FTC FACES TEST OF AD POWER: AUTHORITY TO FORCE CORRECTIVE ADS IS REBUFFED IN DOAN'S PILLS RULING

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The Federal Trade Commission's authority to require corrective advertising in misleading ad cases may be facing its biggest legal test in more than 20 years.

An FTC administrative law judge ruled March 9 that a decade of Doan's pills advertising deemed misleading did not require corrective advertising. That now appears to be prompting a major commission decision on when corrective advertising can be used and a subsequent court appeal.

PITOFSKY `CENTERPIECE'

"Corrective advertising has been a centerpiece of the [FTC Chairman Robert] Pitofsky administration," said Bill MacLeod, a former director of the FTC's Bureau of Consumer Protection and now an attorney who handles FTC cases. "A decision that undercuts their legal authority will encourage respondents to resist those efforts."

Barry Cutler, another former director of the FTC's consumer protection bureau now in private practice, said a decision about the FTC staff's authority to seek corrective ads raises significant issues.

"The Pitofsky administration has made the issue of increased remedies a high priority," said Mr. Cutler, noting he hadn't yet read the Doan's decision. "What will be significant . . . on appeal is that it will be the first time the Pitofsky commission has a chance to put [more] flesh on the standard and decide whether it will continue to follow the standard for corrective advertising."

STARTED WITH LISTERINE CASE

The FTC first won the right to use corrective advertising more than 20 years ago, when it argued that just stopping the misleading ads for Warner-Lambert Co.'s Listerine -- after the message had run for 40 years -- wasn't enough. The FTC said consumers were left with a latent impression that would continue to affect buying decisions, and corrective advertising was the remedy.

In recent years, FTC staff increasingly has proposed corrective or educational ads as a stiffer penalty and has obtained some remedies through consent agreements with marketers.

FTC STANDARD ATTACKED

In the Doan's case, it is the agency's standard for determining when a latent impression exists that is being attacked.

Novartis Consumer Health argued its Doan's ads, which ran from 1987 through 1996, weren't misleading and that no matter what the ads said they were unlikely to leave a sufficiently lasting impression to warrant corrective advertising.

Earlier this month, Administrative Law Judge Lewis F. Parker ruled Doan's claims that its pills were better for back pain were misleading but said corrective advertising was not warranted.

"Given the difference between the length of time that the false Doan's and Listerine ads ran," the judge wrote, "there is no certainty that the belief at issue required corrective advertising."

APPEALS ON THE WAY

The FTC staff announced its intention to appeal the decision to the full commission, and Novartis also is expected to appeal.

"It will be the first time the question of corrective advertising is the primary issue on appeal to the commission," said Lee Peeler, associate director of the FTC's division of advertising practices.

While the FTC now faces a major challenge on corrective advertising, the decision represents a major FTC victory in another area, said Mr. MacLeod.

The judge in the Doan's case lessened the proof the commission has to provide to demonstrate a health or drug claim in an ad has a "material" effect on purchasing decisions.

Novartis disputed the FTC's proof by offering its own studies, but the judge ruled the agency staff was entitled to a "strong presumption of materiality."

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