5 Written questions
5 Matching questions
- Three different definitions of "Unfairness"
- What are the pros/cons with government regulation
- Old Definition of Materiality
- Substantiation definition and types
- a Pros - Universal reach, Compulsion (definitive means of compulsion)
Cons - Oppressive, Ineffectual, Costly, Rigid, Conflicting laws, weakly enforced
- b 1. (1970) Immoral, unethical, oppressive or unscrupulous conduct. Problem was that it was very broad. An example is Arthur Murray Dance Studio (overreaching)
2. (1980) Unfairness Policy - Deception is a small circle that is in unfairness. The problem was that the SC said that unfairness did not include deception. Deception was just the possibility to get hurt where as unfairness someone actually had to be harmed for the FTC to take action under this definition. Example - the Harvester tractors
3. (1994) "causes or is likely to cause substantial injury to consumers, not reasonably-avoidable by consumers and not out weighed by countervailing benefits to consumers or to competition."
- c "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!
- d Definition: The basis for making a claim in an ad. Before the 1970s the FTC allowed any claims and tested it if doubted, now the FTC required evidence of "claims" BE ON HAND before being charged with deceptive adv. If an advertiser does not have it on file then they are found guilty.
Types: Assumption, express claim (states the evidence in the claim), implied claims ("if 4 our of 5 doctors recommend it, it implies that 80% of doctors would agree", unclear claims ("this cleaner will remove stains from white carpet" harder to determine the substantiation. NEED at least a reasonable basis for this claim")
- e A ______ is an obvious lie; they are falase facts that are not believed and are not deceptive. Two types of spoofs explicit and implied
5 Multiple choice questions
- 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.
- In 1974 it added onto NAD/NARB, unit tasked with focusing only on children's advertising (Kellogs and Matel chipped in to help form it). It was small but fairly effective
- Some judges weren't happy with how Section 13B only issued a temporary injunction. So judges decided that they were going to order advertisers to pay money back to the consumers. This was a real threat to consumers and opened up new opportunities for the FTC. It was also only supposed to be for the worst cases but the FTC finds many cases to be the worst.
- The FTC went too far in this case. ______ was charged with deceptive advertising for selling permanent hair color. The FTC thought that the word permanent would mislead women into thinking that it would color hair that hadn't grown out yet. A woman testified about the third person effect of this. People complained and said that the FTC had gone too far to protect ignoramuses. Help lead to the reasonable man standard.
- 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
5 True/False questions
Trade Regulation Rules (TRRs) → 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
Deceptive Advertising → ______ 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.
Consumer Products Safety Act → Can regulate what claims are made about credit in advertising
What is the black box process → The FTC will not reveal its exact methodology in choosing which cases to investigate because it does not want to give advertiser their game plan
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.