an ethical analysis of deception in advertising

An Ethical Analysis of Deception in Advertising

Thomas L. Carson

Richard E. Wokutch

James E. Cox, Jr.

ABSTRACT. This paper examines several issues regarding deception in advertising. Some generally accepted definitions are considered and found to be inadequate. An alternative definition is proposed for legal/regulatory purposes and is related to a suggested definition of the term deception as it is used in everyday language. Based upon these definitions, suggestions are offered for detecting and regulating deception in advertising. This

Thomas L. Carson is Assistant Professor of Philosophy at the Virginia Polytechnic Institute and State Univer- sity. He was previously Lecturer at the University of California at Los Angeles and was homer of an NEH Fellowship for College Teachers. His most important publication is The Status of Morality, ReideI, Dor- drecht, 1984. Forthcoming (in Philosophy and Public Affairs) is: 'Bribery, Extortion, and "The Foreign Corrupt Practices Act" '.

Richard E. Wokutch is Associate Professor of Manage- ment at the Virginia Polytechnic Institute and State University where he teaches in the social issues and policy areas. He previously held positions as Visiting Assistant Research Professor at the Values Center, University of Delaware, and as Visiting Fulbright Research Fellow, Science Center, Berlin, West Germany. He has published several recent articles in

the areas of bluffing and deception in business and 'ethical'/social investing.

James E. Cox, Jr., is Assistant Professor of Management and Marketing at Illinois State University. Formerly, he was at the Virginia Polytechnic Institute and State University (from September 5979 until August I983). He was a fellow at the 1979 American Mar- keting Association Ph. D. Consortium and his research has been published in the Journal of Forecasting, the Journal of Marketing Education, the Proceedings of the American Marketing Association, and the Pro- ceedings of the National Council of Physical Distribu- tion Management. He is also co-author of the book Sales Forecasting Methods: A Survey of Recent Developments.

paper additionally considers the grounds for the generally held but largely unquestioned assumption that deceptive advertising is unethical. It is argued that deceptive advertising can be shown to be morally objectionable, on the weak assumption that it is prima facie wrong to harm others. Finally, the implications of this analysis with respect to current regulation of deceptive advertising by the FTC are considered.

It is almost always assumed that deceptive advertising is morally objectionable. However the grounds for this are seldom, if ever, stated. It is also taken for granted by many that deceptiire advertising should be prohibited by law. In fact most definitions of 'deception' and 'deception in advertising' are simply proposals or criteria for when advertising should be prohibited on account of being deceptive. This is the case with FTC usage of these terms and it is also the case with definitions of these terms found in the marketing literature. Rarely, if ever, definitions of these terms are presented in the sense that they are used in everyday language.

The purposes of this paper are threefold. First, we will suggest criticisms of a widely discussed definition of deception in advertising. Second, we will attempt to show how discussion of the moral and legal aspects of deception in advertising can be illuminated by a discussion of the everyday concept of deception. We will argue that it is not enough to consider only the concepts of deception discussed in the marketing literature which are, in effect, proposals for when the law should prohibit deceptive advertising. Our third and most important aim is to give a plausible explanation of why deceptive advertising is morally objectionable. We will argue that deceptive advertising can be shown to be morally wrong given the rather weak and non-

Journal of Business Ethics 4 (1985) 93-104. 0167-4544/85.15 © 1985 by D. ReideIPublishing Company.

94 Thomas L. Carson et al.

controversial assumption that there is a moral presumption against harming others, i.e. there is a presumption for thinking that any act that harms others is morally wrong.

Both industry and government leaders have recognized the need to avoid deception in advertising. In 1937 the Wheeler-Lea Amendments extended the regulatory powers of the FTC beyond the prohibition of unfair methods of competition. These acts authorized the FTC to forbid unfair or deceptive practices. This placed the identification of deceptive advertising under the FTC's jurisdiction. In 1962 the American Association of Advertising Agencies published a Creative Code discouraging deceptive or misleading advertising. Since the early 1900s the American Advertising Federation has waged a truth-in-advertising campaign to set guidelines for the industry. In its Advertising Code of American Businessl it declares that "advertising shall tell the truth, and shall reveal significant facts, the concealment of which would mislead the public". 2

There has been no problem in making industry and government leaders aware of the need to avoid deception in advertising. The real problem has been to agree on a definition of 'deception' and consequently how to measure it.

It is becoming increasingly important to find an acceptable definition of deception. This is because the 1980 FTC Amendment Act de- emphasizes the use of the 'unfairness' criterion in regulating advertising. 3 Thus even with the current policy of the FTC to rely more on market forces and less on regulation to influence advertisers, regulations concerning deception will more likely be the basis of complaint if FTC action is taken against advertisers. However the criteria for deception are not very precise and there are no clear guidelines for determining its existence .4

Barbour and Gardner give an overview of attempts at defining and measuring deception:

In recent years a number of articles have attempted to broaden and increase the understanding of deception in advertising, especially from a behavioral per- spective. There have been several attempts to define deception in advertising.

Conceptually, with the exception of Haefner, these attempts have defined deception in terms of consumer information processing. The differences between these conceptual definitions are relatively minor. For instance, Gardner argues for veridical perception as the conceptual basis while Olson and Dover argue that demonstrably false beliefs must be acquired. Based on these definitions, attempts have been made to measure deception in advertising, s

It would be impossible in a paper of this length to compare and contrast all previous definitions of deception. However as Barbour and Gardner point out above "the differences between these conceptual definitions are relatively minor". Thus, in this paper we have chosen a representative definition of deceptive adverti-

sing as the basis for discussion. Since Gardner's definition seems to be the most frequently cited in the literature we will use this definition.

Gardner's definition of deception

David Gardner proposes the following definition of deception in advertising:

If an advertisement (or advertising campaign) leaves the consumer with (an) impression(s) and/or belief(s) different from what would normally be expected if the consumer had reasonable knowledge, and that impression(s) and/or belief(s) is factually untrue or potentially misleading, then deception is said to exist. 6

It is unclear to us whether this is intended as: (1) a strict definition of the English phrase 'deceptive advertising', as used in everyday con- versation, or (2) just a definition for legal pur-

poses, i.e., a definition picking out those instances of deceptive advertising that ought to be prohibited by law, or (3) both (1) and (2). We shall ~gue that his definition is unsatisfactory for any of these purposes. Then we will offer a definition of deceptive advertising for legal purposes (a standard for determining when deceptive advertising ought to be prohibited) and a strict semantic definition of 'deceptive advertising'.

According to Gardner's definition, if an

An Ethical Analysis of Deception in Advertising 95

advertisement or ad campaign leaves consumers with other than reasonable knowledge (i.e. the knowledge required in order to make an informed purchasing decision) about the product in question then it is to be considered deceptive. This definition is open to clear counter-examples such as the following case. Suppose that a consumer is completely ignorant about a certain type of product. For example, a refugee from Indo-China might be completely ignorant about the functioning of automobiles: their mainte- nance requirements, susceptibility to rust, fuel and oil consumption etc. According to Gardner's definition a brief, totally honest, television commercial emphasizing the gasoline mileage and warranty of a particular car would count as deceptive. (After viewing the commercial, the refugee's beliefs about automobiles would still be other than they would be if he had reasonable knowledge about them and his beliefs would be potentially misleading.) Surely it would be unfair to label an advertisement deceptive just because it fails to educate the ignorant up to the level of 'reasonable knowledge'. Gardner's definition equates the failure of an ad to provide one with the knowledge required in order to make a reasonable choice with the ad's being deceptive. This is surely not the case; in order to count as deceptive an ad must be the cause of one's misinformation or lack of reasonable knowledge, (As we shall see shortly, Gardner's methods for measuring deception also run afoul of this requirement.) Ads that picture beautiful women cavorting with the product are uninfor- mative but they are surely not deceptive.

The automobile ad (from our earlier example) which Gardner's definition counts as deceptive actually may have had a positive effect on the man's knowledge of the product - it may have moved him in the direction of reasonable knowledge. This suggests the following revised definition of deceptive advertising:

An advertisement can be said to have deceived consumer if and only if as a result of the ad he has a less reasonable knowledge of the product than he would have had otherwise.

This definition, however, is also inadequate. For an advertisement containing two pieces of

valuable and little known information and one outright tie could not count as deceptive under this definition because such an advertisement would still constitute a net gain in terms of knowledge.

Our purported counter-example to Gardner's definition appeals to the very atypical case of an immigrant who is completely ignorant of the nature of the product being advertised, i.e. someone fitting the FTC's 'least reasonable man' or 'ignorant man' description. It might be suggested that Gardner can easily avoid this objection by incorporating the FTC's 'reasonable man standard' into his definition, and as we pointed out in footnote 6, Gardner may be implying this in his definition. According to the reasonable man standard an ad cannot be considered deceptive unless it misleads (or has the potential to mislead) reasonable intelligent and well informed adults. Any advertisement can mislead someone, but in order to count as deceptive an ad must mislead) reasonably intelligent and well informed people. Gardner's definition can be revised along these lines as follows:

If an advertisement or advertising campaign leaves intelligent and knowledgeable adults (or a significant percentage of intelligent and knowledgeable adults) with (an) impression(s) and/or belief(s) different from what would normally be expected if the consumer had reasonable knowledge, and that impression(s) and/or belief(s) is factually untrue or potentially misleading, then deception is said to exist.

Some might argue that this is what Gardner really means; we disagree (see Note 6). In any case our argument does not depend on accepting the first interpretation of the definition as the correct reading of Gardner, since we argue the definition is inadequate in either event.

As Gardner claims, for such definitions as that above to be of operational utility, agreement would need to be reached on the meaning of such terms as 'intelligent and well-informed' and 'significant percentage'. Such agreement, however, may not in general be possible and the meaning of these terms is likely to be dependent on the circumstances. If the consequences of being misled are sufficiently bad (e.g. resulting in a person's death) then we would seem to be justified


in setting a very low percentage criterion for 'significant'. 7 The above revision of Gardner's definition and any other definition that makes 'the reasonable man standard' a necessary condi- tion of deceptive advertising are implausible. For all such definitions imply that many of the kinds of objectionable and misleading advertisements aimed at children are not deceptive because such advertisements would not mislead very many adults.

An alternative definition of deception

To account for the problem of commercials aimed at children we suggest the following definition of deception (for legal purposes):

An advertisement is deceptive if it causes a significant percentage of potential consumers (i.e., those at whom it is directed or whose consumption behavior is likely to be influenced by it) to have false beliefs about the product.

The situational determination of what consti- tutes a 'significant percentage' would still be necessary.

It should be stressed that this is not a strict definition of deception for everyday usage but a criterion of deception for legal purposes. It might be more appropriately considered a strict definition of 'misleading advertising', since a strict definition of 'deception' must make some reference to the intention of the deceiver as we will argue below. Both the FTC and the FDA have in fact used the terms interchangeably dis- regarding the issue of intention. 8 We suggest the above as the legal norm for determining when ads should count as deceptive. We feet the government is justified in forcing advertisers to stop any such ads and in fining them for deceptive ads (fines may be used to finance 'corrective advertising' or to compensate consumers and/or competitors).

It might be objected that this violates one of the most elementary principles of legal justice - that one should be punished only for actions that are deliberate or intentional. For example, in order to punish someone for murder, it is necessary to prove that he killed someone intentional-

ly. But, this objection is mistaken for several reasons. First, it can be justifiable to punish people for unintentional actions if those actions involve negligence. The drunken driver who unintentionally kills someone is still liable to be punished for negligent homicide (and rightly so). The penalty for this is, however, less severe than for murder.

Second, and more fundamentally, an individual or organization may be rightfully compelled to cease harmful activity and to compensate others for that harm, even if the harms are completely unintended, e.g., it is justifiable to com- pel someone to cease an activity and to compensate others for the unintentional destruction of their property. Proof of intent or negligence is only necessary in cases of criminal prosecution which involve the possibility of imprisonment and punitive fines. We believe that cease and desist orders, corrective advertising, and com- pensation to victims of deception are appropriate penalties for both intentional and unintentional deception. Punitive fines would be appropriate only for cases of intentional deception.

As stated above, the FTC and FDA typically have not been concerned with the issue of intent. However in matters pertaining to the related field of product liability, the intent of manu- facturers has been a matter of courtroom delib- eration. The most notable instance of this was the Ford Pinto case where Ford was charged with criminal negligence for allegedly having knowingly put an unsafe car on the market. While Ford was acquitted on this count, it is likely that this is a legal precedent that will be repeated. It seems reasonable to the authors that in an extreme case of deceptive advertising involving large dollar amounts of consumer purchases that this matter of intention can and should be raised in court as well.

Measuring deception

Gardner proposes a number of techniques for measuring deception. One of these is what he calls the "normative belief technique". The normative belief technique involves testing people's beliefs and expectations about a prod-


uct after they have been subjected to advertisements for it. If there is a discrepancy between these beliefs and the actual features of the product then the advert isement is to be considered deceptive. As Gardner notes, if unfulfilled consumer expectations for a product are of ten caused by favorable associations with a particular brand name, any advertisements for that product must be considered deceptive by his criteria. Suppose, for example, that Gerbers markets a new line of inexpensive baby food with a simple ad saying that this is Gerbers' new line. Gerbers has a reputa t ion for being the best and most reliable baby food and consumers will expect the new line to have all of these virtues. Let us suppose that these expectations are un- founded and that the new line of baby foods is actually inferior in quality to other less expen- sive brands. Gardner is commi t t ed to saying that any advertisement for this p roduct must be considered deceptive. He admits that this seems to be implausible:

The advertiser need only mention the brand name and a substantial percentage of the audience may understand the message as, 'Here we are again, old reliable Gerbers, the safest, most nutritious, most reliabte baby food your baby can eat.' If that claim were made explicitly , it would be deceptive. But Gerbers does not have to make the claim; consumers get the message without being told. It is quite possible that the procedures mentioned here will find such advertising deceptive in some manner. Why should an advertisement that merely repeats the brand name be judged deceptive ? But why should this be any less 'deceptive', if you go along with the Gerbers example, than a campaign for a new baby food product that explicitly makes such a claim? No ready solution to this dilemma can be advanced. However, the dilemma cries out for research. 9

However, there is a ready solution to this problem. If an advertisement merely repeats the product ' s brand name, the advertisement, in and of itself, cannot be said to have caused or brought about the unfulfilled expectations o f the consumers. These expectat ions are based on consumers ' past experience with Gerbers, not on the current advertising. Whereas, if a commercial explicitly makes false claims about the quality of

a product , it may be responsible for creating unrealized expectations. An advertisement cannot be considered deceptive unless it, of itself, causes people to be misled.

The concept o f decept ion in everyday life

We will a t tempt to give a definit ion of 'decep- t ion' that is faithful to its everyday meaning in English. Before proceeding with this it would be helpful to distinguish decept ion from lying. A lie is a deliberate false s ta tement made orally, in writing or through some other use o f language. Deception need not involve any false statements or any other use of language. My confident demeanor as I raise the pot in a game of poker may deceive you into thinking that I have a good hand, but it does not involve the making of any s ta tement (whether true or false). So, not all cases of decept ion involve lying. Likewise, not all lying involves deception. If a lie is not believed then the liar has not succeeded in deceiving anyone. According to the standard definit ion of lying, lying only involves the attempt to deceive others. 1° The relationship between lying and deception can be illustrated as follows:

Deception Lying

The left circle includes all instances o f decep- t ion; the right circle includes all instances of lying. Area 1 represents non-verbal or non- linguistic deception, area 2 represents successful lies (lies that do deceive others) and area 3 represents unsuccessful lies (lies that fail to deceive others).


The foregoing points out an impor tant fea- ture of the concept of decept ion - unlike 'lying' the word 'decept ion ' connotes success. An act must actually mislead someone if it is to count as a case of deception. I f my bluff fails to deceive you then it cannot be described as a case of deception, however it could be considered an a t t empt at decept ion which many would consider no less morally objectionable than decept ion itself.

The root meaning of the word 'deceive' is simply to cause another person to have false beliefs. However, this definit ion is not adequate to cover all cases. For one might cause another to have false beliefs in indirect ways that we would not be willing to allow as cases o f deception. For example, by telling you about a sale at the local bookstore I might cause you to notice and purchase a book containing numerous false claims about the life o f Elvis Presley that you would believe. I will have indirectly caused you to believe such things as that Elvis practiced cannibalism, but it would not be correct to say that I deceived you. A perfectly clear and t ruthful s ta tement is likely to be misinterpreted by inattentive listeners or readers but we don ' t call it deceptive for that reason. I am not guilty of decept ion if my lecture on World War I causes a s tudent dozing in the back of the class- room to come to the mistaken belief that Germa- ny and Turkey fought on opposing sides in the war. It won ' t do to define decept ion as directly causing someone else to have false beliefs. Not only are the not ions o f direct and indirect causa- t ion too obscure for the purposes of definition, but some of the subtler forms of decept ion involve indirection.

It might be argued that the reason why cases o f this sort should not count as instances of decept ion is that they involve no in ten t ion that the other person be led to have false beliefs. This suggests the following definition:

x deceives y if and only if x intentionally causes y to have false beliefs.

This definit ion, while a clear improvement over those that preceded it, is also inadequate. For according to it, no mat ter how false or misleading an advertisement is, it cannot be consid-

ered a case of decept ion provided that those who are responsible for producing it believe that it is true because in that case there is no intent to cause false beliefs. Moreover, if this definit ion were correct, then an advertiser would have no need to a t tempt to determine if a claim is in fact true in order to avoid deception. I f an automobile dealer's advertisement mistakenly claims that his model cars have the best safety record of any American-made car, the ad is deceptive, the dealer has commi t ted an act o f deception, even if he believes that its true. We may wish to say that his moral culpability for the deception depends on whether or not he believes this claim and whether or not he made a good faith effort to verify it, but that is another matter. We propose the following definit ion of deception:

x deceives y if and only if: x causes y to have certain false beliefs (b) and x intends or expects his actions to cause y to believe b.

This definit ion does not require that x believe that b is false, although, of course, he may. The reader will note that this definit ion differs from the earlier legalistic one in an impor tant respect. The present definit ion only a t tempts to define what it is for one individual to deceive another. A given act (or advertisement) might mislead some people but not others. We need to provide additional standards in order to determine whether the ad per se should be considered deceptive. Thus our definit ion would not provide adequate guidance to an FTC administra- tive law judge who would need to rule on whether or not an advertisement was likely to deceive enough people that, on the whole, it should be viewed as deceptive. However, our definit ion can (and we think should) be incorpo- rated into guidelines for the regulat ion of advertising. Any definit ion of decept ion in advertising mus t be based upon an understanding of what it means to deceive an individual. An advertisement is said to be deceptive on account of its propensi ty to deceive or mislead individuals, and the intent ion or expectat ion on the part o f the advertiser that it would do so. As we argued previously, in tent ion is an issue that should be considered in impor tant cases. For less


important cases it might be considered sufficient to show that an advertiser expected (or should have expected) that a given percentage of people would be misled by the ad.

What's wrong with deception?

Here we will attempt to give an explanation of why deceptive advertising is wrong. We will argue that there are strong reasons for thinking that deceptive advertising is morally objectionable given the very weak assumption that it is wrong to hurt others.

(1) Our first and most important reason for thinking that deceptive advertisements are wrong is that they are harmful to consumers. Deceptive ads harm consumers by causing them to have false beliefs about the nature of the products being advertised and thereby cause some consumers to make different purchasing decisions than they would have made otherwise. For example, my being deceived into believing that eating Wheaties will make me a champion athlete may cause me to buy Wheaties instead of Kroger's Wheat Flakes which are of equal nutritional value and cheaper in price. I would have been better off if I'd bought the Kroger cereal. (My true interests are determined by what I would have done if I had been fully informed; and if I had been fully informed, I would have bought the Kroger Wheat Flakes.) Deceptive advertisements also harm one's competitors by reducing their sales.

Of course, there is no absolute moral prohibition against harming others. One is perfectly justified in harming someone else in self-defense. Similarly, a newspaper editor would be justified in printing an exposfi harmful to the interests of corrupt official. However, harming others is prima facie wrong, or wrong, other things being equal. We may also put this by saying that there is a presumption for supposing that harming others is wrong. We need to be able to give a special justification in order for it to be right for us to harm others. For example, in the second case above, the general presumption against harming others is overridden by the public's interest in good government and the potential

removal of the harms caused by the official. So, the fact that deceptive advertisements

harm consumers and competitors gives us a presumption for thinking that such advertisements are unethical. Are there any conceivable justifications for deceptive advertising that might override this presumption? Deceptive ads might cause someone to purchase a product which is of value to him which he would not have bought otherwise. For example in the Wheaties case, some might argue that the satisfaction derived from being associated with the Wheaties image more than compensates the consumer for the higher price paid. Or consider the hypothetical case of a well-meaning bureaucrat who decides to exaggerate the evidence linking cigarette smoking to cancer in a government sponsored anti-smoking campaign.

In the first case we have what is clearly a self- serving argument. Since the image projected depends on the fact that consumers are deceived. It's hard to see how the consumer benefits from the image. This case is unlike the case of those who purchase certain products (e.g. designer jeans) for their snob appeal. The image of Wheaties is itself dependent on a lie or falsehood, namely that Wheaties has special nutritional properties that help to produce champion ath- letes. A child is almost certainly better off in the long run if he realizes that athletic prowess can only be achieved by a combination of long hard training and natural ability rather than have his hopes dashed when he finds out that eating Wheaties will not make him a great athlete. 11 Even if there was some benefit, it is not clear that this benefit would be sufficient to justify the deception.

The second case (as well as the first) consti- tutes a type of paternalism typically rejected in the United States. The freedom for individuals to make decisions about their own consumption activities based upon accurate and complete information is generally thought to be more important than the consequences of their making the 'wrong' decision. In extreme cases there are options other than deception to control consumption. Thus we have bans on the purchase of certain drugs and requirements that certain safety devices be purchased (e.g. auto-


mobile safety requirements). These other approaches appear superior to deception in attempting to promote the public good since they do not have the negative side effects discussed below that lying and deception (even for benevolent motives) do. Paternalism, if acceptable at all, should at least be practiced in the open.

Another possible justification for deception is that the benefits derived by the advertiser out- weigh the harms that his ads cause others. This seems unlikely since all the deceptive advertiser's economic gains must come from somewhere - and this will be either from inflated prices paid by consumers and/or sales lost by competitors. Also economic theory tells us that in a free society economic welfare will be promoted through the efficient allocation of resources brought about by people making free choices on the basis of full information. Perfect (or at least adequate) information is not only an assumption of economic theory, it is a prerequisite for the operation of the 'invisible hand' of capitalism. Unless consumers can tell which is the better of two products at a given price, there will be little incentive for the producer to make a better product and an inefficient allocation of resources will result. A firm that needs to deceive the public about the nature of its goods or services in order to stay in business is of dubious value to society - the resources that it utilizes could be put to better use in some other way. One possible exception to this is a case in which deceptive practices of a firm's competitors do financial damage to the firm. While deception by this beleaguered firm might then be justifiable from an economic standpoint, exposing the guilty firm would seem as effective and more morally acceptable. With the recent increase in compara- tive advertising we have in fact seem more firms attempt to expose alleged deception through their own ads and through the courts. 12

The proposed justification of deceptive advertising is also untenable for reasons independent of the dubious empirical claim that harms to others are less than benefits to the deceiver. For, in general, the fact that harming someone else will benefit oneself is a very feeble justification for harming him. For example, the fact that my

stealing your money would benefit me economi- cally as much as it harms you would not justify me in stealing your money. Similarly, even if the economic benefits to a firm that presents deceptive advertisements about its products are roughly equal to the economic harms that it causes others, it is still clearly wrong for the firm to run the ads. This same reasoning applies in the qcpi- cal case of deceptive advertising of relatively inexpensive consumer products leading to a small harm to each o£ many consumers, but cumulatively a great benefit to the producer. It's hard to see why cheating 100 people out of $1 is any less reprehensible than cheating one person out of $100, especially since the probable cumu- lative effect of both of these types of deceptive advertising would be the same for the typical consumer.

So, we ]lave seen that on the weak and scarcely debatable assumption that it is prima facie wrong to harm others we can show that there is a strong presumption for supposing that deceptive advertising is morally wrong, irrespec- tive of its legality.

(2) Sissela Bok 13 argues that, apart from its immediate bad consequences, lying (and by extension, deception) lowers the general level of trust and truthfulness so essential to the proper functioning of our society and its economic system. Because of this she claims that there is a strong presumption against lying and deception, even when they do no immediate harm.

Richard De George14 and Norman Bowie15 appeal to the same claims about the importance of honesty for creating an atmosphere of trust and cooperation in order to construct a different kind of argument for the claim that lying and dishonesty in business are morally objectionable. They argue that the practices of lying and deception would be self-defeating if everyone engaged in them, because the general climate of trust that makes these practices advantageous to those who engage in them would no longer prevail. De George writes the following:

If everyone in business - buyers, sellers, producers, management, workers and consumers - acted im- morally or even amorally (i.e., without concern for whether their actions were moral or immoral), business would soon grind to a halt. Morality is the oil as


well as the glue of society and business. It is only against the background of morality that immorality can not only be profitable but even possible. Lying would not succeed if most people were not truthful and did not tend to believe others. A breach of trust requires a background of trust.16

Both De George and Bowie appeal to the views of the German philosopher Immanuel Kant who proposed what he called the 'categorical imperative' as a standard for the rightness or wrongness of actions. The categorical imperative can be stated roughly as follows:

An act is morally right if and only if the person who does it would be willing to have everyone else do the same thing or have everyone else follow the same principles that he does. 17

Kant's argument in the case of deception in advertising would be that the person who engages in deceptive advertising would not be willing to have everyone else do the same, since if everyone did so the background of trust that makes his deception both possible and advantageous would no longer exist. Kant also proposes the following principle as a criterion of right and wrong:

An act is wrong if it could not become a universal practice without being self-defeating. TM

Bowie argues that making deceptive advertisements in order to gain a competitive advantage is morally wrong according to this criterion. If deception in advertising were a universal practice, no one would trust advertising and no one could gain an advantage by means of deceptive advertising. 19

Suppose that we accept Kant's general principles. Do we have an additional argument for thinking that deceptive advertising is morally objectionable? Perhaps not. For there already exists a great distrust of advertising, but this has not rendered advertising ineffective or futile. However, while this argument may not succeed in establishing the immorality of the milder forms of deceptive advertising prevalent in our society, one can still imagine blatant forms of deceptive advertising that would make advertis-

ing futile if they became a universal practice. Suppose, for example that all ads grossly mis- represented the price and characteristics of the products being advertised. In that case, advertising would cease to provide consumers with useful information and would be unable to exert any significant effect on consumer behavior. Kant's principles would seem to provide us with an argument against blatantly false advertising. It is well to remember the degree to which we can trust the claims and descriptions we encounter in most ads. For example, if a margarine is advertised as being '100% corn oil with no cholesterol' hardly anyone questions this claim.

It might be argued that the moderate level of distrust fostered by advertising is something that is desirable and beneficial. Advertising helps to foster a 'healthy skepticism' not only for the claims of other advertisers, but for the claims of politicians and government officials also. There is no doubt that a certain measure of distrust is desirable and little doubt that advertising helps to instill this distrust. However, we are not persuaded that such considerations could ever justify deceptive advertising. One cannot justify unethical conduct on the grounds that it helps to warn others to be on guard against conduct of that very sort. A mugger cannot justify his actions on the grounds that he makes people more cautious about where and how they travel. Similarly, a politician cannot justify lying to the public on the grounds that doing so will help instill prudent distrust of politicians in the average person.

(3) So far, our argument has depended on an appeal to utilitarian or quasi-utilitarian considerations about the undesirable consequences of deceptive advertising. Many people hold that certain acts (e.g. lying, promise breaking) are inherently prima facie wrong apart from any of their consequences. This view finds its classic formulation in the writings of the British Philos- opher Sir W. D. Ross. 20 Ross holds that lying is prima facie wrong apart from any bad consequences that it may have, i.e., in the absence of any special justification it is wrong to lie, even if doing so won't result in any bad consequences. For example, it is wrong to lie about one's age to a stranger in a train station, even though no


harm will come of this. Ross would claim that a utilitarian must say that lying is permissible in this case. (This is not entirely clear, since the utilitarian might try to avoid this conclusion by pushing Bok's argument that all lying undermines trust. But for the sake of argument let us assume that this lie will go undetected and will not have any negative consequences.) Ross identifies his own view about this matter with the morality of common sense. Here we think that he is clearly right. Most of us do believe that such things as lying and deception are inherently wrong. If common sense morality is right about this, then we have still further reasons for thinking that deceptive advertising is immoral. Our arguments in this paper do not commit us to any particular stance in the debate between Ross and the utilitarian. We simply assume something that both agree on, namely it is pr ima facie wrong to harm others.

New directions in the regulation of deception

The FTC has recently enacted controversial new standards pertaining to the regulation of deception. 21 According to these new regulations, before the FTC would consider an advertisement to be deceptive, it must be found to have the capacity to mislead and to cause harm to 'reasonable' consumers. This policy is supported and extended by FTC Chairman James Miller's contention that all FTC advertising regulations should be subjected to cost-benefit analysis. Since such regulatory activities can be quite costly, it is possible that the costs of regulating deception (which the consumer will pay in higher taxes or higher product prices) will exceed the benefits. This he feels is likely to be the case with low cost consumer goods which are repur- chased frequently. He contends that the desire for repeat business and the threat of legal action for harmful deceptive advertisements will keep deception to a minimum.

This seems to the authors to be an overly optimistic view of the power of the marketplace to curb deception since it is unlikely that we would have so many weU-documented cases of deception if it were unprofitable. The idea of

regulating on the basis of cost-benefit criteria presupposes a commitment to utilitarianism and is open to question for that reason. But even if we accept the utilitarian presuppositions on which Miller's argument depends, it's still not clear that his proposed guidelines are appropriate. A utilitarian would caution that all of the costs and benefits need to be considered. Thus such factors as the decline of trust in society would be relevant. Also a utilitarian would recommend protecting children and ignorant adults from deceptive ads if the benefits of doing so exceeded the costs (see our earlier arguments regarding these special cases). A utilitarian would also be bound to recommend action whenever the costs of deception exceed the costs of regulation regardless of whether the deception costs a great many consumers only a few pennies or a few consumers a great amount. And finally the utilitarian would recommend that that vehicle (government regulation, government litigation or consumer litigation) which could alleviate the problem most cost-effectively should be used.

Summary

In the above analysis we have tried to point out weaknesses in proposed definitions of deception in advertising and have suggested ways of correcting these deficiencies. In addition, we have proposed an explanation of why deceptive advertising is wrong. Finally, new FTC approaches for regulating deception were examined in the light of these ethical considerations. It is hoped that a better understanding by academics, practitioners, and government officials of the concepts presented in this paper will provide a better basis for the consideration and the measurement of deception in advertising.

Notes

I Creative Code (American Association of Advertising Agencies, 1962). 2 The Advertising Code o f American Business (American Advertising Federation, n.d.).

An Ethical Analysis o f Deception in Advertising 103

s D. Cohen, 'Unfairness in Advertising Revisited',Jour- hal of Marketing 46 (Winter 1982), p. 77. 4 Cohen, ibid. s F.L. Barbour II and D.M. Gardner, 'Deceptive Advertising: A Practical Approach to Measurement', Journal of Advertising, 11 (1982), p. 21. In this quota- tion the following references are cited: D.A. Aaker, 'Deceptive Advertising', in Consumerism: Search for the Consumer Interest, 2nd ed., D. A Aaker and G. S. Day (eds.) (The Free Press, New York, 1974), pp. 137-156; G.M. Armstrong, M.N. Gurol and F.A. Russ, 'Detecting and Correcting Deceptive Advertising', Journal of Consumer Research 6 (December 1978), pp. 237-246; G.M. Armstrong, C. L. Kendall and F. A. Russ, 'Appli- cations of Consumer Information Processing Research to Public Policy Issues', Communications Research 2 (July 1975), pp. 232-245; G. M. Armstrong and F. A. Russ, 'Detecting Deception in Advertising', MSU Business Topics 23 (Spring 1975), pp. 21-32; G. T. Ford, P. G. Keuhl and O. Reksten, 'Classifying and Measuring Deceptive Advertising: An Experimental Approach', American Marketing Association I975 Combined Proceedings, E.M. Mazze (ed.) (1975), pp. 493-497; D. M. Gardner, 'Deception in Advertising: A Conceptual Approach', Journal of Marketing 39 (January 1975), pp. 40-46; D.M. Gardner, 'Deception in Advertising: A Receiver Oriented Approach to Understanding', Journal of Advertising 5 (Fall 1976), pp. 5-11; J. E. Haefner, The Perception of Deception in Television Advertising: An Exploratory Investigation', unpublished doctoral dissertation (University of Minnesota, Minneapolis, 1972); J. E. Haefner, 'The Legal Versus the Behavioral Meaning of Deception', Proceedings of the Association for Consumer Research, 3rd Annual Conference 17, Venkatesan (ed.) Cincinnati (1972), pp. 356-360; J. A. Howard and J. Hulbert, Advertising and the Public Interest (Crain Communications, Inc., Chicago 1973); J. Jacoby and C. Small, 'The FDA Approach to Defining Misleading Advertising', Journal of Marketing 39 (Octo- ber 1975), pp. 65-68; P.G. Keuhl and R.F. Dyer, 'Broad Belief Measures in Deceptive-Corrective Advertis- ing: An Experimental Assessment', Proceedings of the 1976 American Marketing Association Fall Conference, K.L. Benhardt (ed.) (1976), pp. 373-379; P. G. Keuhl and R. F. Dyer, 'Applications of the "Normative Belief" Technique for Measuring the Effectiveness of Deceptive and Corrective Advertisements', Advances in Consumer Research IV, W. D. Perrault, Jr. (ed.) (1977), pp. 204- 212; J. c. Olson and P. A. Dover, 'Cognitive Effects of Deceptive Advertising', Journal of Marketing Research 15 (February 1978), pp. 29-38; I. L. Preston, 'Research- ers at the Federal Trade Commission: Peril and Promise', Current Issues and Research in Advertising J. H. Leigh

and Claude R. Martin, Jr. (eds.) (Division of Research, Graduate School of Business Administration, University of Michigan, Ann Arbor, 1980), pp. 1-16. 6 Gardner (1975), op. cit., p. 42. This definition is ambiguous in the use of the term 'reasonable knowledge'. It is unclear whether Gardner means: (1) the consumer has reasonable knowledge about the product after seeing the ad or (2) the consumer is a reasonably intelligent individual. A strict reading of Gardner's definition strongly suggests the first interpretation. According to Gardner we test the deceptiveness of an ad by reference to the impressions and beliefs people are left with after seeing it. An ad is deceptive if after seeing it people have less than adequate knowledge about the product. We use this first interpretation here and discuss a definition which incorporates this second interpretation below. 7 Jacoby and Small, oio. cit. s I.L. Preston, 'A Comment on "Defining Misleading Advertising" and "Deception in Advertising" ', Journal of Marketing 40 (July 1976), pp. 54-60. 9 Gardner (1975), op. cir., p. 46. 10 The standard definition of lying is "a lie is a deliberate false statement that is intended to deceive others". (Oxford English Dictionary). We have argued in other contexts that this definition is implausible and proposed the following definition instead:

A lie is a deliberate false statement which is either intended to deceive others or foreseen to be likely to deceive others. (from: T. Carson, R. Wokutch and K. Murrmann, 'Bluffing in Labor Negotiations: Legal and Ethical Issues', Journal of Business Ethics 1 (February 1982), p. 17.)

Nothing that we have to say in this paper depends on this distSute about the definition of lying. 11 It must be conceded that sometimes people can be made better off by being deceived and led to believe that things are better than they actually are. For example, the parents of a dead man might be happier if they falsely believe that their son was not a murderer. But such cases are very atypical and the proof of this is that very few are willing to be deceived 'for our own good'. We resent those who deceive us or conceal information from us. In order to act effectively and achieve our goals we need to operate on the basis of true beliefs. Others seldom benefit us by deceiving us. It should also be stressed that the benefits of such deception are likely to be short-lived and outweighed by subsequent disappoint- ment upon learning the truth. 12 D. Kneale, 'Remedy Ruckus: Tylenol, the Painkiller, Gives Rivals Headache in Stores and in Court', The Wall Street Journal 10 (September 2, 1982), p. 1.


la S. Bok, Lying: Moral Choice in Public and Private Life (Vintage Books, New York, 1979). 14 R. De George, Business Ethics (MacMillan, New York, 1982). is N. Bowie, Business Ethics (Prentice-Hall, Englewood Cliffs, 1982), pp. 61-64. 16 De George, ibid., p. 6. iv I. Kant, Groundwork of the Metaphysics of Morals, translation H.J. Paton (Harper and Row, New York, 1964), pp. 88-89. is Kant, ibid., p. 70. 19 Bowie, ibid. 20 W.D. Ross, The Right and the Good (Oxford, England, 1930).

21 M. Isikoff, 'FTC Narrows Definition of Deceptive Ads', The Washington Post (October 22, 1983), pp. A1, A7; J. Saddler, 'FTC Alters Its Policy on Deceptive Ads by 3-2 Vote, Sparks Congressional Outcry', The Wall Street Journal (October 24, 1983), p. 41.

Department of Philosophy, Virginia Polytechnic Institute and

State University, Blacksburg, VA 24061,

U.S.A.

(continued from p. 92)

Reich's economic nationalism is more enlightened than the paleolithic reflexes of the old industrial coalition and less protec- tionist than Reagan's it will nonetheless breed defencive responses in other OECD nations) while he recognizes that America's economic decline arises from the new global division of labour, Reich does not extend the partner- ship espoused for business, labour and govern- mnt inside the U.S. to cooperation among OECD nations, speak less with the less developed countries. In sum, American economic assertiveness is not an ethically sound basis for a new international economic order.

A new social contract?

Reich's work begins with the need to bridge the American business/civic culture split. America's tradition of business/government elite accomodation, or "superstructures of management", was concerned only with specific industries (91f.). It continues in America's growing war economy, the realm of Reagan's largely unremarked economic inter- ventionism (178f., 192,206ff.). Reich focusses on the lack of business/government cooperation in national socio-economic planning, in the U.S. in contrast to Sweden, Germany and Japan.

His concept of the business/civic culture split reflects what Herschel Hardin, in The

Unknown Country called America's "private enterprise culture", in contrast to the "public enterprise culture" typical of Canada, not to mention other OECD nations. But why speak of a 'culture'? In part the problem is an ideology, possessive individualism or market liberalism. But Reich also depicts a traditional network of mutually reinforcing socio- economic conventions, values, rituals, and practices. I take his point to be that the issue is neither idea(1)s nor the mode of production. It is both broader and deeper, and perhaps more infractious to change. Hence the force of his analysis of the depth of the crisis and the difficulty of meeting it.

On his own evidence however Reich's concept of the business/civic split can be seen quite differently: as the dominance of the managerial corporation over the government and of private enterprise over the public good in ideology and reality. This, he shows, reached a uniquely American peak in the 'pragmatic' non-ideology of "managerialism", which extended HVSP methods from the business to the civic culture (Chapters IV, VIII). It was, I note, ideological not only in disguising the private interests it supported and its own political values, but also in its central, ethically dubious principles. One was its market economism, which places market egoism and economic efficiency over a social ethic of the common good, equity and equality.

Indeed the managerialist approach is itself a (continued on p. 115)

an ethical analysis of deception in advertising

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