FTC Staff Comment Before the New Mexico Attorney General Concerning State Board of Chiropractic Examiners Proposal to Remove Restrictions on Price Advertising, Superiority Claims, and Yellow Page Advertising

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January 	7, 	1987
COMMI'SSION.
ft~PPFlOVED.::.:
David 	A. 	Garcia, 	Esq.
Office 	of 	the 	Attorney 	General
State 	of 	New 	Mexico
P.O. 	Drawer 	1508
Santa 	Fe, 	NM 	87504
Dear 	Mr. 	Garcia:
The 	Dallas 	Regional 	Office 	and 	the 	Bureaus 	of 	Consumer
Protection, 	Competition, 	and 	Economics 	are 	pleased 	to 	submit 	this
letter 	in 	response 	to 	the 	New 	Mexico 	State 	Board 	of 	Chiropractic
Examiners' 	(-Board") 	request 	for 	public 	comments 	on 	its 	proposed
amendments 	to 	Board 	Rules 	10 	and 	11. 1 	We 	understand 	that 	the
Board 	proposes 	to.modify 	Rule 	10 	by 	eliminating 	its 	restrictions
on 	price 	advertising 	and 	superiority 	claims 	in 	advertisements.
The 	Board 	also 	proposes 	to 	modify 	Rule 	11 	by 	abolishing 	its
restrictions 	on 	Yellow 	Pages 	advertising. 	In 	general, 	we 	applaud
these 	propos3ls 	but, 	as 	explained 	in 	detail 	below, 	suggest 	two
modifications 	to 	the 	language 	of 	the 	Board's 	proposed 	new 	rules.
I. 	INTEREST 	AND 	EXPERIENCE 	OF 	THE 	FEDERAL TRADE 	COMMISSION
The 	Federal 	Trade 	Commission 	is 	empowered 	under 	15 	U.S.C. 	~~
41 	et~. 	to 	prevent 	unfair 	methods 	of 	competition 	and 	unfair 	or
deceptive 	acts 	or 	practices 	in 	or 	affecting 	commerce. 	Pursuant
to 	this 	statutory 	mandate, 	the 	Commission 	has 	attempted 	to
encourage 	competition 	among 	members 	of 	licensed 	professions 	to
the 	maximum 	extent 	compatible 	with 	other 	legitimate 	state 	and
federal 	goals. 	For 	several 	years, 	the 	Commission 	has 	had 	an
ongoing 	program 	examining 	the 	competitive 	effects 	of 	restrictions
on 	the 	business 	practices 	of 	state-licensed 	professionals,
including 	optometrists, 	dentists, 	lawyers, 	physicians, 	and
others. 	The 	Commission's 	goal 	has 	been 	to 	identify 	and 	seek
removal 	of 	restrictions 	that 	lmpede 	competition, 	increase 	costs,
and 	harm 	consumers 	without 	providing 	significant 	countervailing
benefits.
1 	These 	comments 	represent 	the 	views 	of 	the 	Dallas 	Regional
Office 	and 	the 	Bureaus 	of 	Consumer 	Protection, 	Competition,
and 	Economics 	of 	the 	Federal 	Trade 	Commission 	and 	do 	not
necessarily 	represent 	the 	views 	of 	the 	Commission 	or 	any
individual 	Commissioner. 	The 	Commission, 	however, 	has
authorized 	their 	submission.

-David 	A. 	Garcia, 	Assistant 	Attorney 	General 	2
As 	a 	part 	of 	the 	Commission's 	efforts 	to 	foster 	competition
among 	licensed 	professionals, 	it 	has 	examined 	the 	effects 	of
public 	and 	private 	restrictions 	that 	limit 	the 	ability 	of
professionals 	to 	advertise 	nondeceptively.2 	Studies 	have 	shown
that 	prices 	for 	professional 	goods 	and 	services 	are 	lower 	where
advertising 	exists 	than 	where 	it 	is 	restricted 	or 	prohibited,3
and 	also 	that 	advertising 	constraints 	do 	not 	increase 	the 	quality
2
3
See, 	~., 	American Medical 	Association, 	94 	F.T.C. 	701
(1979), 	aff'd 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	aff'd 	memo 	by 	an
equally 	divided 	Court, 	455 	U.S. 	676 	(1982). 	~he 	thrust 	of
the 	AMA decision 	-- 	"that 	broad 	bans 	on 	advertising 	and
soliciting 	are 	inconsistent 	with 	the 	nation's 	public 	policy"
(94 	F.T.C. 	at 	1011) 	-- 	is 	consistent 	with 	the 	reasoning 	of
recent 	Supreme 	Court 	decisions 	involving 	professional
regulations. 	See, 	~., 	Zauderer 	v. 	Office 	of 	Disciplinary
Counsel 	of 	the 	Supreme 	Court 	of 	Ohio, 	U.S. 	,
105 	S. 	Ct. 	2265 	(1985) 	(holding 	that 	an 	attorney 	may 	not 	be
disciplined 	for 	soliciting 	legal 	business 	through 	printed
advertising 	containing 	truthful 	and 	nondeceptive 	information
and 	regarding 	the 	legal 	rights 	of 	potential 	clients 	or 	using
nondeceptive 	illustrations 	or 	pictures); 	Bates 	v. 	State 	Bar
of 	Arizona, 	433 	U.S. 	350 	(1977) 	(holding 	state 	supreme 	court
prohibition 	on 	advertising 	invalid 	under 	the 	First 	Amendment
and 	according 	great 	importance 	to 	the 	role 	of 	advertising 	in
the 	efficient 	functioning 	of 	the 	market 	for 	professional
services); 	and 	Virginia 	State 	Board 	of 	Pharmacy 	v. 	Virginia
Citizens 	Consumer 	Council, 	425 	U.S. 	748 	(1976) 	(holding
Virginia 	prohibition on 	advertising 	by 	pharmacists 	invalid).
Cleveland 	Regional 	Office 	and 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Improving 	Consumer 	Access 	to 	Legal
Services: 	The 	Case 	for 	Removing 	Restrictions 	on 	Truthful
Advertising 	(1984); 	Bureau 	of 	Economics, 	Federal 	Trade
Commission, 	Effects 	of 	Restrictions 	on 	Advertising 	and
Commercial 	Practice 	in 	the 	Professions: 	The 	Case 	of
Optometry 	(1980); 	Benham 	and 	Benham, 	Regulating 	Through 	the
Professions: 	A Perspective 	on 	Information 	Control, 	18 	J.L. 	&
Econ. 	421 	(1975); 	Benham, 	The 	Effects 	of 	Advertising 	on 	the
Price 	of 	Eyeglasses, 	15 	J.L. 	& Econ. 	337 	(1972).

-David 	A. 	Garcia, 	Assistant 	Attorney 	General 	3
of 	goods 	and 	services. 4 	The 	Commission 	has 	examined 	various
justifications 	that 	have 	been 	offered 	for 	restrictions 	on
advertising 	and 	has 	concluded 	that 	these 	arguments 	do 	not 	war.rant
restrictions 	on 	truthful, 	nondeceptive 	advertising. 	For 	this
reason, 	only 	false 	or 	deceptive 	advertising 	should 	be
prohibited. 	Any 	other 	standard 	is 	likely 	to 	suppress 	the
dissemination 	of 	potentially 	useful 	information 	and 	contribute 	to
an 	increase 	in 	prices 	and 	a 	decrease 	in 	consu~er welfare.
II. 	THE 	PROPOSED 	AMENDMENTS 	TO 	RULES 	10 	AND 	11 	OF 	THE
BOARD'S 	RULES 	AND 	REGULATIO~S
Rules 	10 	and 	11 	of 	the 	Rules 	and 	Regulations 	of. 	the 	New
Mexico 	State 	Board 	of 	Chiropractic 	Examiners 	currently 	limit 	the
ability 	of 	chiropractors 	to 	advertise. 	The 	Board's 	decision 	to
seek 	public 	comment on 	rule 	modifications 	that 	broaden 	the
ability 	of 	chiropractors 	to 	engage 	in 	legitimate, 	nondeceptive
advertising 	appears 	to 	reflect 	the 	Board's 	recognition 	that
advertising 	benefits 	consumers 	as 	well 	as 	chiropractors 	who 	wish
to 	market 	their 	services 	in 	innovative 	ways. 	It 	is 	particularly
significant 	that 	the 	Board-has 	proposed 	to 	eliminate 	three 	rules
containing 	advertising 	restrictions 	that 	could 	thwart 	competition
among 	chiropractors 	and 	deprive 	consumers 	of 	useful 	information.
We 	support 	the 	Board's 	proposal 	to 	repeal 	Rule 	10.03{B).
Under 	this 	Rule, 	representations 	that 	cannot 	be 	objectively
verified, 	such 	as 	claims 	of 	superiority, 	are 	presumed 	to 	be
false, 	misleading _or 	deceptive. 	Bans 	on 	superiority 	claims
clearly 	lessen 	competition 	among 	sellers. 	At 	a 	minimum, 	they
restrict 	comparative 	advertising 	that 	can 	effectively 	inform 	and
attract 	customers. 	When 	sellers 	cannot 	truthfully 	compare 	the
attributes 	of 	their 	services 	to 	those 	of 	their 	competitors, 	the
incentive 	to 	improve 	or 	offer 	different 	products, 	services 	or
prices 	is 	reduced.
Bans 	on 	claims 	of 	superiority 	are 	likely 	to 	injure
competition 	and 	consumers 	all 	the 	more 	if 	they 	are 	interpreted 	to
prohibit 	a 	wider 	range 	of 	factual 	statements. 	Virtually 	any
statement 	about 	a 	chiropractor's 	qualifications, 	experience 	or
4 	Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	of
Restrictions 	on 	Advertising 	and 	Commercial 	Practices 	in 	the
Professions: 	The 	Case 	of 	Optometry 	(1980); 	Muris 	and
McChesney, 	Advertising 	and 	the 	Price 	and 	Quality 	of 	Legal
Services: 	The 	Case 	for 	Legal 	Clinics, 	1979 	Am. 	B. 	Found.
Research 	J. 	179 	(1979). 	See 	also 	Cady, 	Restricted
Advertising 	and 	Competition: 	The 	Case 	of 	Retail 	Drugs
(1976) .

David 	A. 	Garcia, 	Assistant 	Attorney 	General 	4
performance 	can 	be 	considered 	an 	implicit 	claim of 	superiority.
Inhibiting 	such 	claims 	hinders 	chiropractors 	from 	providing
consumers 	with 	truthful 	information 	about 	the 	differences 	between
their 	services 	and 	those 	of 	their 	competitors.
Similarly, 	we 	concur 	in 	the 	Board's 	proposal 	to 	repeal 	Rule
10.04, 	and 	in 	particular, 	Rule 	10.04(E). 	Rule 	10.04(E) 	currently
establishes 	a 	presumption 	that 	certain 	types 	of 	price
advertising, 	such 	as 	"low 	cost,· 	·economy," 	and 	·free," 	are
false, 	misleading 	or 	deceptive. 	Price 	advertising 	may 	serve 	to
enhance 	competition 	by 	facilitating 	new 	entry 	and 	by 	assisting
existing 	firms 	to 	attract 	new 	customers. 	It 	is 	not 	only 	a 	useful
competitive 	device, 	but 	also 	provides 	consumers 	with 	valuable
information. 	Thus, 	this 	Rule 	may 	harm 	both 	the 	pUblic 	and
chiropractors.
We 	also 	concur 	in 	the 	Board's 	proposal 	to 	repeal 	Rule
11.04. 	Rule 	11.04 	limits 	the 	size 	of 	Yellow 	Pages 	advertisements
by 	chiropractic 	referral 	services 	and 	prevents 	the 	use 	of 	an
individual 	chiropractor's 	name 	in 	such 	ads. 	This 	Rule 	does 	not
appear 	to 	be 	reasonably 	related 	to 	the 	Board's 	goal 	of 	preventing
false, 	misleading 	or 	deceptive 	advertising, 	and 	may 	deprive
chiropractors 	of 	a 	valuable 	competitive 	tool. 	The 	Board's
proposal 	to 	repeal 	this 	Rule 	suggests 	that 	it 	recognizes 	the
Rule's 	potential 	to 	discourage 	the 	advertising 	of 	much 	useful
information 	about 	the 	availability 	and 	nature 	of 	chiropractic
services.
Although 	we 	support 	the 	Board's 	pro?osa1 	to 	repeal 	Rules
10.03(B), 	10.04(E), 	and 	11.04, 	we 	are 	concerned 	with 	certain
features 	of 	the 	proposed 	standard 	for 	determining 	what 	types 	of
advertising 	should 	be 	permitted. 	First, 	the 	Board's 	proposed
rule 	would 	ban 	advertising 	that 	contains, 	inter 	alia,
"sensational 	or 	fabulous 	statements." 	This 	restriction 	is
ambiguous 	and 	could 	cause 	some 	chiropractors 	to 	refrain 	from
supplying 	information 	useful 	to 	consumers 	in 	their 	advertisements
for 	fear 	of 	violating 	the 	Rule. 	To 	remedy 	this 	problem, 	we
recommend 	that 	the 	Board 	substitute 	the 	phrase 	-misleading 	or
deceptive" 	for 	the 	phrase 	"sensational 	or 	fabulous." 	This
language 	modification 	should 	ensure 	that 	chiropractors 	are 	able
to 	make 	nondeceptive, 	truthful 	claims.
We 	also 	believe 	that 	one 	additional 	change 	should 	be 	made 	in
the 	proposed 	standard. 	The 	Board's 	proposed 	Rule 	would 	ban
advertising 	"which 	is 	intended 	or 	has 	a 	tendency 	to 	• 	• 	• 	impose
upon 	credulous 	or 	ignorant 	persons." 	Under 	this 	standard, 	a
chiropractor 	is 	responsible 	for 	ensuring 	that 	his 	or 	her
advertising 	will 	not 	be 	misinterpreted 	by 	even 	the 	most
uninformed, 	uneducated 	or 	ignorant 	consumer. 	According 	to 	the
analysis 	contained 	in 	Federal 	Trade 	Commission's 	1983 	Deception

navid 	~. 	Garcia, 	Assistant 	Attorney 	General 	5
Policy 	Statement 	this 	would 	appear 	to 	be 	inappropriate. 5 	The
Commission 	noted 	that 	an 	advertiser 	should 	only 	be 	responsible
for 	how 	a 	reasonable 	consumer 	will 	interpret 	the 	advertising. 	If
chiropractors 	are 	responsible 	for 	unreasonable 	interpretations 	of
their 	advertising, 	both 	their 	ability 	and 	willingness 	to
advertise 	will 	be 	greatly 	curtailed, 	thus 	depriving 	chiropractors
of 	a 	significant 	competitive 	device 	and 	denying 	valuable
information 	to 	consumers. 	Consequently, 	we 	recommend 	that 	the
Board 	strike 	"impose 	upon 	credulous 	or 	ignorant 	persons" 	from 	its
proposed 	Rule.
III. 	CONCLUSION
In 	sum, 	we 	support 	and 	commend 	the 	Board's 	proposals 	to
enhance 	the 	ability 	of 	chiropractors 	to 	advertise 	nondeceptively
in 	New 	Mexico. 	We 	do, 	however, 	recommend 	that 	the 	Board 	make 	the
two 	changes 	in 	its 	proposed 	rules 	noted 	above. 	We 	believe 	that
those 	two 	modifications 	will 	benefit 	both 	consumers 	and 	those
chiropractors 	who 	wish 	to 	market 	their 	services 	in 	innovative
ways.
Thank 	you 	for 	considering 	our 	comments. 	We 	have 	referred 	to
several 	studies, 	cases, 	and 	other 	materials. 	We 	would 	be 	happy
to 	supply 	copies 	of 	these 	if 	you 	so. desire, 	or 	to 	provide 	any
other 	assistance.
sincei~l~;? 	~
',V- 	/111-Jj
,;/Jim Moseley
Regional 	Director
Dallas 	Regional 	Office
cc: 	Ms. 	Michelle 	McGinnis
Administrator
New 	Mexico 	State 	Board 	of
Chiropractic 	Examiners
Regulation 	and 	Licensing 	Department
Bataan Memorial 	Building
Santa 	Fe, 	New 	Mexico 	87504
5 The 	Deception 	Policy 	Statement 	is 	contained 	in 	a 	letter 	to
the 	Honorable 	John 	D. 	Dingell, 	Chairman, 	Committee 	on 	Energy
and 	Commerce, 	U.S. 	Bouse 	of 	Representatives, 	Washington,
D.C., 	October 	14, 	1983. 	A copy 	of 	the 	statement 	is 	enclosed.