Anti-CFPA lobbying effort of the day
Is there a risk that the new Consumer Financial Protection Agency will start cracking down on media companies? A couple of advertising industry associations seem to think so:
Controversial legislation winding its way through the House to create a Consumer Finance Protection Agency would establish a whole new regulatory system for financial-services advertising. One provision, according to media industry advocates, could make media outlets liable for running financial advertisements the new agency deems misleading…
“The whole advertising community should be concerned about this,” said Dan Jaffe, exec VP of the Association of National Advertisers…
The ANA and the American Association of Advertising Agencies oppose the bill in its current form, along with a wide swathe of business groups, including the U.S. Chamber of Commerce. They are worried about the sweeping regulatory authority the legislation would give the CFPA.
This all seems very silly to me. For one thing, as Jim Surowiecki notes, the U.S. Chamber of Commerce is hardly representative of carefully-considered views:
Its opposition to regulation now seems reflexive; at the moment, its legislative priorities include opposing a consumer financial-protection agency, opposing a shareholder bill of rights, and opposing “flawed health care proposals,” which seems to mean any health-care proposal made by a Democrat.
For another thing, note that it’s the advertisers complaining, here, not the publishers. It’s right and proper that advertisers should be held accountable for what they advertise, and all the guff about “free-speech issues” and the “chilling effect” of the law is really just a desperate attempt to hide the fact that they’re worried the CFPA is going to be tougher on financial advertising than the FTC has been.
The specific part of the legislation they’re talking about is the part of the bill which makes it “unlawful for any person to”
(3) knowingly or recklessly provide substantial assistance to another person in violation of the provisions of [CFPA’s unfair, deceptive or abusive acts or practices regulations] and any such person shall be deemed to be in violation of that section to the same extent as the person to whom such assistance is provided.
Now remember that media companies already vet ads before they run them. But in general the CFPA has no incentive to shoot the messenger in these situations. The job of the CFPA is to stop unlawful products from being offered in the first place, not to stop them being advertised. The advertising, indeed, might well be a very useful way in which the CFPA finds out that such products exist. The natural response of the CFPA on seeing such an ad would be to stop the product in question from being sold. Once that happens, there’s no need to go after the publisher of the ad, since it’ll stop running anyway.