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DISPATCH: Courting Disaster
Posted on February 28, 2002 by Anita

Silly me -- I thought false advertising was against the law. But I've been reading recently about the case of Marc Kasky, who is suing Nike for false advertising over a Nike public relations campaign that grossly misrepresented that company's record on sweatshops. And while the Supreme Court of California appears to agree that the Nike statements in question were deliberately misleading -- if not flat-out false -- it also seems ready to declare that such a greenwashing campaign is perfectly legal.

Nike has taken the brunt of the bad press about sweatshop abuses, and for good reason. For many years, the company denied or was unapologetic about its abuse of labor in overseas factories. But beginning in the late 1990s, Nike CEO Phil Knight began countering the bad press with a campaign to buff Nike's image. That campaign culminated in a series of press releases claiming that Nike had remade itself into a leader in the anti-sweatshop movement, that conditions in its factories were splendid, that its wages were high, and that its workers -- contrary to widespread reports -- were not being exposed to dangerous chemicals.

But there was plenty of evidence that Nike's claims were simply false. Nike claimed in one press release that the wage of the average Nike factory worker in Asia was double the minimum required, but a leaked 1996 Ernst & Young audit showed that the average wage was $45 per month, just $5 more than the legal minimum. In a letter to The New York Times, Knight claimed that Nike "provides free meals, housing and health care" to factory workers in Vietnam; in reality, a Vietnamese labor watchdog who examined Nike workers' pay stubs discovered that Nike was actually deducting money from its factory workers' pay for meals.

Marc Kasky took this evidence and plenty more and filed suit in California in 1998, claiming that Nike violated California consumer protection laws against unfair business practices and false advertising.

It looks like he'll lose. The California Supreme Court will issue a ruling on the case sometime in the next two or three months, but early rumblings indicate that the Court will ultimately conclude that Nike's false statements are constitutionally protected under the First Amendment. Their reasoning: Press releases and letters to the editor are not, by themselves, product advertising because they contain no direct call to buy. For example, had Nike published a full-page ad in a magazine with a picture of an Air Jordan sneaker and copy reading "Not Made in a Sweatshop," accompanied by a list of local retailers, it would probably have been shot down. But instead, Nike has argued successfully that through its public statements, the company is merely exercising its right to participate in a public debate on a controversial topic. The subtext: In effect, Nike is asserting a constitutionally
protected right to lie to the public.

"Image-burnishing" campaigns like Nike's may not directly sell product, but they do have an underlying economic motive: to build brand loyalty and thereby sell more of the company's goods. If Nike gets off on this technicality, greenwashing will become so widespread that consumers will have an incredibly difficult time separating truth from lies about any product or manufacturer. The result will be so much noise that consumers will be overwhelmed. They'll either believe everything they hear about a company (which rewards the liars), or disbelieve everything (which punishes corporations that really are socially responsible). Either way, if Nike wins, it will be much more difficult to be a conscientious consumer.

If stories like this frustrate you as much as they do me, get involved in the movement for corporate accountability. For starters, you can check out Global Exchange's corporate accountability action center and its Nike campaign.

Topic : Trade Justice
Posted By : Anita
Posted On : February 28, 2002



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