5 Written questions
5 Matching questions
- How much can the FTC fine you for deceptive adv.
- Consumer Credit Protection Act
- Oxydol Example
- Conveyed Message
- Lasting Residual Effect
- a 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.
- b What is received; how the consumer interprets the ad. Comparing what is happening in the consumer's mind to what the product attribute is = a measure of deceptive advertising.
- c The FTC cannot punish so they cannot fine anything BUT Congress can fine advertisers for violating the order given by the FTC to cease and desist or whatnot. The fine from Congress use-to-be $5000 but today it is $10000
- d Can regulate what claims are made about credit in advertising
- e Cease and desist still allows the company to earn profit from the advertisement, while corrective advertising takes into consideration residual profit (profit after not running the ad) and the decay of the ad once it is pulled.
5 Multiple choice questions
- "The natural and probable result is to cause one to do that which he would not otherwise do." Ie. If you knew the crystals were blue and not green would you still buy the product - yes!
- 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.
- Preston - Spoofs = puffery and they are deceptive because some people believe them. He calls puffery a safe harbor b/c the FTC ignores puffery.
Richards/FTC - No. puffery is not deceptive, it is a form of opinion and an exaggeration is expected and does not create a resonable falsity. If no one believes them then it is NOT deceptive. However, opinions that imply facts/can be reduced to a fact can be regulated
- 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.
5 True/False questions
Rental Car Guidelines → The states realized that there was no agency for rental cars so the FTC had no power over the states. As a result, the states wrote regulations for the rental car industry that required disclosure of information. Similar thing happened in food advertising. By the end of the Regan administration the FTC realized that it was not going to be able to keep states out of regulating national advertising so the FTC started to work with the states.
Clairol Case → Possibility
What is Section 13B → Comes from the Balkan wars where territories were broken up. Advertising regulation would break up into a lot of parts and there would be no unified regulations so any national advertiser would face completely different laws from state to state. As a result the National Association of Attorneys General (NAAG) said the FTC had a point and created guidelines that said if you follow them you will stay out of trouble.
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
What are the pros/cons with government regulation → PROS - Faster/cheaper and more efficient than gov't regulation, can complement government regulation rather than replace it, more stringent (can do things the law cannot), can deal with issues government cannot touch, promoting moral adhesion to the law, looks better
CONS - Lack of means of enforcement, self serving, keeps government at bay (Tipper Gore), Can get in trouble with anti-trust laws, notoriously under-financed, frequently top-down (no consumer input)