EDITORIAL – Seeking the truth about regulations on ‘truth in advertising’

It will surprise no one that, as a newspaper, the Cayman Compass strongly supports advertising. We also support “truth in advertising.” But at this moment, we are unsure about the Utility Regulation and Competition Office’s proposed regulations on truth in advertising.

The telecoms, fuel, water and wastewater regulator, commonly known as OfReg, has recently released draft rules intended to police deceptive or unfair marketing practices by companies under its purview.

According to OfReg, the rules have been modeled on similar protections in the United Kingdom and other western countries. They are intended to ensure that consumers are protected against “false advertising” and deceptive claims, and would cover pricing statements, guarantees, after-sales services, endorsement, testimonials and other marketing techniques.

Regulated companies and the public have until March 13 to comment on the draft rules, after which OfReg intends to craft a final policy. Here are our preliminary comments:

First, are these new regulations necessary? Specifically, does OfReg have substantive examples of companies employing “deceptive or unfair” advertising, that consumers have complained about, and that in the absence of these new regulations have gone unaddressed? The Compass news and editorial staff are constantly peppered with complaints and rumors from the community on all manner of subjects – absent among them is untruthful or misleading advertising by utility companies.

Second, do channels already exist for consumers to have “truth in advertising” complaints addressed? If consumers feel they have been misled into purchasing (or overpaying for) a service or product, can they pursue a remedy through the civil court system? At this time it is unclear that an additional process and set of rules by OfReg would offer a more effective or efficient avenue for rectifying such grievances.

On this last point, the language of the proposed regulations are themselves vague and potentially problematic. For example, here is the text of just one of the 41 draft rules:

“The Office will likely consider unqualified superlative Claims as comparative Claims against all competing Sectoral Utility Services, and any superiority Claims (i.e. any Claims that the Sectoral Provider’s Sectoral Utility Services is better than a competitor’s) must be supported by credible evidence unless such Claims are obvious puffery.”

Our general editorial position is that government regulations should be as minimal, as common-sensical and as clear as possible. It is not clear that the 41 draft rules meet those criteria.

Further, OfReg’s short but eventful track record does not inspire confidence in the regulator’s capacity to fairly and uniformly enforce regulations, even if hypothetically they were clear, concise and targeted wisely.

From exorbitant expenditures on travel and consultants, to knee-jerk announcements of major initiatives to profound and sudden leadership changes, to say that OfReg has had a “smooth start” might well constitute a “deceptive or unfair” claim.

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