USA Law and Practice Contributed by: Katelyn Patton, Frankfurt Kurnit Klein & Selz
1. Legal Framework and Regulatory Bodies 1.1 Primary Laws and Regulation In the USA, advertising law is governed by a variety of overlapping federal, state and local laws. There are laws and regulations that prohibit false advertising generally, as well as laws and regulations that address specific types of marketing practices. The primary consumer protection law in the USA is Section 5 of the Federal Trade Commission Act (the “FTC Act”), which prohibits “unfair or deceptive acts or practices”. A “deceptive” practice is a material repre - sentation, omission or practice that is likely to mislead a consumer acting reasonably in the circumstances. An “unfair” practice is a practice that causes or is likely to cause substantial injury to consumers, which is not reasonably avoidable by consumers themselves and which is not outweighed by countervailing ben - efits to consumers or competition. The primary federal law that gives a right of action to competitors to sue for false advertising is Section 43 (a) of the Lanham Act, which generally prohibits false or misleading representations that are likely to cause confusion as to affiliation, connection, association or approval or that misrepresent the characteristics of the advertiser’s or another’s goods or services. 1.2 Enforcement and Regulatory Authorities The Federal Trade Commission (FTC) is the primary federal regulator charged with enforcing federal laws governing advertising practices. There are a number of other federal agencies that are charged with enforc - ing advertising laws aimed at specific industries or types of advertising practices, such as the Federal Communications Commission (FCC), the US Food and Drug Administration, the Consumer Financial Protection Bureau, the US Department of Transpor - tation, and the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau. Each of the 50 US states (as well as some of its ter - ritories) has an attorney general who is charged with enforcing state laws governing advertising practices. Although it varies by state, there are additional state agencies who have authority to enforce advertising
laws as well. Some local municipalities also have the authority to enforce advertising laws – for example, via county district attorneys in California and the New York City Department of Consumer and Worker Pro - tection. The remedies that are available to regulators vary, depending on the laws that are being enforced, but can include injunctive relief, restitution and disgorge - ment, and other types of equitable relief (such as cor - rective advertising), as well as damages and penalties. 1.3 Liability for Deceptive Advertising Although the First Amendment to the US Constitution provides broad protections for freedom of speech, generally when marketers engage in advertising or other commercial speech in the USA, they may be held liable for deceptive advertising. Whether a mar - keter can be held liable for false advertising for spe - cific advertising practices, however, will depend on the specific law that applies. In certain circumstances, other entities and individuals that participate in the creation and dissemination of false advertising (such as, for example, advertising agencies, media compa - nies and company executives) can be held liable as well. 1.4 What Is Advertising? Drawing the line between commercial speech and non-commercial speech is not always straightfor - ward, particularly when the speech comes from a commercial entity and serves multiple purposes. The US Supreme Court has said that commercial speech is, at its core, “speech proposing a commercial trans - action”; however, it has also acknowledged that the precise bounds of the category of commercial speech are “subject to doubt, perhaps”. Although there are undoubtedly certain types of speech that are non- commercial, most types of communications coming from a company’s marketing department – even com - munications that are not traditional advertising, such as social media posts – are likely to be considered “advertising” that is subject to the specific rules gov - erning advertising. 1.5 Pre-Approvals For most types of advertising, no government pre- approvals are required before running advertising. In
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