COSMETIC ADVERTISING UNDER THE FEDERAL TRADE COMMISSION ACT By CHARLES A. SWEENY* Presented November 29, 7960, New York City Ix •s A PLEASURE and somewhat of a challenge to discuss with cosmetic chemists the advertising of the fruits of their efforts. It is en- tirely appropriate that your profession have an understanding of this area of government regulation, and I shall offer my personal views for your consideration on the basis of more than twenty-five years experience in dealing with food and drug matters as a Federal Trade Commission at- torney. I stress the fact that these are my personal views, because, as a staff member, I cannot express or anticipate the official position of the Com- mission. While the Federal Trade Commission Act was approved in 1914, and action to correct false and misleading advertising has represented a sub- stantial effort on a continuing basis ever since, the Act was amended in 1938, in so far as advertising of foods, drugs, devices and cosmetics is concerned. I propose to limit my discussion to our enforcement efforts today, dipping into historical references only when that would seem to promote understanding. In this area, there may be a question as to whether a particular product is a cosmetic or a drug, because of its composition, or the claims made for it. The question is not of practical importance to us, and I shall not burden you with definitions or discussion of the subject, simply because the provisions of the Act applicable to both categories are identical. For this reason, too, I will refer to cases involving drug products where they may clearly illustrate principles discussed. The Commission's authority in the regulation of false and misleading advertising stems basically from Section 5 of the Federal Trade Commission Act, which provides that "Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful." Section 12 declares specifically that the dissemination of false advertising for a food, drug, device or cosmetic is an unfair or deceptive act or practice in commerce within the meaning of Section 5. In inter- preting commerce, the Act is unique with respect to products in these four * Bureau of Investigation, Federal Trade Commission, Washington, D.C. 180

ADVERTISING UNDER THE FEDERAL TRADE COMMISSION ACT 181 categories in that if either the advertising or the products move in com- merce the jurisdiction of the Commission over the advertising is clearly spelled out. It is on this basis that the Commission has issued several Complaints and Orders to Cease and Desist (1) based upon the dissemination of de- ceptive advertising by United States mails or otherwise in commerce in connection with the intrastate sale of drug preparations. These have been cases where the sales of a product have been confined to a single State, and where jurisdiction has been asserted solely on the dissemination of the advertising in commerce. A fundamental question, in any discussion such as this, is just what con- stitutes a false advertisement. Pertaining to cosmetics, we find a definition in Section 15, as follows: "The term 'false advertisement,' means an advertisement, other than labeling, which is mis- leading in a material respect " and continues by explaining that an advertisement may be misleading because it fails to reveal material facts. This definition, then, clarifies rather than limits an extremely broad and general authority to prohibit any claim which is found to be misleading in a material respect. The statute does not spell out in detail those specific claims which are unlawful. Rather, the Commission is left with a free hand to consider all manner of representations in the light of the pertinent evidence and on that basis order discontinuance of claims considered mis- leading. It is obvious, then, that advertising need only tell the simple, whole truth if it would avoid violating the Act. IEarlier this year, Chairman Earl W. Kinruer suggested that all those having a responsibility for advertising would do well to screen copy in the light of the following principles--common sense rules of thumb which have received direct support from the courts over a period of years: 1. Advertisements must be considered in their entirety and as they would be read by those to whom they appeal. (Ford Motor Co. vs. Federal Trade Commission, 120 F. 2d 175 (6th Cir. 1941)). 2. Advertisements are not intended to be carefully dissected with a dictionary at hand, but rather to produce an impression upon the or- dinary purchaser. (Newton Tea & Spice Co. vs. United States, 288 Fed. 475 (6th Cir. 1923)). 3. Advertisements as a whole may be completely misleading although every sentence separately considered is literally true. (Donaldson vs. Read Magazine, Inc., 333 U.S. 178 (1948)). 4. Whether or not the advertiser knows the representations to be false, the deception of purchasers and the diversion of trade from competitors is the same. (Gimbel Bros., Inc., vs. Federal Trade Commission, 116 F. 2d 578 (2nd Cir. 1941)). 5. A deliberate effort to deceive need not be proved to prohibit •he use of advertising which misleads as an unfair method of competition or un- fair or deceptive act or practice within the meaning of the Federal Trade