5 Written Questions
5 Matching Questions
- Examples of corrective advertising
- Invisible floating device case
- James Miller
- FTC's 6 factors of an unclear claim
- Reasonable Man Standard
- a Ran the FTC during the Reagan administration. He was from the Chicago economic thought. He wanted Congress to add his definition, Congress refused but he made it into an FTC policy. Deception policy was changed from "capacity OR tendency to mislead" to "capacity AND tendency to mislead". Raised the standard to prove deception. Less regulation and less consumer protection.
- b FTC decided they would only protect those acting reasonably under the circumstances. Examples of unreason-ability (Clairol case and Invisible floating device case). Used to be the ignorant man standard.
- c The device wasn't invisible, but that it was inconspicuous. So in appeal they decided not to go so far to protect someone who thinks its actually invisible; only the foolish or feeble minded would believe that.Lead to the reasonable man standard
- d 1. Campbell's Soup - Claimed to have more meat/veggies in their soup, but used marbles to make the chunks rise to top. (1970) Banzhaf's students Students Opposing Unfair Practices (SOUP). However, this case was strong enough to implement a Cease and Desist order, so turned to Listerine Case.
2. Listerine - Had been telling consumers for 100 years that Listerine would prevent colds, which was a lie. By the time the FDA was formed, Listerine had already made the claim so the FDA grandfathered in the claim, but prevented others from making the claim. Listerine had to disclose: "Contrary to prior advertising, Listerine will not help prevent colds or sore throats or lessen their severity." Listerine appealed and the FTC decided Listerine could take out the first four words because it was too much like punishment.
- e 1. Type of claim
2. Type of product advertised
3. Consequences of the false claim
4. Benefits of a truthful claim
5. Cost of developing substantiation - FTC will also consider how much time/money goes into substantiating the claim
6. What experts in the field think is reasonable
5 Multiple Choice Questions
- An ad is _______ if there is a representation, omission or practice that is likely to mislead consumers acting REASONABLY under the circumstances and it is MATERIAL.
- This is a state regulation ("little FTC Act"). The main provision: "False, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." The minor Provisions: You can't use the state seal and state flag when selling a product, because it doesn't want to look as if the state endorsed the product
-List of examples (not an exhaustive list): Passing off, confusion as to the source, misrepresentation as to the origin, pyramid schemes, turning back odometers when selling cars, etc.
-Consumers can sue and ask for punitive damages (2x), and can get both the court fees and the attorney fees back if you win
-States were encouraged to create their own trade practices by the FTC in the 80s
-This act is like the FTC act b/c it protects against deceptive advertising but this act d/n protect against unfairness and this act allows consumers to sue.
- General Definition - Opinions not believed to be facts and which are not demonstrably false. Example The leading brand
FTC Definition - "Claims that reasonable people d/n believe to be fact AND which can't be proved true or false
Colloquial Definition - Exaggeration or hyperbole (Preston); people know that companies overstate so the colloquial definition of puffery may be deceptive, but what the FTC has defined is not
- These are LAWS published by the FTC. Regulations on: Premiums and Prizes, Children's online privacy, Televisions and Amplifiers: to make sure TV manufacturers measure the same way), Telemarketing & Mail Order, Making false guarantees, Endorsements, The leather content of belts, etc
- Harder to prove. The FTC must prove that there is a difference b/t the conveyed message and the product attributes
5 True/False Questions
Evaluative/Implied claims → These are the hardest claims to prove b/c it is a matter of opinion. The FTC will most likely NOT attack evaluative claim,s but there have been some regulation on them. Examples Vivarin Case/Wonder Bread Case
Misdescriptive name → Names can have a primary and secondary meaning. If the consumers know the primary meaning and not the secondary meaning that the ad is implying then it is considered deceptive. EXCEPTION: something has existed so long that it precedes the FTC. It is grandfathered in (ex. 2x4). Cases Aspercreme case and cashmora sweather case
Children's Advertising Review Unit (CARU) → ______ is the FTC's version of the "scarlet letter". involves admitting that the deception is made and correcting the mistake. However, the problem is that the FTC is not supposed to punish.
Oxydol Example → Dealing with materiality. - In the early 1970s, it started advertising that it was the laundry detergent with the green crystals. The implication was that the green crystals made it better. You buy the laundry detergent and find out that the crystals are blue. You have been deceived because the crystals are blue NOT green but no one cares. It does not matter. This is an example of a trivial exception it is NOT material. No one will get hurt based on trivial deception.
Benefits of comparative advertising → 1. Free speech
2. Better Knowledge (consumer sovereignty/the consumer receives more informaiton)
3. Lowers prices
4. Forces upgrades
5. May rpovide better informaiton