FTC Staff Comment Before the Pennsylvania Independent Regulatory Review Commission Concerning Board of Dentistry Regulations on Advertising

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UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
CLEVELAND REGIONAL OFFICE
April 24, 1989
V890033
COMMISSION AUTHORIZED
Mr. Frank J. Ertz
Executive Director
Independen t Regula tory Review
Commonwealth of Pennsylvania
Room 22A, 333 Market Street
Harrisburg, Pennsylvania 	17101
Dear Mr. Ertz:
Commission
The staff of the Federal Trade Commission (FTC)! is pleased to respond to
your letter of November 23, 1988, requesting comments on the restrictiveness of
regulations of the Pennsylvania State Board of Dentistry (Board). 	Our
comments address restrictions on advertising practices. 	We believe that these
restrictions may impede the flow of information to consumers, increase the cost
of advertising, and adversely affect commercial aspects of the practice of
dentistry.
I. 	FEDERAL TRADE COMMISSION INTEREST AND EXPERIENCE.
The FTC is an independent regulatory agency responsible for fostering and
safeguarding the interests of consumers. 	Section 5 of the Federal Trade
Commission Act 2 prohibits unfair methods of competition and unfair or
deceptive acts or practices. 	In enforcing this statute, the Commission and its
staff have gained considerable experience in analyzing the market impact of
various private and governmental restraints on competition and the costs and
benefits to consumers of such restraints. 	The staff, upon request by federal,
state and local governmental bodies, regularly analyzes lee;islative and regulatory
proposals to identify provisions that may impair competitIOn or increase costs
without offering offsetting consumer benefits.
1 	This letter represents the VIews of the staff of the Federal Trade
Commission's Cleveland Regional Office and Bureau of Competition, and not
necessarily those of the Commission or of any individual Commissioner.
2 	15 U.s.c. § 45.

Frank 1 	Ertz
Independent Regulatory Review Commission
Page 2
Moreover, for 	the past several years, the Commission has examined the
effects of state-sanctioned limitations on the business practices of state-licensed
professionals. 	The Commission staff has prepared numerous legislative and
regulatory comments analyzing the effects on consumer welfare of regulations
that limit the dissemination of information about professional services.3
II. 	ADVERTISING RESTRICTIONS.
Consumers need information in order to make intelligent decisions when
purchasing goods and services. 	Restricting the availability of that information
can diminish consumer welfare without providing countervailing improvements III
services. 	Numerous studies have shown that prices for professional goods and
services tend to be lower where advertising is relatively unfettered than where
restrictions or prohibitions exist. 4 	In addition, advertising limitations may harm
consumers by increasing search costs and decreasing information on which to
make judgments. 	Supporters of restrictions on the advertising of professional
services argue that advertising leads to lower quality services. 	Empirical
evidence, for 	the most part, does not support that contention.5
We believe that statutes and regulations should prohibit only advertising
that is false, misleading, or deceptive. 	Current Board regulations reflect that
3 	See, e.g., Letter to Dr. Robert Rector, President, Montana Board of
Dentistry (May 3, 1988); Letter to the Honorable Gerry E. Hinton, Louisiana
State Senator (June 25, 1987); Letter to the Honorable Harry Hill, Missouri
State Representative (May 12, 1987); Letter to Dr. William Overton, President,
Tennessee Board of Dentistry (April 29, 1987); Letter to Ms. Gwen Mathews,
Executive Director, Florida Board of Dentistry (April 23, 1987); Letter to
Ms. Nancy Feldman, Executive Director, Virginia State Board of Dentistry
(April 23, 1987); Letter to R. B. Thompson, Executive Director, Kentucky Board
of Dentistry (November 21, 1986). 	The Commission also has engaged in judicial
and administrative challenges to restrictions on the ability of health
professionals to engage in nondeceptive advertising. 	See, e.g., American Medical
Association, 94 ET.C. 701 (1979), affd, 638 F.2d 443 (2d Cir. 1980), affd memo
by an equally divided court, 455 U.S. 676 (1982).
4 	Jacobs et ai., Improving Consumer Access to Legal Services: The Case for
Removing RestrictIOns on Truthful Advertising, Cleveland Regional Office and
Bureau of Economics, Federal Trade Commission (1984); Bond, Kwoka, Phelon,
and Whitten, Effects of Restrictions on Advertising and Commercial Practice on
the Professional: The Case of Optometry, Bureau of Economics, Federal Trade
Commission (1980); Benham and Benham, Regulation through the Professions:
A 	Perspective on Information Control, 18 lL. & Econ 421 (1975); Benham, The
Effects of Advertising on the Price of Eyeglasses, 15 lL. & Econ. 337 (1972).
5 	Bond et al., supra note 4; Muris & 	McChesney, Advertising and the Price
and Quality of Legal Services: The Case for Legal Clinics, 1979 Am. B. Found.
Research J. 179 (1979); McChesney & Muris, The Effects of Advertising on the
Quality of Legal Services, 65 A.B.A. 1 1503 (1979); Cady, Restricted Advertising
and Competition: The Case of Retail Drugs (1976).

Frank J. Ertz
Independent Regulatory Review Commission Page 3
standard, in accord with powers granted by the legislature to discipline dentists
for 	"engaging in false, misleading, or deceptive advertising."6 	The regulations
provide further, however, that all practices in violation of advertising
regulations "will be considered false, misleading or deceptive advertising.''7
These proscribed practices include factual and subjective advertising
representations that may benefit consumers.
In particular, the Board's regulations forbid subjective representations
concerning dental services, equipment, or personnel; only "objectively verifiable
representations" are permitted. s 	Advertisers regularly use subjective
representations to attract consumers' attention and communicate messages more
effectively. 	A 	statement that straightening teeth will improve appearance,
although not misleading, may be difficult to verify objectively. 	Such
representations are not inherently deceptive. 	A 	prohibition of nondeceptive
subjective claims may reduce the effectiveness of advertising and lower its
frequency, thereby increasing costs for consumers.
In fact, consumers may benefit from the kinds of comparative statements
that the Board's regulation prohibits. 	Some consumers may want to know, for
example, which dentist believes that he or she is the "kindest" or "most
sympathetic." 	Such statements clearly are puffery yet may provide useful
information to consumers on the elements of a practice that a dentist considers
most important. 	The existing prohibition of false, misleading, or deceptive
advertising seems adequate to address harmful subjective representations without
limiting nondeceptive advertisements.
The Board's rules also limit the manner in which dentists 	may inform the
public about the particular services they offer. 	The regulations provide that, in
certain circumstances, an advertisement that specifies areas of dentistry
practiced or that includes a statement that the dentist specializes in or limits
his or her practice to particular areas, must include the following statement:
"Listing of the above area(s) of practice does (do) not indicate any certification
of expertise therein.''9 	The statement must be included if either: 	(1) the area
of dentistry is not one of the eight areas of dental practice that have been
recognized by the American Dental Association as specialties; or (2) the
advertised area is an ADA-recognized specialty for which the dentist has not
successfully completed a specialty training program approved by the ADA's
Commission on Dental Accreditation. 	While we believe that the rule probably is
intended to protect consumers from deception, we think it may be overly broad
and, therefore, may deprive the public of valuable information.
Affirmative disclosure requirements can sometimes be useful in addressing
problems of deception. 	Such requirements must be used with caution, however,
6
7
8
9
Pa. Stat. Ann. tit. 63, § 123.1(a)(10).
49 Pa. Code § 33.31(1).
49 Pa. Code § 3331(b).
49 Pa. Code § 3331( d).

Frank J. Ertz
Independent Regulatory Review Commission Page 4
because they typically impose costs on advertisers. 	They also may impose costs
on consumers by suppressing information about the types of services offered by
a dentist, which prospective patients well might find useful. 	The required
disclaimer may convey to consumers a negative connotation which may be
undeserved. 	The disclosure requirement's effects may be particularly significant
in their relation to the many aspects of dental practice that are not
ADA-recognized specialty areas. 	We believe that the state's interest in
protecting consumers from misleading claims regarding a dentist's qualifications
may be better served by a rule more narrowly focused on deceptive claims than
are the disclosure provisions currently in effect.
Board regulations inadvertently also may restrict the services provided by
dentists who use fictitious names for their practices. 	The rules require that
advertisements by dentists who use fictitious names for their dental facilities
must contain the name of a licensed dentist associated with the facility.1o 	We
can understand a consumer's interest in being informed of the name of a
dentist in addition to the fictitious name. 	We do not understand, however,
what purpose the Board intends to serve through its additional requirement in
that prOVIsion that the dentist identified in the advertisement indicate any
ADA-recognized specialty in which certification has been received. 	ADA rules
provide that a dentist who advertises a specialty must practice exclusively in
that specialty.11 	Requiring a qualified dentist to indicate a specialty in
advertisements may force speCIalists to limit their practices to their areas of
reco~nized expertise even when they would prefer to offer more general
serVIces.
III. 	SIGN RESTRICTIONS.
Board rules limit the size, position, content, and number of si~ns
maintained by a dentist and restrict the use of lights on the signs.I 	These
regulations may adversely affect the dissemination of truthful information, yet
do not appear to offer offsetting benefits.
The most significant limitation states that a sign 	maintained by a licensee
may contain only the licensee's name, title, and office hours. 	This requirement
may restrict unduly the use of signs advertising services and specialties, and
10 	49 Pa. Code § 33.22(b)(2).
11 	American Dental Association Principles of Ethics and Code of Professional
Conduct, Code § 5-C.
12 	49 Pa. Code § 33.32. 	These restnctlOns may be obsolete. 	The rules
were not amended to comply with later statutory and regulatory changes.
Subsection (a) is based expressly on a law that we understand is no longer in
existence, and other provisions seem to be in conflict with later amendments to
other regulations. 	For example, § 33.22(b) specifically allows the use of
fictitious naI~es, yet § 33.32(b) appears to prohibit dentists from placing such a
name on a SIgn.

Frank J. Ertz
Independent Regulatory Review Commission Page 5
may prohibit the advertisement of a trade name. 	Restrictions on the size of
signs may make it difficult to read them from a reasonable distance or while
driving past a building. 	Permitting the lighting of signs only when a practice IS
open for business seems to inhibit the advertising message provided by such
signs. 	A 	practitioner advertising through signs presumably wants to make the
practice known even when closed. 	Under current rules, though, a sign can be
of only limited benefit during evening and night hours.
IV. 	CONCLUSION.
The elimination or amendment of the Board's restrictions governing
advertisements and signs could enhance the dissemination of truthful information
to the public. 	Consumers would benefit through improved information on which
to make choices, through lower search costs, and through lower dental prices
created by the increased competition resulting from the freer flow of
information.
We appreciate the opportunity to provide our views on the Board's
regulations. 	We have referred to several studies and other materials. 	We will
provide copies if requested, and any other further assistance that would be
helpful in your analysis.
Office