574 CHAPTER 16 ETHICAL ISSUES IN MARKETING COMMUNICATIONS(e.g. information on health issues has led to more healthy food) and prices are reduced
(due to a reduction in a seller’s informational market power). Sometimes the distinction
is made between regulation of deceptive marketing communications and regulation of unfair
practices. Consumers are deceived when there is a claim–fact discrepancy and the false claim
is believed by customers. Moreover, the message must be misleading, i.e. representation,
omission or practice that is likely to mislead the customer, from the perspective of a reason-
able consumer, i.e. by a reasonable number of the group to which the practice is targeted, and
the deceptive practice must be material, i.e. important and likely to impact on consumers’
choice or conduct regarding the product and thus relate to a central characteristic. Unfair
marketing communications are acts or practices that cause or are likely to cause substantial
injury to consumers, which are not reasonably avoidable by consumers themselves and not
outweighed by countervailing benefi ts to consumers or competitors. Th ey may go beyond
questions of fact and relate merely to public values, e.g. off ends public policy as it has been
established by statutes, is immoral, unethical, oppressive or unscrupulous, or causes sub-
stantial injury to consumers, competitors or other business.^113 Each country has its own laws
and regulations. A detailed discussion is beyond the scope of this book.Self-regulation of marketing communications practices
In order to retain trust and credibility, advertising needs to meet high ethical standards. Th e
advertising industry in many countries has recognised this fact and has started to regulate
its industry by establishing codes of practice or sets of guiding principles, a process called
self-regulation. On top of legislation and government regulation, in many countries organ-
isations or systems of self-regulation are in place. Table 16.1 summarises the pros and cons
of self-regulation. Although the features and operation of the self-regulatory systems may
be quite diff erent in diff erent countries, they all share the same goal: ‘ensuring legal, decent,
honest and truthful advertising, prepared with a sense of social responsibility to the con-
sumer and society and with proper respect for the rules of fair competition’.^114 Th e ICC was
the fi rst to publish its International Code of Advertising Practice (ICC code) in 1937. All the
codes in use today, all around the world, are based on this code. Self-regulatory organisations
(SROs), which are funded by the advertising industry, ensure that the rules are applied. If an
advertiser is not willing to comply voluntarily with the decision of the SRO, media may be
refused for future advertising, negative publicity may be used or the case can be referred to
the appropriate statutory authority. Due to its fl exibility, speed and low cost, self-regulation
makes an ideal complement to the law.^115Table 16.1 Pros and cons of self-regulationPros Cons
z Usually faster and less expensive, more
flexible and up to date
z Does not require ‘injury’ to be proven as
in law
z Assists and complements statutory
regulation
z Generates greater moral cohesion than
the law – whole industry co-operates to
reflect current values and norms
z Helps minimise friction between consumers
and businesses
z Media voluntarily participate in enforcing
self-regulationz Business competition and innovation are
impaired by restrictions
z Voluntary regulations may only impose
minimum standards and enforcement may
be lax
z Lacks effective judicial and sanction tools
z System may lack too few lay people and
involve too many industry representatives
with the potential of over-indulgent
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