Federal Advertising Law: An Overview

Federal Advertising Law:
An Overview
Updated April 10, 2008
Henry Cohen
Legislative Attorney
American Law Division

Federal Advertising Law: An Overview
This report provides a brief overview of federal law with respect to six selected
advertising issues: alcohol advertising, tobacco advertising, the Federal Trade
Commission Act, advertising by mail (including junk mail), advertising by telephone,
and commercial e-mail (spam). There are numerous federal statutes regulating
advertising that do not fit within any of these categories. As random examples, the
Food, Drug, and Cosmetic Act requires disclosures in advertisements for prescription
drugs; the Truth in Lending Act governs the advertising of consumer credit; and a
federal criminal statute makes it illegal falsely to convey in an advertisement that a
business is connected with a federal agency.

Alcohol Advertising............................................1
Tobacco Advertising...........................................2
Federal Trade Commission Act...................................4
Advertising by Mail............................................5
Advertising by Telephone.......................................6
Commercial E-Mail (Spam)......................................8

Federal Advertising Law: An Overview
This report provides a brief overview of federal law with respect to six selected
advertising issues: alcohol advertising, tobacco advertising, the Federal Trade
Commission Act, advertising by mail, advertising by telephone, and commercial e-
mail (spam).1 There are numerous federal statutes regulating advertising that do not
fit within any of these categories. As random examples, the Food, Drug, and
Cosmetic Act requires disclosures in advertisements for prescription drugs2; the3
Truth in Lending Act governs the advertising of consumer credit; and a federal
criminal statute makes it illegal falsely to convey in an advertisement that a business4
is connected with a federal agency.
Alcohol Advertising
The Federal Alcohol Administration Act makes it unlawful to engage in
interstate or foreign commerce in distilled spirits, wine, or malt beverages, unless
such products conform to regulations of the Bureau of Alcohol, Tobacco, Firearms,
and Explosives, which is in the Department of the Justice.5 The act requires that
these regulations, among other things, prohibit statements on labels and in
advertisements “that are disparaging of a competitor’s products or are false,
misleading, obscene, or indecent.”6 A 1988 amendment to the act requires that
alcoholic beverages sold or distributed in the United States, or to members of the
Armed Forces outside the United States, contain a specified health warning label.7
In 1995, the Supreme Court held unconstitutional a provision of the act that
prohibited beer labels from displaying alcohol content unless state law requires such
disclosure.8 The Court found the provision to violate the First Amendment,

1 On the issue of constitutional protection for advertising, see CRS Report 95-815 A,
Freedom of Speech and Press: Exceptions to the First Amendment, by Henry Cohen.
2 21 U.S.C. § 352.
3 15 U.S.C. §§ 1661-1665b.
4 18 U.S.C. § 709.
5 The Homeland Security Act of 2002, P.L. 107-296, § 1111, added the word “Explosives”
to the name of the Bureau, and transferred it from the Department of the Treasury.
6 27 U.S.C. § 205(e)(4), (f)(4). The Federal Trade Commission can also regulate alcoholic
beverage advertising and labeling under its general power to regulate unfair or deceptive
commercial practices; see page 3, below.
7 27 U.S.C. § 215.
8 Rubin v. Coors Brewing Co., 514 U.S. 476 (1995) (striking down 27 U.S.C. § 205(e)(2)).

concluding that, although the government had a legitimate interest in curbing
“strength wars” by beer brewers who might seek to compete for customers on the
basis of alcohol content, the ban “cannot directly and materially advance” this
“interest because of the overall irrationality of the Government’s regulatory
scheme.”9 This irrationality was evidenced by the fact that the ban did not apply to
beer advertisements, and that the statute required the disclosure of alcohol content
on the labels of wines and spirits.
Federal law does not prohibit the advertising of alcoholic beverages on radio or
television, but, since 1936 for radio and 1948 for television, the industry voluntarily
refrained from advertising hard liquor on radio or television.10 On November 7,
1996, however, the Distilled Spirits Council of the United States said that it would
lift the ban, but that it had “drawn up 26 guidelines for the industry to follow —
guidelines that will avoid a younger audience but also allow this industry to compete
more effectively . . . .”11 The four major television networks announced at the time
that they would not air liquor advertisements.
Next, in December, 2001, NBC announced that it would accept liquor ads, but
imposed 19 rules to govern them, including limiting them to after 9 p.m E.S.T.,
requiring that actors in them be at least 30 years old, and requiring the liquor
companies to run social-responsibility messages on subjects like designated drivers
and drinking moderately. Then, in March 2002, NBC announced that it would no
longer accept liquor ads. In November 2007, however, WNBC-TV in New York
started to run liquor ads.12
Tobacco Advertising
Advertising of tobacco products is restricted by the Federal Cigarette Labeling
and Advertising Act, which requires specified warning labels on all cigarette
packages distributed in the United States and on all cigarette advertisements within
the United States. The warnings must be rotated quarterly in accordance with Federal
Trade Commission regulations. The statute also prohibits advertising of cigarettes
and little cigars on any medium of electronic communications subject to the

8 (...continued)
In 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996), the Supreme Court held to
violate the First Amendment a state statute that prohibited disclosure of retail prices in
advertisements for alcoholic beverages.
9 Id. at 1592.
10 See CRS Report RL31239, Prohibiting Television Advertising of Alcoholic Beverages:
A Constitutional Analysis, by Henry Cohen.
11 Washington Post, November 8, 1996.
12 New York Times, November 30, 2007.

jurisdiction of the Federal Communications Commission.13 This apparently would
include radio, and broadcast, cable, and satellite television.
In 1996, the Food and Drug Administration (FDA) adopted a final rule
restricting the advertising of cigarettes and smokeless tobacco products. The purpose
of the final rule “is to establish restrictions on the sale, distribution, and use of
cigarettes and smokeless tobacco in order to reduce the number of children and
adolescents who use these products . . . .”14 The rule did not go into effect,
however, because a federal court ruled that the FDA lacked the statutory authority to
restrict tobacco advertising.15 The Supreme Court later held that the FDA lacked the
statutory authority to regulate tobacco products at all.16
The FDA final rule would have restricted tobacco advertising in several ways,
such as by banning “outdoor advertising for cigarettes and smokeless tobacco,
including billboards, posters, or placards . . . within 1,000 feet of the perimeter of any
public playground or playground area in a public park, . . . elementary school or
secondary school,” and permitting other outdoor advertising, and advertising in
newspapers, magazines, and periodicals, only in “black text on a white background.”
It would also have prohibited any manufacturer, distributor, or retailer from
sponsoring “any athletic, musical, artistic or other social or cultural event, or any
entry or team in any event, in the brand name . . . , logo, motto, selling message,
recognizable color or pattern of colors, or any other indicia of product identification
identical or similar to, or identifiable with, those used for any brand of cigarettes or
smokeless tobacco.”
On November 23, 1998, attorneys general from 46 states, the District of
Columbia, and the five U.S. territories signed an agreement with the major tobacco
companies to settle all the lawsuits the states have brought to recover the public
health costs of treating smokers. (The four other states — Mississippi, Texas,
Florida, and Minnesota — had previously settled.) The settlement had to receive
court approval in each state before it took effect, but it did, and it has. It limits
tobacco advertising in various ways, including banning the use of cartoons, banning
public transit advertising, and limiting billboard and retail-store advertising.17

13 15 U.S.C. §§ 1331-1341. In addition, 15 U.S.C. § 4402 requires warning labels on
smokeless tobacco product packages and advertisements (other than outdoor billboard
advertising), and prohibits advertising smokeless tobacco on any medium of electronic
communications subject to the jurisdiction of the Federal Communications Commission.
No similar law applies to cigars.
14 61 Fed. Reg. 44615 (1996).
15 Coyne Beahm, Inc. v. United States, 958 F. Supp. 1060 (M.D. N.C. 1997), rev’d on other
grounds, 153 F.3d 155 (4th Cir. 1998), aff’d sub nom., Food and Drug Administration v.
Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000).
16 Id.
17 For additional information, see CRS Report RL30058, Tobacco Master Settlement
Agreement (1998): Overview, Implementation by States, and Congressional Issues, by C.
Stephen Redhead. See also [http://tobaccofreekids.org/research/factsheets/pdf/0057.pdf].

Federal Trade Commission Act
Section 5 of the Federal Trade Commission Act is the basic federal statute
prohibiting unfair or deceptive advertising. Subsection (a) of section 5 reads:
Unfair methods of competition in or affecting commerce, and unfair or deceptive acts
or practices in or affecting commerce, are hereby declared unlawful.18
A 1980 amendment to the FTC Act provides:
The Commission shall not have any authority to promulgate any rule in the
children’s advertising proceeding pending on May 28, 1980, or in any
substantially similar proceeding on the basis of a determination by the
Commission that such advertising constitutes an unfair act or practice in or19
affecting commerce.
The rule that this amendment foreclosed would have banned television
advertising, aimed at children, of foods containing added sugar; the FTC’s theory
behind the rule was that, because children are unable “to understand the selling
purpose of, or otherwise comprehend or evaluate, commercials,” such commercials
may be unfair even if literally truthful.20 The 1980 statute allows such a rule only if
it is “based upon acts or practices that are ‘deceptive’”21; unfairness alone is not
A 1994 amendment to the FTC Act provides that an act or practice is illegal
only if it “causes or is likely to cause substantial injury to consumers which is not
reasonably avoidable by consumers themselves and not outweighed by countervailing
benefits to consumer or to competition.”22 Section 12 of the act makes it unlawful
to disseminate any false advertisement for “foods, drugs, devices, services, or
cosmetics.”23 The Federal Trade Commission Act does not provide for lawsuits by
individual consumers. Rather, consumers may file complaints with the Federal Trade
Commission (FTC), which may take legal action when it deems it appropriate.
The Federal Trade Commission Act does not apply to banks, savings and loan
institutions, Federal credit unions, common carriers (railroads and airlines), or
“persons, partnerships, or corporations insofar as they are subject to the Packers and
Stockyards Act of 1921 . . . .”24 All these entities, and their advertising, are regulated
by federal agencies other than the FTC.

18 15 U.S.C. § 45(a).
19 15 U.S.C. § 57a(h).
20 43 Fed. Reg. 17967, 17969 (1978).
21 H. Conf. Rep. 96-917, 96th Cong., 2d Sess. (1980) at 31; reprinted at 1980 U.S.C.C.A.N.


22 15 U.S.C. § 45(n).
23 15 U.S.C. § 52.
24 15 U.S.C. § 45(a)(2).

Advertising by Mail
A federal statute provides that a person who receives in the mail “any pandering
advertisement which offers for sale matter which the addressee in his sole discretion
believes to be erotically arousing or sexually provocative” may request the Postal
Service to issue an order directing the sender to refrain from further mailings to the
addressee, and the Postal Service must do so.25 If the Postal Service believes that a
sender has violated such an order, it may request the Attorney General to apply to a
federal court for an order directing compliance. This statute applies to any unwanted
advertisement, regardless of content.26
Another section of the statute provides that any person may file with the Postal
Service a statement “that he desires to receive no sexually oriented advertisements
through the mails.”27 The Postal Service shall make the list available, and “[n]o
person shall mail or cause to be mailed any sexually oriented advertisement to any
individual whose name and address has been on the list for more than 30 days.” If
the Postal Service believes that any person is violating this provision, it may request
the Attorney General to commence a civil action against such person in a federal
district court.
Another section of the statute provides that unordered merchandise sent through
the mails “may be treated as a gift by the recipient,” and the sender may not bill for
it.28 Various other federal statutes prohibit mail fraud and other deceptive mailing
practices.29 In addition, the Federal Trade Commission has adopted a trade regulation
rule entitled “Mail or Telephone Order Merchandise,” which requires, among other
things, that sellers who solicit buyers to order merchandise through the mails or by
telephone ship such merchandise within the time the seller states or, if no time is
stated, within 30 days after receipt of the order. Where a seller is unable to ship the
merchandise within such time, it must offer the buyer the option to cancel the order
and receive a prompt refund.30
In 1999, Congress enacted the Deceptive Mail Prevention and Enforcement Act,
P.L. 106-168, which contains restrictions and requires disclosures with respect to
mailed sweepstakes promotions.

25 39 U.S.C. § 3008.
26 Rowan v. Post Office Department, 397 U.S. 728, 738 (1970) (“We . . . categorically reject
the argument that a vendor has a right under the Constitution or otherwise to send unwanted
material into the home of another.”)
27 39 U.S.C. § 3010.
28 39 U.S.C. § 3009.
29 E.g., 18 U.S.C. §§ 1341, 1342, 39 U.S.C. §§ 3001 et seq.
30 16 C.F.R. Part 435.

Advertising by Telephone
The Telephone Consumer Protection Act of 1991 makes it illegal to, among
other things, “initiate any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message,” or “use any telephone facsimile
machine, computer, or other device to send an unsolicited advertisement to a
telephone facsimile machine.”31 Victims of these practices may file a complaint with
the Federal Communications Commission and may sue and recover actual monetary
damages or $500, whichever is greater, and the court may increase the award up to
three times if it finds that the defendant acted willfully or knowingly. The Junk Fax
Prevention Act of 2005, P.L. 109-21, amended the Telephone Consumer Protection
Act of 1991 to add the exception, previously promulgated by the FCC,32 that allows
senders who have an established business relationship with a recipient to send
unsolicited fax advertisements to that recipient. The 2005 statute also requires
senders of fax advertisements to place a clear and conspicuous notice on the first
page of every fax informing the recipient of how to opt out of future faxes.33
The Telemarketing and Consumer Fraud and Abuse Prevention Act, enacted in
1994, required the Federal Trade Commission to “prescribe rules prohibiting
deceptive telemarketing acts or practices and other abusive telemarketing acts or
practices.”34 Such rules must include:
(A) a requirement that telemarketers may not undertake a pattern of unsolicited
telephone calls which the reasonable consumer would consider coercive or
abusive of such consumer’s right of privacy,
(B) restrictions on the hours of the day and night when unsolicited telephone
calls can be made to consumers, and
(C) a requirement that a person engaged in telemarketing for the sale of goods
or services shall promptly and clearly disclose to the person receiving the call
that the purpose of the call is to sell goods or services and make such other
disclosures as the Commission deems appropriate, including the nature and price
of the goods and services.

31 47 U.S.C. § 227. Federal courts of appeals have held that this statute does not violate the
First Amendment. Destination Ventures v. Federal Communications Commission, 46 F.3dth

54 (9 Cir. 1995) (unsolicited faxes); Moser v. Federal Communications Commission, 46th

F.3d 970 (9 Cir. 1995), cert. denied, 515 U.S. 1161 (1995) (prerecorded telemarketingth
calls); Missouri, ex rel. Nixon v. American Blast Fax, Inc., 323 F.3d 649 (8 Cir. 2003),
cert. denied, 540 U.S.1104 (2004) (unsolicited faxes).
32 47 C.F.R. § 64.1200(a)(2)(iv).
33 See CRS Report RS21647, Facsimile Advertising Rules Under the Junk Fax Prevention
Act of 2005, by Patricia Moloney Figliola.
34 15 U.S.C. §§ 6101 et seq. P.L. 107-56 (2001) amended the statute to cover, in addition
to calls “to induce purchases of goods or services,” calls soliciting “a charitable
contribution, donation, or gift of money or other thing of value.”

The FTC’s Telemarketing Sales Rule, adopted pursuant to the Telemarketing
and Consumer Fraud and Abuse Prevention Act, prohibits telemarketers from, among
other things, calling a person’s residence, without the person’s prior consent, before
8:00 a.m. or after 9:00 p.m.35 It also prohibits initiating a call to a person who has
previously stated that he or she does not wish to receive a call from the seller or
charitable organization, or who has placed his or her telephone number on the “do-
not-call” registry maintained by the FTC.36
On September 23, 2003, a federal district court in Oklahoma held that the FTC
does not have the authority to promulgate a national do-not-call registry, but, in
response, Congress enacted a law (P.L. 108-82 (2003)) to ratify that it does.37 On
September 25, 2003, a federal district court in Colorado enjoined implementation of
the do-not-call registry on the ground that it violated the First Amendment because
it applied only to commercial solicitors and not to other types of speech, such as
charitable or political solicitations.38 The FTC appealed, however, and, on October
7, 2003, the court of appeals granted a stay of the lower court’s order, allowing the
do-not-call registry to remain in effect pending final resolution of the appeal on the
merits. On February 17, 2004, the court of appeals reversed the district court’s
decision, finding that the do-not-call registry does not violate the First Amendment.
The discrimination against commercial solicitors, the court of appeals found, was
justified “based on findings that commercial telephone solicitation was significantly
more problematic than charitable or political fundraising calls.”39
The Federal Communications Commission also addresses the do-not-call issue;
it requires persons who initiate a telephone solicitation to a residential phone number
to institute procedures for “maintaining a list of persons who do not wish to receive
telephone solicitations made by or on behalf of that person or entity.”40 The Do-Not-
Call Implementation Act, P.L. 108-10 (2003), requires the FCC, by September 7,
2003, to “issue a final rule it began on September 18, 2002, under the Telephone
Consumer Protection Act (47 U.S.C. 227 et seq.) In issuing such rule, the Federal
Communications Commission shall consult and coordinate with the Federal Trade
Commission to maximize consistency with the rule promulgated by the Federal Trade
Commission (16 CFR 310.4(b)).”
In addition, more than 20 states have enacted statutes to establish statewide do-
not-call registries.41

35 16 C.F.R. § 310.4(c).
36 16 C.F.R. § 310.4(b)(iii).
37 U.S. Security v. Federal Trade Commission, 282 F. Supp. 2d 1285 (W.D. Okla. 2003).
38 Mainstream Marketing Services, Inc. v. Federal Trade Commission, 283 F. Supp. 2d 1151
(D. Colo. 2003), stay granted, 345 F.3d 850 (10th Cir. 2003), rev’d, 358 F.3d 1228 (10th
Cir. 2004), cert. denied, 543 U.S. 812 (2004).
39 358 F.3d at 1246.
40 47 C.F.R. § 64.1200(e)(2).
41 For additional information on federal and state do-not-call registries, and on the court

The Telephone Disclosure and Dispute Resolution Act of 1992 requires the FTC
to prescribe rules “to prohibit unfair and deceptive acts and practices in any
advertisement [in any medium] for pay-per-call services.”42 Such rules must require,
among other things, that the person offering such services “clearly and conspicuously
disclose in any advertisement the cost of the use of such telephone number,” and “the
odds of being able to receive [any] prize, award, service, or product [offered] at no
cost or reduced cost.”
Commercial E-Mail (Spam)
The CAN-SPAM Act of 2003, P.L. 108-187,43 effective January 1, 2004,
establishes civil or criminal penalties for various actions related to any “protected
computer” (which as defined in section 3 of the statute effectively means any
computer). These include accessing a protected computer without authorization and
intentionally initiating the transmission of multiple commercial e-mails, transmitting
multiple commercial e-mails with intent to deceive or mislead recipients, sending a
commercial e-mail with header information that is materially false or materially
misleading, sending a commercial e-mail that does not contain a functioning return
e-mail address or other Internet-based mechanism that a recipient may use to request
not to receive future commercial e-mails from that sender, transmitting a commercial
e-mail more than 10 days after receipt of such a request, and initiating a sexually
oriented commercial e-mail to a recipient who has not given prior affirmative consent
to its receipt, unless the e-mail includes marks or notices prescribed by the Federal
Trade Commission.
On April 19, 2004, the FTC issued a final rule implementing the CAN-SPAM
Act of 2003.44 It requires, effective May 19, 2004, that commercial electronic e-mail
that includes sexually oriented material must “exclude sexually oriented material
from the subject heading . . . and include in the subject heading the phrase
‘SEXUALLY-EXPLICIT:’ in capital letters as the first nineteen (19) characters at the
beginning of the subject line.” The rule also requires —
that the content of the message that is initially viewable by the recipient when the
message is opened by any recipient and absent any further actions by the
recipient, include only the following information:

41 (...continued)
cases mentioned above, see CRS Report RL31642, Regulation of the Telemarketing
Industry: State and National Do Not Call Registries, by Angie Welborn. See also CRS
Report RL30763, Telemarketing: Dealing with Unwanted Telemarketing Calls, by James
R. Riehl.
42 15 U.S.C. §§ 5711 et seq. The FTC rules appear at 16 C.F.R. Part 308.
43 “CAN-SPAM” is an acronym for “Controlling the Assault of Non-Solicited Pornography
and Marketing.” For additional information on the CAN-SPAM Act of 2003, see CRS
Report RL31953, “Spam”: An Overview of Issues Concerning Commercial Electronic Mail,
by Patricia Moloney Figliola; and CRS Report RL31488, Regulation of Unsolicited
Commercial E-Mail, by Angie A. Welborn.
44 69 Fed. Reg. 21204 (2004), 16 C.F.R. Part 316; [http://www.ftc.gov/opa/2004/04/
adultlabel.htm] .

(i) the phrase “SEXUALLY-EXPLICIT:” in a clear and conspicuous manner;
(ii) clear and conspicuous identification that the message is an advertisement or
a solicitation;
(iii) clear and conspicuous notice of the opportunity of a recipient to decline to
receive further commercial electronic mail messages from the sender;
(iv) a functioning return electronic mail address or other Internet-based
mechanism, clearly and conspicuously displayed, that . . . a recipient may use
to submit . . . a reply . . . requesting not to receive future commercial electronic
mail messages from the sender . . . .”