Refining Advertising Regulation

54 Pages Posted: 15 Feb 2016 Last revised: 22 Mar 2017

Date Written: February 12, 2016

Abstract

Why did the Federal Trade Commission (FTC) aggressively pursue Volkswagen’s claims about “clean-diesel” technology, while ignoring widespread practices like deceptive discount pricing? Why did the FTC offer formal guidance to industry about “native advertising,” but only casual guidance to consumers about widely-used, peer-review aggregators like Yelp! and Fandango?

For decades, the FTC has only loosely employed a cost-benefit-analysis approach toward prioritizing enforcement of advertising regulation. I contend that federal regulators can best refine enforcement priorities by looking to the information economics literature for an established framework for classifying advertising claims. This Article shows that classifying advertising into search claims, experience claims, and credence claims offers a structure for more rigorous cost-benefit analysis of enforcement opportunities. Expressly incorporating this search-experience-credence claim framework into regulatory decision making and prioritization will lead to improved stewardship of FTC resources.

Keywords: consumer, consumer law, advertising, advertising law, FTC

Suggested Citation

Friedman, David Adam, Refining Advertising Regulation (February 12, 2016). 49 Connecticut Law Review 837 (2017). Available at SSRN: https://ssrn.com/abstract=2731940 or http://dx.doi.org/10.2139/ssrn.2731940

David Adam Friedman (Contact Author)

Willamette University College of Law ( email )

245 Winter St. SE
Salem, OR 97301
United States
503-370-6811 (Phone)
503-370-6375 (Fax)

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