D Disclosures are the "small print" in ads.
d1. Most ads are "true," but incomplete.
d2. Disclosure laws are government regulations or rules
d3. People disagree about the kind and degree of government regulations.
d4. People disagree about the "borderline cases" of government regulations.

d1. Most ads are "true," but incomplete.

Assume that persuaders will intensify the good about their product or policy.

But, also assume that they will downplay the bad.

Don't expect the persuader to inform you of the "bad" involved, unless they are forced to do so by a disclosure law.

d2. Disclosure laws are government regulations or rules.

Disclosures are the "small print" (often unreadable by most people) and the "fast talk" on TV and radio ads. Most consumer complaints relate either to people not reading the "small print" or to the confusing language there.

Disclosure laws require products to reveal certain potential harms, especially related to health and safety. Over-the-counter (OTC) drugs, for example, must be labeled with appropriate warnings. Recently, drug companies got FDA permission to advertise prescription drugs on TV, direct-to-consumer (DTC), if they warned about the known side-effects ("may cause bleeding, irregular heart rhythms, tremors, dizziness, loss of hair, sexual dysfunction, and depression; should not be taken by pregnant women or nursing mothers" and so on) and included a warning to "ask your doctor."

Alas, advertisers have also found out that such drug ads are effective, because so many people simply don't pay attention to the disclosures. Many doctors report that they are pestered by people asking for the heavily-advertised brand name drugs, when older drugs or generics may be more appropriate.

Sometimes, this results in some very strange ads, with pleasant images showing happy healthy people and the soothing voice-over sweetly disclosing all of the horrible possible side-effects. Why do advertisers even disclose these disadvantages? Because they have to.

Furthermore, a Consumer Reports (Feb. 2003, pp. 33-37) investigation: "revealed a broad and disconcerting range of misleading messages: ads that minimized the product's risks, for example; exaggerated its efficacy; made false claims of superiority over competing products; promoted unapproved uses for an approved drug; or promoted use of a drug still in an experimental stage.

Worse, many people appear to believe that drug advertising is meticulously regulated.... half of the [survey] respondents wrongly believed that the drug ads are preapproved by the FDA and 43 percent wrongly believed that only 'completely safe' drugs can be advertised."

In fact, the FDA has only 30 reviewers to handle the 30,000 submissions a year. The approval process is so slow that a FDA warning letter to a drug company often came long after the ad had finished its life cycle on television.

This is a good example how disclosure laws can be subverted by corporate pressure groups exerting their influence on Congress to underfund regulatory agencies: the laws are on the books, but there's very little money to hire an adequate staff to enforce them.

Usually the cost and burden of enforcing disclosure laws relating to national ads falls on local law enforcement agencies. For example, Minnesota's Attorney General suit against Capital One credit cards.

Ads do not have to disclose the merits of competing products, nor of other choices available, other ways to spend your time and money. But, you ought to become aware of these choices.

To a lesser extent, some laws regulate ads about the cost of products (e.g. "Truth in Lending"- laws related to costs of loans, disclosure of credit card rates, APR). Alas, most people do not pay attention either to the "small print" here: even most college students who have a credit card cannot tell what percent interest they pay.

Cost differs from price. The price of an item does not include operating costs (e.g. batteries, gas, repairs, insurance), extras, other services, frequent upgrades needed, or restrictions. But, in a few situations, when kids are targeted, ads must disclose some information such as, "Batteries not included," "Some assembly required," "Accessories extra," "Actual size is not pictured."

Labels on packaged foods, for example, must disclose the ingredients (in order of quantity) and certain nutritional information (e.g. fats, sodium content). But, there are constant battles between consumer groups and the giant food companies about what has to be disclosed and what words can be used in claims (e.g. Natural, Organic, Healthy). For current issues, see: ConsumerReports.org or use google.com (search terms: disclosure laws, sunshine laws, open meeting laws, FOI "Freedom of Information" laws)

Alcohol (beer, wine) and cigarettes must carry health warnings. Beer companies usually run a few lip-service ads during the holidays encouraging safety ("Don't drink and drive," "Be a designated driver") and moderation. (For more: madd.com)

Cigarette manufacturers are now forced to run a few ads discouraging smoking, but are still permitted to run their enticing ads attracting new customers. The complex history of the big money and special interests involved in some of the cigarette advertising battles are surveyed in Thomas Whiteside, Selling Death.

The cigarette battles go on. For example, during August, 2003 in the California legislature, when (almost) everyone's attention was focused on resolving the huge budget crisis, the tobacco industry's lobbyists managed to tack on two "little" amendments into an obscure part of the state budget giving the industry enormous financial and legal benefits. As the Los Angeles Times, put it (in "How Big Tobacco Got its Way in California" Sept. 14, 2003): "Health groups and government agencies that closely track tobacco issues were stunned to learn about the laws days or even weeks after the fact."

In August 2006, two major events occured involving tobacco disclosures: a judge ruled definitively that cigarette ads were deliberately deceptive (but, alas, a technicality prevented imposing more penalties); and a court case revealed that the nicotine content was secretly being increased to increase addiction.

Different countries require different disclosures. As the New York Times (12/18/05) reports: "When traveling abroad, American smokers are often taken aback by the bluntness of cigarette warnings. While packs in the United States are stamped with small-print notices mentioning the risks of emphysema and birth defects, packs elsewhere often don't mince words. "Smoking can cause a slow and painful death," reads one government warning in Britain, spelled out in large bold letters; in Canada, packs are required to feature graphic pictures of smoking's consequences, like diseased lungs and clogged arteries.

 

d3. People disagree about the kind and degree of government regulations.

People disagree on the kind and the degree of government regulation necessary in a society. Usually, liberals -- or progressives -- want more "consumer protection" (with government acting to counterbalance the power of big corporations) while conservatives want less "government interference" in the marketplace.

Every disclosure law in the United States has had a long history of fighting between consumer groups (such as medical and educational organizations) and product sellers. Most disclosure laws in the US went into effect during the consumer reforms of the 1970s.

For more information, see www.consumer.gov or www.ftc.gov (for TV ads), or www.fda.gov (for foods, drugs, cosmetics) or www.cpsc.gov (for toys, safe products for children).

Every disclosure law is a compromise: sellers wouldn't disclosure anything bad which they not legally forced to do, because they know they lose sales due to any disclosure of any bad effect.

Not every nation has such disclosure laws, nor do the American laws cover everything, nor are they adequately enforced. Often, Congress does not fund them adequately because of political pressure groups.

When Communism collapsed in Russia and Eastern Europe in the late 1980s, no strong central government with moral authority was left to impose the kinds of economic and business regulations which the western democracies had gradually developed during the earlier part of the 20th century. Alas, into this vacuum of no regulations, Russia, for example, was soon overwhelmed by thugs and gangsters -- "entrepreneurs" -- acting without restraints from a central government.

Hard-core fraud

Everyone, however, usually agrees that there should be some laws against "hard-core" fraud and deceptive advertising. Such laws do exist, but, again, enforcement is often difficult. Predators exist. These criminals are hard to catch: they are fly-by-night operators who run a scam for a few weeks, then "take the money and run."

Mail fraud, for example, has a long history, but Post Office officials estimate that many billions are still lost annually to the same common frauds which promise get-rich-quick plans to the gullible and greedy, or cancer cures to the very sick and needy.

Internet fraud has a shorter history, but is quickly becoming very costly because these criminals are harder to catch. Whenever you send money to an unknown person, buyer beware!

d4. People disagree about the "borderline cases" of government regulations.

Most "borderline cases" concerning deceptive television advertising, for example, are concerned with puffery, omissions, and suggestions.

Puffery, or "seller's talk" (or "glittering generalities") means the praise words, the superlatives (hyperboles) commonly used by sellers -- such as best, greatest, finest, superior, beautiful, fantastic -- and so on. Most courts have ruled that puffery is legal because buyers expect sellers to praise their products, and buyers should reasonably discount such flattery.

Omissions of relevant information. Ads usually minimize the price: "easy monthly payments" "only $99 a month" "less than a dollar a day." Perfectly legal, in most situations. Health and safety issues, however, have more regulations and guidelines. Here's where the lawyers from both sellers and regulators often argue the details.

Suggestions (implications, not explicit claims) are also difficult borderline cases. Receivers often do not understand that most persuasion is indirect, using implications and suggestions, encouraging them to make inferences, to "jump to conclusions." People often make faulty inferences, because of their own "wishful thinking."

Top | ABCs | Home

Capital One Sued Over Its Card Ads
Minnesota's attorney general charges that a 4.99% 'fixed' interest rate on the 'No Hassle' card is often raised.
Associated Press December 31, 2004


Minnesota Atty. Gen. Mike Hatch sued Capital One Financial Corp.'s bank unit Thursday over the ads for its "No Hassle" credit card, which promote a supposedly fixed annual interest rate of 4.99%.

Customers who miss a payment deadline or exceed their credit limit can end up with annual interest rates of as much as 27%, Hatch said at a news conference. About 40% of the card's users will be paying higher rates within two years, he said.

"It's very clear that these ads are designed for the sole purpose of getting people to believe that the rate is fixed and it can't change," Hatch said.

Capital One spokeswoman Diana Don said the McLean, Va.-based company "has cooperated fully with the attorney general's investigation and believes it has acted properly and in full compliance with the law."

One "No Hassle" television ad features barbarian marauders catapulting a man for using a rival credit card — illustrating that interest rates for other banks' credit cards will change arbitrarily, while Capital One's rates won't.

Fine print saying "Subject to change without notice" flashes on the screen briefly.

Patsy Trusty of Minnesota said she got a Capital One credit card to finance her inventory as a Mary Kay saleswoman after receiving an offer in the mail. The word "fixed" was repeated throughout the mailing, which said the interest rate was 4.9%.

Trusty said she never paid late. But after she exceeded her credit limit, she said, the bank raised her rate to 7.9%. When she called to complain, Capital One lowered it to 5.9%, she said.

Hatch's lawsuit seeks an unspecified amount of damages. He also wants Capital One to change its TV ads.

---------------------
Copyright 2004 Los Angeles Times

Big tobacco: 50 years of lies. Now what?
Editorial - The Christian Science Monitor - August 22, 2006

For 50 years, big tobacco has "lied" to the American public about the devastating health effects of smoking, a US judge ruled last week. That's a moral victory for the federal government, which initiated this massive court case seven years ago. Sadly, the ruling will do little to remedy the problem of tobacco use.

The federal case comes after a major settlement between the tobacco firms and 46 states in 1998. In the end, the industry agreed to compensate all 50 states $246 billion over 25 years for health costs related to smoking. They also agreed to marketing changes - such as taking down billboard ads - and to help pay for antismoking campaigns.

But the federal government didn't believe the settlement with the states went far enough, or it wouldn't have brought its own suit seeking a $280 billion penalty for conspiring to hide smoking's harmful effects. About half that amount was to fund smoking cessation and prevention programs and public education about the dangers of tobacco.

The federal case tried to do what the states settlement didn't - change practices in the industry and adequately fund campaigns to prevent and reduce smoking. There's an enormous desire among America's 47 million smokers to quit, and every effort should be made to help them, and to prevent potential smokers (mostly young people) from starting.

While big tobacco may maintain it has already reformed and already paid by virtue of its states settlement, US District Judge Gladys Kessler found last week that fraud is ongoing. "As the evidence overwhelmingly demonstrates, [tobacco's] fraudulent conduct has permeated all aspects of their operations - from how they design, manufacture, and market their products to how they communicate with the public about them - and continues to this day."

Judge Kessler did her best to remedy this. She ordered the defendants, including Philip Morris and R.J. Reynolds, to stop using terms such as "light" and "low tar," which mislead smokers to believe such cigarettes are significantly less harmful; to issue corrective statements in newspapers and on TV; to share marketing data with the government; and to pay the government's legal fees. But she didn't do anything to help fund antismoking efforts or grant the government its sought-after penalty.

This is because she was restricted by a federal appeals court ruling last year. The court found that, because the US was bringing the tobacco case under the Racketeer Influenced and Corrupt Organizations Act, remedies must be "forward-looking," and ill-gotten industry gains from the past could not be used. The US then dropped its penalty demand to $14 billion.

So Ms. Kessler has found that big tobacco is a fraudulent bunch of racketeers, but she can't do much about it. Who can?

That would have to be Congress. Legislation has languished that would give the Food and Drug Administration regulatory oversight of tobacco - a legal industry, yes, but also one that sells an addictive substance and that kills hundreds of thousands of people each year. Kessler's hands were tied, but that's not the case with Congress. If it can resist $22 million in tobacco lobbying, it can act.
Copyright © 2006 The Christian Science Monitor
Raising Nicotine Doses, on the Sly
Editorial - The New York Times - August 31, 2006

While most of us thought the country was trying to curb smoking, and the rapacious habits of the tobacco companies, it turns out the industry has been sneakily making cigarettes more addictive.

Evidence of what looks like an increasingly desperate effort to hook new young smokers and prevent older ones from quitting has been uncovered by a Massachusetts law that forces tobacco companies to report test results showing how much nicotine is inhaled by typical smokers of their various brands.

This week, the Massachusetts Department of Public Health revealed that from 1998 through 2004, as public health campaigns were mounted to curb smoking, the manufacturers increased the amount of addictive nicotine delivered to the average smoker by 10 percent. Of 179 cigarette brands tested in 2004, an astonishing 166 brands fell into the state’s highest nicotine yield range, including 59 brands that the manufacturers had labeled “light” and 14 described as “ultra-light.” The three most popular brands chosen by young smokers — Marlboro, Newport and Camel — all delivered significantly more nicotine as the years passed. Virtually all brands were found to deliver a high enough nicotine dose to cause heavy dependence.

This trend has escaped notice because the standard government test uses a smoking machine that fails to mimic real-life smoking. A manufacturer, for example, can design a cigarette that will score low in nicotine delivery to the machine by placing tiny ventilation holes in the filter to dilute the smoke. But in real life a smoker will often cover the vents with lips or fingers, thereby inhaling a higher dose of nicotine. When Massachusetts required the manufacturers to use what it considered a more realistic method, the nicotine yields were more than twice those found on the standard test. The Massachusetts approach may not be perfect, but it is surely a lot more accurate than the traditional test, which virtually all independent experts consider deficient.

It is stunning to discover how easily this rogue industry was able to increase public consumption of nicotine without anyone knowing about it until Massachusetts blew the whistle. The Massachusetts report bears out the conclusions of a federal judge in Washington, who recently concluded that the companies have designed cigarettes to produce low nicotine readings on the standard test while delivering enough nicotine to create and sustain addiction. It is long past time for Congress to bring this damaging and deceitful industry under federal regulatory control. If the companies had to justify to the Food and Drug Administration why they should be allowed to increase the nicotine inhaled by smokers, you can bet they wouldn’t even try.
Copyright 2006 The New York Times Company | Top