Opening the way to deceptive ads

Remember the stir back in the Carter administration years when the Federal Trade Commission (FTC) was accused of ''overstepping'' its legal authority and imposing overly restrictive rules on the US business community? That fuss finally ended in 1980 when Congress gave itself a veto power over FTC rules and imposed a virtual ban on certain types of investigations. Now calls are once again being heard for even tighter restrictions on the agency. Only this time, the calls are coming from none other than the chairman of the agency, William C. Miller III.

Mr. Miller is a free-market economist who believes that the agency has not given enough attention to ''cost-benefit analysis'' in its rulemaking procedures. He wants a smaller, leaner, and less activist FTC. To achieve this, he has proposed a major cutback in the agency's budget, arguing that ''a budget reduction makes it easier to begin to reorder some priorities.'' At the same time he has asked Congress to slap tough limitations on the agency's authority to determine what is ''unfair'' or ''deceptive'' advertising - in short, severely to restrict the very purpose of the FTC.

Under the Miller proposal, the FTC would be able to bring a case involving unfair or deceptive advertising only if the advertisements injured consumers or were so misleading that a reasonable consumer could not tell they were false. Also, the FTC would be able to investigate only statements of fact, not opinion.

The mischief in the Miller proposal is two-fold. One, the looser definitions could lead to a certain amount of misleading advertising, so long as the ads did not injure anyone or were so subtle that a person could not determine that they were false.

Secondly, the changes, as several public interest groups have pointed out to Congress, would ''throw an entire body of (consumer) law into question and give rise to years of litigation over the application of changed standards to particular cases.''

Despite recession, the US business community has been seeking to boost sales; open up markets abroad; and develop new and better production techniques. Its objective, however, remains what it has always been, namely, to offer good and safe products at reasonable prices. Promoting products based on apparently ''harmless'' exaggeration would hardly be the right foundation for a prospering economy. Why, then, write an allowance for deceit into US law?

Congress should reject Mr. Miller's dubious proposal.

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