Put simply: under traditional law, the rewards for advertising deception were so great and the penalties so modest (especially when discounted against the remote likelihood of detection and suit) that it was virtually perverse for advertisers not to engage in certain kinds of false claims.
It comes at a time when concern is growing about the effectiveness of television advertising regulation in light of technological developments in media. Such developments include the rapid growth of television channels that are available via a number of platforms-terrestrial, satellite, and cable-and that are being further facilitated through the transition of broadcasting from analogue to digital transmission.
Digitalization means not only more television channels for viewers to choose from but also greater scope for interactivity. This, in turn, may mean more power to consumers to select what to watch, when to watch, and how to watch. Concerns about increased volumes of advertising on burgeoning television channels and the use of more subtle forms of advertising that accompany greater commercialization of the television system (e.g., program sponsorship, product placement, program-related merchandising) have led to calls for tighter regulations governing televised advertising. This development is regarded as being especially necessary where children are concerned because their psychological immaturity as viewers and consumers leaves them more vulnerable to advertising influences.
Under traditional advertising law, successfully prosecuted violations resulted in a "cease-and-desist" order that directed the advertiser not to engage in similar future frauds. Violations of these orders could result in prosecutions (extremely rare in practice) leading to fines of $5,000 per day per violation.1 Since most advertising campaign themes run for a year or less, and most commission advertising enforcement proceedings span periods of two to five years - with one horrible example running to sixteen years2 -the effect of any order was usually to direct the advertiser to discontinue an advertising campaign that had long since disappeared. Thus the major risk that an advertiser ran in disseminating a false claim was that the litigation expenses necessary to delay enforcement might exceed the value to the advertiser of the business advantage generated by the deception.
Any move toward tightening restrictions upon advertising will create a tension with freedom of speech rights in democratic societies. To overrule freedom of speech (which includes freedom to advertise) rights, a legislator, regulator, or complainant will need to prove that harm is being done by commercial messages. Discussion of this issue has become particularly acute in debates surrounding moves to harmonize or even to standardize advertising related regulations across national boundaries-such as in Europe. Some countries operate much tighter regulations than others over advertising to children on television, and finding common ground that satisfies all national partners' concerns about children and about the freedom for advertisers to reach consumers with promotional messages can be difficult.
Beginning in 1970, the commission claimed the authority to impose corrective advertising