SEEDS WERE SOWN FOR AD INDUSTRY SELF-REGULATION

By Published on .

Most Popular
At the time of Richard Nixon's election in 1968, the advertising business was knee deep in trouble in Washington. The hope was that a Republican administration would bring relief.

The publication of Ralph Nader's "Unsafe at Any Speed" in the mid-1960s had moved consumer issues to the center of the political stage, and marketing strategies headed the list.

If anything, though, marketing's problems got worse in the early Nixon years. Existing laws were aggressively enforced, and the administration supported legislation to reach newer forms of marketing abuse.

Damage control was the best President Nixon would offer. The White House consumer office, begun under President Johnson, would no longer serve as a command post for activists. But for meaningful relief, the industry would have to find ways to avoid the practices that were feeding the consumerist flame.

Awaiting the new president was a Nader report characterizing the Federal Trade Commission as a "toothless tiger." President Nixon asked the American Bar Association for an assessment. Its verdict: Rehabilitate the FTC or shut it down. President Nixon's response was a significant clue to what was to follow. Opting for change, he entrusted the FTC to his close friend, Caspar Weinberger. In his brief tenure before moving on to a Cabinet post, Mr. Weinberger began the revamp by sweeping out ineffective political appointees and operational bottlenecks.

Mr. Weinberger beefed up White Houseproposals on the FTC. His add-ons included the power to stop deceptive ads with court injunctions, issue industrywide rules, levy fines and award damages.

The Nixon years were't all bad news for the business community. With Bryce Harlow, a former Procter & Gamble Co. Washington office director as White House chief of staff, business leaders had free access at the policymaking level. It was comforting to know that under a new executive order, no new regulation could be adopted by any agency until it had been screened by Mr. Harlow.

An activist FTC was conceded. After Mr. Weinberger came Miles Kirkpatrick, the antitrust lawyer from Philadelphia who had chaired the ABA review of the Nader report; and with him came Robert Pitofsky as chief enforcement officer on advertising and consumer issues, who wrote much of the ABA's report.

The new leadership found the FTC didn't have to be a "toothless tiger." That reputation had rested on a pattern of interminable hearings that led only to orders that said: "Don't do it again."

George Washington University law students proposed a way to make false advertising costly. Within the 50-year-old law, they argued, is broad language to support penalties requiring corrective advertising. Their idea added sinew to FTC's muscle.

The solution to procedural delays came from the Nader camp.

In typical Nader form, he had written to 100 top TV advertisers, citing specific claims in ads and asking for supporting data. Virtually all gave his query a brushoff.

Mr. Nader was accustomed to this kind of treatment. He simply trucked his file over to the FTC, and from this evolved the single most important change in the history of advertising regulation.

The FTC proceeded on an industry by industry basis to collect data. With the results in hand, the FTC ruled the assertion of an unsubstantiated claim is an unfair act. Now there was no need for the endless delays while the FTC proved a claim was false.

It would be incorrect to characterize the White House strategy on consumerism as foot dragging. Effective self-regulation was the strategy's keystone, and in that quest the White House was dealing with an industry where many preferred the due process of law at the FTC over uncertainties they feared in a self-regulation system.

Divergent strains came together. In 1971 and 1972, the industry mo

In this article: