Overview of &Quot;Can and Should the Ftc Restrict Advertising to Children&Quot; Workshop

Michael B. Mazis, Federal Trade Commission
[ to cite ]:
Michael B. Mazis (1979) ,"Overview of &Quot;Can and Should the Ftc Restrict Advertising to Children&Quot; Workshop", in NA - Advances in Consumer Research Volume 06, eds. William L. Wilkie, Ann Abor, MI : Association for Consumer Research, Pages: 3-6.

Advances in Consumer Research Volume 6, 1979      Pages 3-6

OVERVIEW OF "CAN AND SHOULD THE FTC RESTRICT ADVERTISING TO CHILDREN" WORKSHOP

Michael B. Mazis, Federal Trade Commission

INTRODUCTION

This session was organized to present to the consumer research community the views of leading figures in the debate over children's advertising regulation. The Federal Trade Commission's children's advertising proceeding is particularly significant to consumer researchers because after a number of years of limited research utilization at FTC, behavioral science research now occupies a central role in the policy debate. Given the importance of research findings in the proceeding, eight key individuals, who have been associated with the children's advertising controversy over the past decade, agreed to address an ACR audience. The participants shared the common belief that the research community should be apprised of the issues underlying the trade regulation rulemaking proceedings, which were scheduled to commence hearings (and did) in January, 1979.

The Commission's determination to undertake this rule-making proceeding arises from consideration of two petitions received in April, 1977 from Action for Children's Television and the Center for Science in the Public Interest. While slightly different in approach, these two petitions request promulgation of a trade regulation rule prohibiting the television advertising of sugared products to children.

Following receipt of these petitions, Bureau of Consumer Protection staff undertook an inquiry into the factual and legal issues raised by the petitions. These efforts culminated in a document entitled "Staff Report on Television Advertising to Children." The two petitions and the Report suggest that televised advertising of any product directed to young children who are too young to understand the selling purpose of, or otherwise comprehend or evaluate, commercials (i.e., under the age of eight) may be unfair and deceptive within the meaning of Section 5 of the Federal Trade Commission Act, requiring appropriate remedy. The Report also suggests that current televised advertising of sugared products directed to older children (i.e., between ages of 8 and 12) may be unfair and deceptive, again requiring appropriate remedy.

The staff's recommended approach consisted of a "package" of remedies which included the following three elements:

1. Ban all televised advertising for any product which is directed to, or seen by, audiences composed of a significant proportion of children who are too young to understand the selling purpose of or otherwise comprehend or evaluate the advertising;

2. Ban televised advertising for sugared food products directed to, or seen by, audiences composed of a significant proportion of older children, the consumption of which products poses the most serious dental health risks;

3. Require televised advertising for sugared food products not included in Paragraph (2), which is directed to, or seen by, audiences composed of a significant proportion of older children, to be balanced by nutritional and/or health disclosures funded by advertisers.

In response to the staff's recommendation, the Commission invited comment in an April 28, 1978, Federal Register announcement on the advisability and manner of implementation of a rule which would include the preceding three elements. In addition, the Commission sought comment on the appropriateness and workability of alternative remedial approaches not contained in the staff report.

A distinguished panel of experts, representing the full spectrum of views on these proposals, was assembled to state their positions and to interact with the consumer research audience. In order of their presentations, the speakers were:

* Tracy A. Westen, Federal Trade Commission

* Robert B. Choate, Council on Children, Media and Merchandising

* John A. Dimling, National Association of Broadcasters

* Seymour Banks, Leo Burnett Advertising

* Gerald J. Thain, University of Wisconsin Law School

* Stanley Cohen, Advertising Age

* Fletcher C. Waller, General Mills, Inc.

* William Van Brunt, Hershey Foods Corp.

The panel was organized by Michael B. Mazis, Office of Policy Planning and Evaluation, Federal Trade Commission, who served as chair for the session. Dr. Mazis introduced the participants, whose remarks appear in summary form below.

TRACY A. WESTEN

Mr. Westen has been deputy director of the Federal Trade Commission's Bureau of Consumer Protection since August 1977, and has been one of the architects of the proposed children's advertising rule. His remarks were designed to set forth the facts underlying the FTC's children's advertising proposal and to place the proposal in a legal context.

Westen cited a number of "facts" which led staff to consider some action to remedy the children's advertising "problem." Children between the ages of two and eleven see enormous amounts of advertising--about 25 hours per week is spent watching television and approximately 20,000 ads are seen by the average child in a year. In addition, there is considerable research evidence that young children: can't distinguish between programs and commercials; do not understand the selling intent of commercials; cannot distinguish between fantasy and reality.

Mr. Westen also discussed the problems associated with the advertising of sugared products to children. Children see about 7,000 advertisements for highly sugared products each year, but children between ages seven and twelve have difficulty balancing appeals for the immediate gratification afforded by eating highly sugared products with the long-term dental risks. By age two, about one-half of children have diseased gums and decayed teeth.

The unique legal treatment of children was discussed also. Westen suggested that the Supreme Court has ruled that even fundamental civil rights may be withheld from young children who lack the maturity to exercise them. The ability to run for public office and to cast a ballot for candidates of one's choice, for example, are vital Constitutional rights. Yet the Constitution itself withholds these rights from individuals below a certain age. And in the commercial marketplace, the courts have voided contracts made with children and restrained the ability of minors to purchase guns, liquor, and cigarettes--products which are felt to be dangerous in immature hands.

Thus, the notion that children often need special protection from the consequences of their inexperience and immaturity is sanctioned by the Constitution and the decisions of the Supreme Court. The thrust of the FTC's proposals is to withhold advertising from preschoolers and other children who do not understand what advertising is, and provide older children with both sides of important nutritional controversies. This approach, Mr. Westen stated, appears consistent with decades of Constitutional precedent.

In the case of children's advertising, Mr. Westen emphasized, there is reason to believe that advertisers are engaging in deception through omission of a material fact. Deception occurs because of the immaturity of the audience (i.e., children may be unable to "fill-in the blanks" in some ads) and the complexity of the product (i.e., children may not understand the consequences of using a potentially dangerous product). While there is sufficient evidence to open the inquiry, Westen stressed that the Commission is still actively considering a wide range of possible options.

ROBERT B. CHOATE

Mr. Choate is the President of the Council on Children, Media and Merchandising--an organization dedicated to studying advertising practices to children and to educating children and their parents about present marketing practices so that they may become more prudent consumers.

The opening portion of Mr. Choate's remarks were devoted to a discussion of Congressional lobbying efforts over proposed children's advertising regulations. He expressed great concern about "overt corporate lobbying against supposed independent agencies." In Choate's view, "corporate lobbyists are trying to emasculate the FTC in its actions vis-a-vis children and advertising."

The proposed children's advertising regulation, Choate asserts, is of far greater significance than the stated issues. Previously, there was insufficient attention to the unequal bargaining power between advertisers and imprudent parties. The proceeding involves a possible alteration of commercial law principles. The real issue is: Should commercial law, dealing with transactions between prudent advertisers and "reasonably imprudent'' children, be updated to protect children from television sales pitches?

Mr. Choate also elaborated on Mr. Westen's discussion of television advertising content. He stated that there is an imbalance in the products advertised to children on commercial television. The private enterprise system emphasizes a limited "menu" of highly sugared foods and drinks as opposed to fresh fruits and vegetables or other nutritious foods. The FTC's inquiry is designed to cope with this advertising "imbalance.'' For example, public service messages to children or to both children and parents are one important method of partially shifting the advertising "imbalance" in the direction of encouraging the purchase and consumption of nutritious foods.

JOHN A. DIMLING, JR.

John A. Dimling, Jr. is Vice-President and Director of Research for the National Association of Broadcasters (NAB). Dimling briefly summarized his perception of the logic of FTC's children's advertising proposals. He stated that the proposed rule rests on the following arguments: (1) per capita sugar consumption has been increasing; (2) sugar (sucrose) causes tooth decay; (3) television advertising to children emphasizes that "sweetness is good" thereby increasing sugar consumption; (4) as a result, we should restrict the number of advertisements directed toward children.

However, the consumption of sucrose, the sugar in candy and pre-sweetened cereals, has remained rather constant. In addition, even if children switched from pre-sweetened cereals to cereals with small amounts of added sugar, they tend to add just as much sugar as exists in pre-sweetened cereals.

In addition, there is very little evidence that eating the most heavily advertised products will cause tooth decay. Pre-sweetened cereal consumed with milk has not been found to have an impact on tooth decay. Also, there is no evidence of a relationship between heavy exposure to television commercials and the incidence of tooth decay. There is some evidence, however, that children are aware that fresh fruits and vegetables are more nutritious than candy bars and other highly sugared foods; as a result the purpose and goal of any FTC action does not appear to be based on a logical foundation.

Finally, Dimling emphasized that the proposed FTC regulations are likely to be counterproductive. The research literature suggests that some children are able to understand the selling intent of commercials earlier than eight years of age, which is the age posited in the FTC staff proposal. Although children below some age do not understand selling intent, restricting advertising to this audience will result in denying advertisers the right of free speech to communicate with other audience members. These other members constitute the great majority of the television audience for most children's programs.

As a result of restricting advertising to large numbers of the potential audience, many of the benefits of advertising would be lost. The possible effects of advertising restrictions include: a decline in the quality and quantity of children's programming; a loss of important information communicated to children through advertising; an increase in the price of toys and other children's products; increased costs of marketing new products, raising entry barriers for many firms.

SEYMOUR BANKS

Seymour Banks is Vice-President in charge of Media Research, Leo Burnett Advertising Agency. Dr. Banks discussed two topics during his remarks: the validity of FTC's rulemaking efforts and the need for self-regulation of children's advertising.

Banks confidently predicted defeat of the proposed children's advertising TRR because the FTC staff's conclusions are totally "without merit." There are two main facts leading to this conclusion. First, "the FTC does not have the professional competence to serve as a 'national nanny'." In attempting to present a convincing argument for restricting television advertising to children below the age of eight on the grounds that they cannot understand selling intent, staff engaged in a "highly selective use of research material and an out-of-date oversimplified version of Piaget to the exclusion of social learning theories."

Second, there is little evidence that grade school children are unaware of the long-run consequences of the consumption of heavily sugared products. Banks asserted that the FTC will not be able to defend its position strongly enough to justify First Amendment concerns over the protection of advertisers' rights of free speech.

The second portion of Dr. Banks' remarks was devoted to exploring needed improvements in advertising self-regulation. Advertising agencies and media are "willing to adopt new practices when factual evidence suggests that it would be socially beneficial to do so." What is needed at this point is new research to improve children's advertising. Several areas for additional research were offered: (1) Improvement of children's consumer education skills--such as teaching children to distinguish between programs and commercials; (2) Development of methods to maximize discussion of commercials with children and recommendations about use of these procedures to parents, to maximize incidence of this type of discussion; (3) Development of standards which protect children while allowing for appropriate advertising techniques (e.g., fantasy); (4) Inclusion of pro-social messages in advertising.

GERALD J. THAIN

Gerald J. Thain is presently Professor of Law, University of Wisconsin Law School. Prior to assuming a faculty position in 1974, Mr. Thain held a number of important posts at the FTC from 1963-74, including attorney-adviser to Commissioner Philip Elman, Director of the National Advertising Regulation Division and Assistant to the Director, Bureau of Consumer Protection. Professor Thain discussed the two major questions facing the panel: Can the FTC restrict television advertising to children? Should the FTC restrict television advertising to children?

In response to the first question, Thain stated that he believes that the FTC can act to restrict commercials oriented to a children's audience. In terms of the FTC's statutory jurisdiction, it has authority over unfair and deceptive trade practices, which could include children's advertising. Therefore, there do not appear to be any legal inhibitions to FTC action. Although the Supreme Court has ruled that commercial speech is now afforded First Amendment protection, there are unlikely to be any First Amendment problems in the FTC's possible advertising restrictions. The Court has consistently ruled that administrative agencies can engage in reasonable restrictions on the time, place and manner of advertising.

Whether the Commission should take any action which would prohibit of severely restrict advertising to children is a more difficult issue with both political and public policy implications. The political question is: Will it be politically possible to alter the system in the United States which now exists and which many think of as given or status quo? The answer will be greatly influenced by citizens' responses and by lobbying efforts of business and other groups.

The policy question is: Will Commission action result in positive benefit to consumers? The answer depends in large measure how we frame the problem. If we accept the status quo as given, we might ask, "What harm is caused by advertising to children on television?" If we are unwilling to accept the premise underlying this question we might ask, "What social good is served by advertising to children on television?" Determining which question is to be asked may determine the outcome of the FTC's inquiry; different questions might lead to different conclusions.

STANLEY COHEN

Stanley Cohen is currently Washington Editor of Advertising Age. His weekly column and editorials have expressed both concern over the content of children's advertising and the likely success of FTC's efforts to develop a workable solution.

Mr. Cohen's stirring statement focused on the political environment surrounding FTC's inquiry into children's advertising regulation. He is impressed with the "destructive power" of the issue. The inquiry should not be over regulation of children's advertising, however, but what is good for the child?

Mr. Cohen believes that broadcasters and advertisers are losing sight of the threat to their own medium in an attempt to preserve their access to the child. He predicted continued advertising to children will turn parents against advertisers, and turn kids against television.

Mr. Cohen raised the question: What has this done to our political process? He claimed behind the scenes lobbying is a threat to the political process. The FTC has procedures based on statutes and due process, adopted with the participation of the industry. Yet, industry was unwilling to have regulations considered in the proper way--instead went to Congress, behind the scenes, and talked to politicians, who have no real knowledge of the issues and who reached their conclusions without hearings. He called this "a government of men, not of laws."

What is this process doing to the First Amendment? As a journalist, Mr. Cohen regards the First Amendment as sacred. His friends have been hauled before judges who have commanded them to disclose their sources. He does not want the First Amendment degraded to allow corporations to tell five-year-olds to eat chocolate-covered cornflakes.

The basic issue, from Mr. Cohen's perspective is: How does the broadcaster carry out its responsibility toward children? It's broadcasters who plan programs and accept ads. He suggested that the FTC approach might be "counter-productive" because it diverts attention away from broadcasters' obligation to prepare good programming for children.

FLETCHER C. WALLER, JR.

Fletcher C. Waller, Jr., was named Vice-President and Director of Marketing Services for General Mills in August, 1976. In this position, he has responsibilities for a group of service departments that execute marketers programs and consult with marketers on problem solving. Included are The Betty Crocker Food & Nutrition Center, Promotion Services, Advertising Services, Marketing Research, and Marketing Accounting Departments.

Mr. Waller's remarks were addressed primarily to the implicit assumptions underlying the FTC rulemaking efforts. These implicit assumptions as to how we communicate and deal with children in our society must be made explicit to make progress in the policy debate. According to Waller, the FTC assumes that the American family is incapable of healthy interaction between parent and child. He asked whether "irritation of parents" is justification for FTC regulation on what children should and should not see on television. This intra-family conflict should be considered a natural, indeed healthy, part of parenting and should not be used to increase federal regulation.

Waller believes also that the FTC assumes that children under eight years of age do not have adequate nutritional knowledge. However, the concept of "nutritional knowledge" has not been adequately defined.

Finally, the FTC assumes that advertising to children is synonymous with allowing a surrogate salesman into our homes. However, advertising merely communicates the characteristics of products to children so they can express their desires to parents. Children process information in advertising, match their own set of needs, desires, likes and dislikes with the product array, select what they'd like to have and express these interests to parents.

WILLIAM VAN BRUNT

William Van Brunt is Associate Counsel for Hershey Foods Corporation with primary responsibility for regulatory matters. Mr. Van Brunt address his remarks to the reasons underlying corporate dissatisfaction with the FTC's children's advertising rulemaking proceeding.

The FTC, in view of the First Amendment protection for Free Speech, and the rule of law that the party seeking to change established customs and practices, has the burden of proof of demonstrating the need and justification for such changes, must prove that the advertising of products to children causes a substantial harm.

On a more specific level, the proposed advertising ban for certain sugared products appears completely unjustified. In fact, no substantial body of data exists: to judge the cariogenicity of food products; to indicate that there is a direct relationship between the percentage of sucrose content and cariogenic potential; to suggest that advertising of sugared products causes harm to children in excess of that which results from the sale of these products without advertising support. The rule-making effort exhibits a measure of elitism, which assumes that the government knows what is right for people.

The possible effect of these efforts, according to Van Brunt, is the imposition of additional inflationary costs on consumers. This potential waste of millions of taxpayer dollars is a result of the FTC's apparent failure to consider fully all the relevant facts before proceeding. For example, staff has ignored industry's self-regulation efforts and the possibility of working for improvements through the process of voluntary industry cooperation. By ignoring or distorting the findings of the recent NSF-sponsored report on children in the marketplace, staff has similarly failed to consider important research evidence which is pertinent to potential rulemaking.

DISCUSSION

Following the brief presentations of the panelists, a discussion period ensued, with considerable interaction between panelists and the audience until the end of the session. The panelists remained, however, to comment on the next session, which featured prominent researchers discussing children and television advertising.

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