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Code Offers Leeway for Advertising Claims

Jul 1, 2017


Situation

In the 1970s, at the height of the energy crisis, a quarter-page advertisement appeared in a newspaper in a major city of the Midwest proclaiming, "Your plant was designed when energy was cheap. We can save you 20% or more now that it's not." The ad was placed by a large environmental consulting and design firm; it touted the firm's 25 years of specialization in this field and claimed that "no one offers more experience at solving energy conservation and management problems for a wide variety of industries." The ad concluded by urging readers to "take immediate action to reduce your energy costs" by contacting the firm's client service representatives.

A member of a competing firm forwarded a copy of the ad to ASCE's Committee on Professional Conduct (CPC) and asked that body to determine whether it violated ASCE's Code of Ethics. The complainant adduced article 7 of the code, which at the time read as follows: "It shall be considered unprofessional and inconsistent with honorable and dignified conduct and contrary to the public interest for any member of the American Society of Civil Engineers ...[t]o advertise engineering services in self-laudatory language, or in any other manner derogatory to the dignity of the profession.

Upon review of the ad, the members of the CPC were quick to agree that the statements concerning the firm's experience and the results it could deliver contravened the Society's prohibition on "self-laudatory" language. Accordingly, the committee found that the member had violated article 7 of the code, and it issued a letter of admonition informing the member of its findings and advising him to "review future advertisements for his firm's services very carefully in light of the provisions of the ASCE Code of Ethics." Notice of the disciplinary action appeared in a Society publication, but the member was not named.


Question

If this ad were submitted to the CPC today, would its wording still be adjudged a violation of the Code of Ethics?

Discussion

The history of ASCE's Code of Ethics in this area is in many ways a history of the tension between a profession's right of self-regulation and the mandates of federal antitrust law. From the former perspective, codes of conduct are a means of safeguarding the profession's credibility and serving the public interest, protecting colleagues and customers alike from unqualified or unscrupulous practitioners. From the latter perspective, codes of conduct all too often countenance collusion among market competitors that boosts the cost of services by suppressing competition and makes it harder for members of the public to make informed decisions about cost and value.

Several early provisions of ASCE's code came under legal challenge from antitrust regulators, including language prohibiting the submission of price proposals and restricting an engineer from attempting to "supplant" another engineer in seeking work. By the same token, earlier codes of conduct governing the legal, medical, dental, pharmaceutical, and other professions also have seen substantive revisions as a result of antitrust scrutiny. Many of these changes were the result of heightened federal enforcement efforts in the late 1970s. However, one subject that continues to draw regulatory attention is language in codes of ethics that limits advertising speech.

In a landmark case in 1976, the U.S. Supreme Court struck down a state pharmaceutical board's attempt to prohibit pharmacists from advertising prescription drug prices. The court dismissed the state's argument that the restriction served to preserve professional integrity and protect consumers from a "race to the bottom" on prices, ruling instead that these concerns were outweighed by the protection that even commercial speech merits under the First Amendment and by the public's right to truthful and nondeceptive information on products and services.

That decision was followed by a flood of additional cases in which associations and licensing entities were challenged over restrictions on advertising in their codes of conduct. In 1979 the Federal Trade Commission won a victory against the American Medical Association in a case involving restrictions on physician advertisements for reasons of ethics. In 1990 the commission successfully challenged language in the American Institute of CPAs' code banning self-laudatory or comparative advertising. And as recently as 2015 the National Association of Animal Breeders fell afoul of federal antitrust laws because of advertising restrictions in its code of conduct.

These cases make it clear that government regulators are unlikely to be swayed by advertising restrictions grounded in paternalistic arguments about professional integrity or the need to protect consumers from making rash decisions about professional services. Indeed, even when professional advertising contains boasts, exaggerations, or grandiose comparisons complete with such words as "greatest," "best," or "most trusted," regulators have deemed such language as unlikely to deceive a public that is used to "advertising puffery." Such statements are seen as deserving protection as forms of commercial speech.

On the basis of the American Institute of CPAs case and others like it, ASCE removed the prohibition on "self-laudatory" advertising from its Code of Ethics in April 1993. Today, the sole remaining stricture on advertising can be found in category (f) of the guidelines to practice for canon 5: "Engineers may advertise professional services in a way that does not contain misleading language or is in any other manner derogatory to the dignity of the profession." This clause in the guidelines is followed by examples of permissible advertising, but it is important to note that advertising not covered by the examples is not necessarily deemed unethical. Indeed, the list of examples has never been interpreted in this way.
In view of the protection afforded advertising speech by federal courts, ASCE's enforcement of category (f) for canon 5 has in practice been restricted to instances that run counter to federal laws against false advertising. This includes advertising that is demonstrably false, for example, an engineer claiming to have earned specialty certification that he or she did not earn or that does not exist, as well as advertising that is objectively misleading, for example, listing a flat fee without disclosing additional, hidden fees.

Given the changes discussed above, it is likely that today the CPC would view the claims of unmatched expertise and potential cost savings in the ad from the 1970s merely as advertising puffery and not as something that was objectively false or misleading. Even the more direct claim that the firm "can save you 20% or more" has sufficient ambiguity with respect to the nature or certainty of the promised results that it would probably not be viewed as a claim upon which the average consumer would rely. Thus, in the absence of any substantive evidence to show that reasonable consumers had been deceived by the ad, it is probable that the CPC would not see it as violating the Code of Ethics.



Members who have an ethics question or would like to file a complaint with the Committee on Professional Conduct may call ASCE's hotline at (703) 295-6151 or (800) 548-ASCE (2723), extension 6151. The attorneys staffing this line can provide advice on how to handle an ethics issue or file a complaint. Please note that individual facts and circumstances vary from case to case, that some details may have been altered for purposes of illustration or confidentiality, and that the general summary information contained in these case studies is not to be construed as a precedent binding upon the Society.