Fair Trade Law Q&A - False or Misleading Advertising

1. Under Article 21, Paragraph 5 of the Fair Trade Act, advertising agencies and advertising media may be held jointly and severally liable for damages only where they make, design, disseminate, or publish a false or misleading advertisement while they know or should have known that the advertisement is false or misleading. The purpose of this provision is to require advertising agencies and media to exercise a reasonable degree of screening with respect to false or misleading advertisements. Accordingly, the provision generally applies only where the advertising agency or media has sufficient ability to exercise control over the content or dissemination of the advertisement and is therefore capable of performing such screening.
2. As a violation of Article 21, Paragraph 5 gives rise to joint and several civil liability on the part of advertising agencies and advertising media , and issues relating to such civil liability fall within the jurisdiction of the ordinary courts, the precise scope of application of the provision to advertising agencies and advertising media is ultimately to be determined by the courts.