Free Speech in Commercial Speech
In the Bill of Rights, the First Amendment to the U.S. Constitution protects the right of free speech and other rights. It reads, in part, Congress shall make no law … abridging the freedom of speech, or of the press. Court rulings provide different protections for political speech and commercial speech.
The First Amendment only restricts government actions to limit or censor free speech. Private individuals or businesses may regulate speech of anyone under their authority, such as employees, agents, shoppers, customers, website, forum or blog users, or visitors on private property. Not all public property is a public forum. For example: the lobby of the post office is for conducting postal business, not for making political speeches or disturbing or soliciting customers.
Commercial speech is used by individuals and businesses for the purpose of making a profit, by marketing, promotion, advertising, sales and soliciting. It has less protection than political speech, which is the expression of thoughts, ideas and opinions regarding government policies, laws, officials, candidates, and social issues.
Free speech does not protect defamation, false statements that may damage the reputation of a person or business, true threats, inflammatory fighting words that are either injurious by themselves or might cause the hearer to immediately retaliate or breach the peace, inciting imminent lawless action, or an invasion of privacy.
Landmark Court Cases on Commercial Speech
Before Bigelow v. Virginia in 1975, the Supreme Court ruled that commercial speech had no protection under the First Amendment, and governments could regulate it at will. Since then, commercial speech has gained protection, but governments still have authority to restrict it, if regulation furthers a substantial interest, such as protecting consumers from fraud, lies and deception.
In Central Hudson Gas & Electric, 1980, the Supreme Court devised a four-factor test to determine when commercial speech would receive First Amendment protection:
(1) commercial speech must concern lawful activity and not be misleading.
(2) the asserted governmental interest must be substantial.
(3) the regulation directly advances the asserted governmental interest, and
(4) the regulation is no more extensive than necessary to serve that interest.
(see Making Sense of Commercial Speech, Neel Sukhatme, Harvard Law School, 2005)
In 1983, in Bolger v. Youngs Drug Products Corp. the Supreme Court articulated that commercial speech has three characteristics:
(1) It is an advertisement of some form,
(2) it refers to a specific product, and
(3) the speaker has an economic motivation for the speech.
Commercial speech must follow many laws, rules, regulations, business and industry ethics codes, and socially accepted practices, that do not apply to political speech.
While political candidates might lie, mislead or deceive voters to get a vote, a business may not lie, mislead or deceive consumers to make a sale.
Colorado Consumer Protection Act
The Colorado Consumer Protection Act (CCPA), CRS 6-1-101 et seq., regulates commercial speech to protect consumers and competitors. It is enforced by the Colorado Attorney General and the Colorado district attorneys. Civil charges for damages may also be brought by consumers or competitors against violators.
Some CCPA provisions include:
CRS 6-1-102 (1) “Advertisement” includes the attempt by publication, dissemination, solicitation, or circulation, visual, oral, or written, to induce directly or indirectly any person to enter into any obligation or to acquire any title or interest in any property.
CRS 6-1-102 (8) “Property” means any real or personal property, or both real and personal property, intangible property, or services.
CRS 6-1-102 (10) “Sale” means any sale, offer for sale, or attempt to sell any real or personal property for any consideration.
CRS 6-1-105. Deceptive trade practices. (partial list)
(1) A person engages in a deceptive trade practice when, in the course of such person’s business, vocation, or occupation, such person:
(c) Knowingly makes a false representation as to affiliation, connection, or association with or certification by another;
(e) Knowingly makes a false representation as to the characteristics, ingredients, uses, benefits, alterations, or quantities of goods, food, services, or property or a false representation as to the sponsorship, approval, status, affiliation, or connection of a person therewith;
(g) Represents that goods, food, services, or property are of a particular standard, quality, or grade, or that goods are of a particular style or model, if he knows or should know that they are of another;
(p) Solicits door-to-door as a seller, unless the seller, within thirty seconds after beginning the conversation, identifies himself or herself, whom he or she represents, and the purpose of the call;
(u) Fails to disclose material information concerning goods, services, or property which information was known at the time of an advertisement or sale if such failure to disclose such information was intended to induce the consumer to enter into a transaction;
(cc) Engages in any commercial telephone solicitation which constitutes an unlawful telemarketing practice as defined in section 6-1-304;
(2) Evidence that a person has engaged in a deceptive trade practice shall be prima facie evidence of intent to injure competitors and to destroy or substantially lessen competition.
(3) The deceptive trade practices listed in this section are in addition to and do not limit the types of unfair trade practices actionable at common law or under other statutes of this state.
Enforcement of CCPA
The attorney general or district attorney has authority to investigate a potential violation of CCPA, conduct a hearing, promulgate rules for enforcement, request or demand sworn testimony from witnesses, reports, documents, and records. They may initiate an action in district court to obtain a temporary restraining order or an injunction to stop the deceptive trade practice and seek restitution to any person injured in the process.
The violator may be required to pay the costs of the investigation and legal proceedings, restitution to any injured persons, and a civil penalty of up to $2,000 for each consumer or transaction involved, up to $500,000. Violations against an elderly person, over 60 years of age, may result in a civil penalty of up to $10,000 for each violation.
CRS 6-1-113. Damages.
Any consumer or competitor injured by a deceptive trade practice may bring a civil action seeking the greater of actual damages, $500, or three times actual damages, if bad faith conduct is shown, plus costs and attorney fees.
Local Laws on Commercial Speech
Local governments may also enforce laws regulating commercial speech. Zoning regulations create commercial, industrial, agricultural, residential and mixed-use zones. Operating or advertising a commercial business or parking a commercial vehicle in a residential zone may be prohibited by local ordinance, deed restrictions or by neighborhood covenants or HOA rules.
Soliciting laws may prohibit door to door soliciting. Residents and businesses may post No Soliciting, No Flyers, or No Trespassing signs on private property. Businesses may prohibit unauthorized commercial advertising or soliciting of their customers in or on the premises or parking lot, or require written permission for soliciting by a few approved non-profit organizations such as the Girl Scouts or Salvation Army.
Vendors do not have a right of commercial speech to advertise on someone else’s private property without permission. See the rules, terms, and conditions posted on site or on the business website.
Federal Laws on Commercial Speech
The Federal Trade Commission (FTC) enforces truth in advertising regulations protecting consumers from false, misleading, deceptive or unfair commercial advertising and business practices.
Online Customer Reviews
BBB Code of Advertising
See BBB Southern Colorado Code of Advertising
Whether your business is a member of the Better Business Bureau (BBB) or not, it is good practice to follow their Code of Advertising and ethical business standards.
Advertising Law Compliance
Part of a business marketing plan should include a legal review by an attorney or compliance officer, to check that marketing, advertising, email, and soliciting messages and delivery methods are in compliance with all relevant laws, rules, regulations, codes, terms and conditions, to avoid fines, lawsuits and reputation damage.
Disclaimer: Laws and regulations vary by city and state and are subject to change. This article is not to be used or considered as legal advice. For legal advice, contact a licensed, experienced attorney.