The new Federal Trade Commission policy regarding deceptive advertising is unfortunate. Unfortunate because it tolerates a certain level of dishonesty. Unfortunate because it replaces a current standard that - for all its flaws - is stricter. For these reasons Rep. James Florio (D) of New Jersey, who heads a House subcommittee that oversees the FTC, is on target in calling for a thorough congressional examination of the new policy.
What's at stake in all this, of course, is the nature of claims made by manufacturers and sellers of products and services worth billions of dollars. Under the old FTC policy, recently overturned, an ad could be considered deceptive if it had the capacity to mislead a large number of people. Under the new policy, adopted on a close 3-to-2 vote, an advertisement would be considered deceptive if a ''reasonable'' consumer would be injured by it. In other words, the ad would not be considered deceptive if only a small number of people would be injured by completing a transaction based on trust in the claim.
Congress, to its credit, forthrightly refused to accept this policy last year.
At that time, FTC chairman James Miller was attempting to have the new policy formally written into law. Mr. Miller has long argued that such a new policy makes sense because it is hard for the FTC to successfully bring action against parties using false advertising. In other words, the change in policy, as some persons within the FTC see it, would help to better identify cases that might be carried to conclusion regarding deceptive advertising.
On the other hand, the FTC was created by Congress to serve as a public watchdog against false advertising. Misleading claims are injurious not only because they sometimes occasion the sale of products that might be physically dangerous, but in a larger sense because they injure the marketplace. False advertising induces people to divert money from products that do what they are supposed to do to inferior products that are based on deception.
Such ads foster a distrust in the business community - of honest firms as well as dishonest firms.
One would assume that a federal policy pertaining to false advertising should be directed not just at ''reasonable persons,'' who, after all, usually do have the acumen to see through unworthy claims - but those citizens who, for whatever reasons, may be less educated, less sophisticated, and would be particularly vulnerable to subtle claims.
The new FTC policy should be sent back to the drawing board for further refinement.