unfair or perceptive acts or practices in or affecting commerce are hereby declared unlawful." This definition was stated in the Powers Under Federal Trade Commission Act (1971).
The FTC was also created to stop claim-based advertising. What is Claim-Based Advertising? "An advertising claim is a statement made in advertising about the benefits, characteristics, and/or performance of a product or service designed to persuade the customer to make a purchase."
Using this advertisement for an example, we are able to see that this is a claim-based advertisement, with the claim being, that 20,679 Physicians say "Luckies are less irritating". When we see the number 20,679, we immediately need to think about the bigger picture. Where did they get the number 20,679? How many Physicians did they ask? Did they even ask Physicians? It leaves customers wondering, and it is a very broad statement when taken into consideration. We also need to think about what they mean by the statement "Less Irritating". What is it less irritating than? All of these are questions that are left unanswered and could be seen as False, Deceptive and Illegal.
A practice is considered unfair under these 3 standards:
1) It causes or is likely to cause substantial injury to consumers
2) Which is not reasonably avoidable by consumers themselves and...
3) Not outweighed by countervailing benefits to consumers or competition
And it is considered Deceptive if...
"There is a representation, omission or practice that is likely to mislead consumers who are acting 'reasonably under the circumstances' and... it would be material to the decision to buy or use the product'".
The only safe-zone companies have when they make these statements comes with the term "Puffery". Puffery is, "A Hyperbole or Exaggeration that no 'Reasonable' person would believe. Vague evaluations that cannot be proven true or false." Red Bull advertisements are a perfect example of puffery. No reasonable person would believe that you drink a can of Red Bull and all of a sudden you grow wings. They are able to make that their slogan because of the term Puffery.
Now that we have mentioned all of the background information in regards to Commercial Speech and what is and isn't acceptable when forming Commercial Speech, here is the timeline of cases that have set a precedent for Commercial Speech.
It was in this case that the Supreme Court ruled that Commercial Speech is not protected by the First Amendment. This is not the precedent setting case for Commercial Speech because it did nothing in assessing the relationship between commercial speech and the First Amendment.
In this case, Chrestensen was distributing handbills around New York City for his local business. When stopped by the police and told that he was not allowed to do that, he ended up printing more with the other side now, "protesting the city's refusal to provide wharfage facilities at a city pier for the exhibition of his submarine." While this was a case of Commercial Speech that could have put the term on the map, the court made no attempt to explain why this case fell under First Amendment protection and why it would have been considered commercial speech.
In this case, the Virginia Citizens Consumer Council was acting on behalf of the public to say that it was unprofessional conduct for licensed pharmacists to disclose the prices on their products in advertisements. This case was the precedent setting case for allowing Commercial Speech to be protected by the First Amendment. In a 7-1 ruling, the Supreme Court stated that this speech was protected just the same as noncommercial speech is protected. They stated that they have all intentions on maintaining their professionalism, and that it is not unconstitutional to have their prices listed so that individuals can compare to their competitors.
This case also set 5 Legal Hallmarks when it comes to Commercial Speech:
1) Struck down Hallmark
2) Confirmed Intermediate Protection
3) Created 3 exceptions
4) Cleared TPM (Time, Place, Manner) restraints
5) Created "Right to Receive"
Lastly, in 1980 there was the Central Hudson Gas & Electric Corporation v. Public Service Commission of New York case.
In this case, The Public Service Commission of New York wanted to enact a regulation that prohibited electric facilities to promote electricity use. By doing this, they were setting a regulation against Commercial Speech and in an 8-1 decision, the Supreme Court ruled in Central Hudson Gas & Electric Corporation's favor. While the PSC's regulation would directly further the interest in promoting energy conservation, according to the precedent case First National Bank v. Bellotti, it violated the First and Fourteenth Amendment Right to Freedom of Speech.
This case also created the 4 Part Central Hudson Test. The first 3 points also known as the 3 Part Strict Scrutiny Test:
1) Does the Government have a compelling interest to regulate the speech?
2) Is there a close nexus between the regulation and the goal?
3) Is the regulation narrowly tailored as to not squelch too much speech?
The final part of this test is the Threshold Question which asks:
*Is the speech in question eligible for First Amendment protection?
It is this question which turns the 3 Part Strict Scrutiny Test into the Central Hudson Test.
Through all of these methods, and these cases, we are able to see how Commercial Speech has advanced throughout the years to where it is today. Although there are still debates on what is and isn't Commercial Speech, this in depth outline will allow readers to gain the knowledge they need and look at advertisements in a different light.
- I have provided links to two other sources below that were in-class readings that will help readers gain more insight on Commercial Speech and The Values of Free Expression and Advertising & First Amendment Overview. These two sources will provide a better insight on an individuals opinion about Commercial Speech and a more in-depth overview of how all of the court cases I have listed within this post play into one another in the Supreme Courts decisions on rulings. -
- Here is a 2-minute YouTube Video that also explains the concept of Commercial Speech.-
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