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AdLib On May - 27 - 2010

THE TRUTH IN CORPORATE ADVERTISING ACT (TICA)

A potential state ballot proposition in The State of California

(NOTE: ALL COMMENTS IN RED ARE QUESTIONS FOR ALL OF YOU ON HOW WE SHOULD DEAL WITH CERTAIN PROVISIONS)

OVERVIEW
The purpose of The Truth in Corporate Advertising Act (TICA) is to build and strengthen the rights of Californians to receive truthful information from corporate advertising so that they may make informed decisions as consumers and voters.

WHY THIS ACT IS NEEDED
While the impact of corporate advertising in the media and on the internet has grown more powerful over the years, the mechanisms of holding entities responsible for making false claims have declined. This has led to an environment where the public is too-frequently presented with representations by corporations that are either untruthful or omit critical facts, in order to unethically manipulate the public into supporting the best interests of a corporation instead of their own.

Corporations escape existing Truth in Advertising laws through loopholes by such tactics as using virtually unreadable fine print or having caveats or warnings spoken too quickly to be fully discernible. There are myriad ways corporations can and have mislead people. GROW believes that people are entitled to the truth.

Additionally, in its Citizen’s United decision, the U.S. Supreme Court has declared that corporations are to be viewed as people, that money is equivalent to free speech and that people are entitled to unlimited free speech. This means that corporations are now permitted to spend unlimited amounts of money on social and political ads to promote the issues and candidates that will be the most advantageous to them, as opposed to the public. As the Health Care Reform campaign revealed, some corporations will use misrepresentation of the truth to further their interests. Undoing the Citizens United decision is a long term task but in the meantime, if corporations are restricted from spreading untruths to voters in advertisements, the impact of the Citizens United decision could be blunted.

WOULD A TRUTH IN ADVERTISING LAW VIOLATE THE 1ST AMENDMENT OR BE ILLEGAL?
As mentioned above, there are already Truth in Advertising laws in place. Also, though the Supreme Court has declared corporations to be people, corporations and their behavior can be and is regulated both federally and by the states in which they are incorporated. Laws against slander, libel and fraud join other legal precedents demonstrating that Freedom of Expression doesn’t protect the right to intentionally express harmful untruths.

As to political ads, there are already states that have Truth in Advertising laws in place that apply to political advertising. There are issues that have undermined their effectiveness which have been taken into account in drafting the structure of this act.

HOW WOULD THE TICA ACT WORK?
The TICA act is designed to empower citizens to be able to take action themselves, simultaneously avoiding conflicts of interest between government and corporations. Similar to Small Claims court, TICA allows citizens to file claims against corporations without the need for lawyers, court or the substantial expenses they can entail.

TICA claims will be handled in a fully online process. Citizens can make claims, join claims and review the status and results of claims online. This greatly increases the response time and efficiency of resolving claims and applying decisions while drastically reducing the expenses.

This program is intended to be revenue neutral and may even provide revenue to The State. It would require a minimal initial outlay by The State of California to set up a TICA website and database which would be reimbursed and self-sustaining through fees and penalties generated from claims.

Through this process, both Complainants and Corporations will provide their statements and supporting materials via the website and an Arbitrator will be randomly selected by The State from an approved list to review all the information and provide a decision. The decisions of Arbitrators will be reviewed annually to assess performance; any who are not performing adequately will be removed from the list.

Here are some details on how it will work:

1.  Upon viewing or hearing an advertisement in California (whether an in-state ad or a national ad)  by a corporation or any entity funded by a corporation (in whole or in part), any California citizen (this excludes corporations) who believes that ad to be presenting untruths may file a complaint with the State of California (What department? Secretary of State?) against the corporation(s) or entity(ies) who helped finance the ad. A reasonable filing fee of $200 would be required to limit frivolous claims (Should the fee be lower or higher?).

2.  The Complainant would file and complete a complaint online at a dedicated State website:

a. To prevent abuse or attempts to subvert this process by Corporations or any other parties, Complainants will confirm their identity by providing their full name and Driver’s License or California ID number, to be verified against DMV records.  They will do so under penalty of perjury so if someone is trying to fraudulently undermine or abuse the process, they could be pursued criminally.

b. Complainant will provide details about the advertisement, the entity advertising, the subject matter and the alleged untruths.  In response, an automatic search will be made of the complaint database and Complainant will be presented with any claims that are currently pending or decided that may match the information entered. If a Complainant finds that a claim is already open against an advertisement, a Complainant may join the claim and add additional evidence. Otherwise, if no claim exists against an advertisement, a Complainant may open a new claim. In all cases, Complainants will be required to pay the $200 filing fee. If the case is decided in their favor, they will receive a full refund. If it is decided in the Corporation’s favor, a single $200 fee will be equally assessed amongst all Complainants so in the case of multiple Complainants, the balance of their filing fees would be refunded to them. If the number of Complainants exceeds 200 and they do not prevail in the case, all Complainants will be assessed a fee of $1 and refunded the balance.

c. At this online complaint site, Complainants will type in a statement detailing the advertisement and explaining why they believe that advertisement is untruthful. This will include leaving a false impression that fine print or rapidly spoken disclaimers don’t sufficiently refute. They will then provide links to articles, videos and/or other online information that supports their position (if possible, a link to the advertisement in question would be desirable).   Additional Complainants may add their statements and more links to the list. The Arbitrator will assess the material at the provided links on the reliability of the site and source so the more subjective a site is, the less weight the material on it will be. Providing links to more objective sources would be best and strongly advised.

d. Complainants are required to print out the complaint (which will include a case number) and send a copy to the Corporation(s) responsible for the advertisement, either by Certified Mail or private delivery service (FedEx, UPS, etc.). This will put the Corporation on notice that they are presenting an ad that is claimed to be materially untrue and that a TICA complaint has been filed against them.  Complainant will return to their claim on the website to add the certification or tracking number online so notification can be confirmed if disputed by a Corporation. If a Complainant does not verify delivery information at the website within one week of completing a claim, the claim will become inactive until this step is taken.

3.  Once put on notice, the Corporation(s) then has two choices. It can remove the ad in question within 72 hours (Is this a good timeframe? Shorter? Longer?) from airing and refrain from any other advertising expressing the same or similar statements or inferences. This would close the claim. Or, if a Corporation wishes to dispute the claim, they may do so at the website (including a copy of the ad is mandatory) and Complainant will be automatically notified by email. If a Corporation fails to respond within one week, the claim will be deemed to be disputed.

4.  One week from the date of delivery of the claim to a Corporation, if a Corporation has failed to respond or is contesting a claim, The State of California (Department?) will use a statewide list of approved Arbitrators to randomly assign an Arbitrator to the case who will decide it within 48 hours. If a corporation fails to participate in this process, the Complainant will win by default. Upon making a decision, the Arbitrator will post his decision at the website (in the claim file) and send a copy of it to the Complainant and Corporation by overnight delivery. The Corporation will have 1 business day from receipt (Timeframe too short?) to abide by the decision or severe penalties will accrue.

5.  If the Arbitrator finds for the Complainant, The Corporation must:

a.  Reimburse the Complainant for the filing fee paid (paying the state which refunds the fee paid by the Complainant).

b.  Pay all costs of arbitration.

c.  Pay a TICA Maintenance Fee to The State of $1,000.

d.  Withdraw the advertisement in question and be restricted from any further advertisements making the same or similar assertions.

e.  Pay a fine in an amount equal to the amount they spent on producing and airing the untrue advertisement. The State of California (Department?) will choose from a list of approved non-profit entities to assign the amount, to be used to produce and air a modest advertisement that corrects the misinformation that appeared in the original ad.

f.  In the case of an egregious violation, a Complainant may request additional punitive damages to be levied against the Corporation, the Arbitrator may approve or deny punitive damages up to a maximum of $10,000 (Is this amount too much or too little? Should there be a specific formula such as up to 5 times the amount spent on the ad and airing it? Should there be a minimum fine? Unlimited in both directions? Should this money go to financing Public Service Announcements, Education/Schools, another cause or program?) .

6. If the Arbitrator finds for the Corporation, The Complainant must:

a.  Share the cost of Arbitration with the Corporation (if Complainant filed a claim in good faith).

b.  Agree not to file any further TICA complaints against the Corporation for the advertisement in question or any ads for communicating the same information in this ad (though if a new ad contains new assertions, a complaint could be filed).

c.  If the claim is found to be frivolous and unsupported by legitimate documentation from any reliable source, The Arbitrator may require the Complainant to pay all expenses of arbitration and could apply a fine of up to $1,000 (higher or lower, to avoid abuse by trolls, etc.?).

7.  To further discourage corporations from accepting fines as a cost of doing business and to discourage those with ill will from abusing the complaint process, repeat offender penalties will be applied. Each subsequent violation by a Corporation or Complainant will raise the maximum fine applicable to them by 100% (i.e., $10,000 of the maximum fine in the first case, $20,000 in a second case, $40,000 in a third case, etc) (Is this too much of an increase? Not enough?).

8. If a Corporation fails to comply with the decision on a case, the Corporation will be fined an amount, equal to the maximum fine applicable, for each time the ad continues to air (i.e., $10,000 per airing for a Corporation on its first ad found in violation, $20,000 per airing on its second instance, etc.).

9.  A Complainant may be barred by The State of California from filing future claims if they have made three or more complaints that have been found by Arbitrators to be made in bad faith.

Categories: GROW Info

Written by AdLib

My motto is, "It is better to have blogged and lost hours of your day, than never to have blogged at all."

8 Responses so far.

Click here to leave a comment
  1. kesmarn says:

    AdLib, this is to let you know that I had no problem accessing the page, and also to say that I had the same thought that Sue, I believe, had when she mentioned the Attorney General’s office as the possible one to be handling this. That occurred to me last night, but I didn’t get a chance to mention it. I would imagine that most states’ Attorneys General would have a division devoted to consumer issues. Do you think that might be the one to handle this?

    Also wondered if others had thoughts on the $200 filing fee. I have to say that, coming from a depressed rust belt community, my perception of the value of $200 probably differs considerably from a normal person’s. But $200 would probably be a deal breaker for many folks in this community. They’d be afraid to gamble that much, even for a good cause. That’s sad to say, but, in this case, true. $100 would probably be more like it here. But California may be a different story entirely, so I leave this to the Californians in the group!

    This is looking more and more like a real possibility all the time!

    • AdLib says:

      Great, glad this new section at the Planet is working as it should, so far so good!

      Yes, I agree with you and Sue, the AG would probably be the best division of state government to oversee such a litigation and enforcement effort.

      As for the amount of the fee, I threw $200 out as an amount that I thought would be high enough to dissuade fraud but maybe it is too high. Maybe $100 would be better…or less? $50?

      We should find the best balance between dissuading fraud and making the amount reasonable for conscientious people to have held for a few weeks and likely returned.

      Hey, all it takes is the will and commitment of a few people to make a huge difference. Some have done so for negative reasons, I wouldn’t bet against us for something as positive as this!

      • SueInCa says:

        What about the fee being refundable if your complaint is validated? It could come from the fines charged to the company. Also another area of government that might be feasible for this is the Federal Trade Commission. They are responsible for truth in advertising for corporations.

        http://www.ftc.gov/greenlights#110201

        • AdLib says:

          Absolutely, in fact that’s already in the proposal. If a Complainant prevails, the Corporation pays the state for the filing fee and the amount is refunded to the Complainant.

          As for the FTC, as a federal body, it wouldn’t have jurisdiction to apply state regulations.

          Since political advertising is involved along with commercial advertising, I’m not sure if oversight of this could be under a trade or consumer affairs department. A question that will need to be answered. Still, it would still probably be under the AG I would think.

  2. SueInCa says:

    Okay Adlib a few things

    The corp should have to do a public retraction. Removing the ad, does not remove the lie already told to the public. The corp should bear the complete financial liability to right the wrong, including fines.

    If a Corporation fails to respond within one week, the claim will be deemed to be disputed.

    I think this should read, “not disputed”?

    I may think of more, but you have a great start here. You could write a contract for almost any corporation….lol. I used to do it all the time at WFB and this is as good as any I saw there or wrote myself.

    One other question, does the final have to be reviewed by an attorney or would the state do that once it is voted on?

    • AdLib says:

      I’m with you on the public retraction. Should it be in the form of a press release to media outlets? And posted at the TICA site, which I would hope media outlets, consumer groups and blogs would check in on for the latest outcomes of complaints.

      While I want there to be justice, I do also try to keep in mind if a decent company just makes a mistake unintentionally, that they can correct it without great expense. That’s why I suggest the press release for those corps who swiftly agree to pull their ad and much more costly penalties if they refuse and lose the case.

      My original thought was to let a case proceed if a corp didn’t respond so an Arbitrator would still review the Complainant’s claim for validity. Perhaps what we could do instead is accept a failure to respond as conceding but the Arbitrator would still need to review the Complainant’s material to confirm untruths in the ad and assure that justice is in fact done…that is, if a corp is found to have falsely advertised, it truly did.

      Just a stray thought, you know how the Chamber of Commerce lied throughout the HCR and Financial reform? Since their ads are funded through corporate money, they too would be in the cross-hairs. That’s kinda cool but it will mean that they would throw everything they have at this to stop it.

      Thanks so much for the props, very appreciated!

      Ultimately, yes, we will need and have an attorney to review it and give it a thumbs up before finalizing it. The last thing we’d want is to go through the whole journey of getting it on the ballot and voted in…then having a court throw it out or gut it for legal/constitutional reasons.

      Also, along the way, Choicelady and others may help us share it with folks out there who are experienced in the lobbying and legislative world in CA and could also help vet this and make suggestions.

      It is very exciting to consider what a victory a bill like this would be for the public over corporations, if things go as we hope, this could be a very exciting journey.

      • SueInCa says:

        AdLib
        I think the public retraction should be just that, very public. I am so adamant on this piece because I am so tired of others fact checking but the original liar never steps up to the plate. The lie is just left out there with no real repercussions for doing so in the first place. Fines are all well and good but to publicly have to say you are sorry and retract the claim is so much more powerful.


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