Deck 14: Regulations and Ethical Concerns

Question 1

A "typical person" must believe the content of an advertisement to be false in order for the Wheeler-Lea Amendment to apply.

Answer 1

True

Question 2

When a substantial number of people are misled by a series of commercials,it is deemed to be deceptive or misleading.

Answer 2

True

Question 3

The Federal Communication Commission (FCC)has jurisdiction over the content of advertisements transmitted by mass media.

Answer 3

False

Question 4

The federal agency that presides over marketing communications is the Federal Communications Commission (FCC).

Question 5

Substantiation means that an advertising claim or promise must be proven with data,facts,or through competent and reliable evidence.

Question 6

The Wheeler-Lea Amendment makes advertising puffery illegal.

Question 7

Under FCC rules,television stations are limited to 12 minutes per hour of children's advertising during weekdays and 10 minutes per hour during weekends.

Question 8

One reason the food industry has been slow to respond to concerns about too much sodium in foods is that impact it would have on brand image.

Question 9

The Federal Trade Commission (FTC)monitors advertising on food packages and advertisements for drugs.

Question 10

The key difference,in terms of the Federal Trade Commission (FTC)and the courts,between puffery and a claim is that puffery is not considered to be a factual statement while a claim is considered to be a factual statement that can be proven true or false.

Question 11

The Food and Drug Administration (FDA)regulates and oversees the packaging and labeling of products.It also monitors advertising on food packages and advertisements for drugs.

Question 12

When a statement is made that is deemed to be puffery,then the concept of substantiation applies.

Question 13

The Wheeler-Lea Amendment (1938)of the Federal Trade Commission Act prohibits false and misleading advertisements.

Question 14

A person targeted by a mail fraud campaign should contact the Federal Communication Commission (FCC).

Question 15

Terms normally associated with puffery include best,greatest,and finest.

Question 16

Although the word "better" is normally accepted as puffery,the "best" is somewhat vague and implies a comparison,which has recently been tested through the FTC.

Question 17

If a company uses endorsers,the statements made by the endorsers must be truthful and represent their actual experiences or opinions.

Question 18

Puffery exists when a firm makes an exaggerated statement about a good or service; while a claim is a factual statement made about a good or service.

Question 19

The Federal Communication Commission (FCC)is responsible for monitoring television advertising directed to children,in terms of how many minutes per hour is directed to children.

Question 20

When the FTC Act was passed in 1914,the FTC's responsibility was to enforce antitrust laws and to protect businesses from one another.

Question 21

When the Federal Trade Commission (FTC)issues an administrative complaint and an administrative judge rules a violation has occurred,the judge would issue a cease and desist order.

Question 22

Before issuing trade regulation rulings,the FTC will normally hold a public hearing and accept both oral and written arguments.

Question 23

FTC industry regulation rulings cannot be challenged by an appeal to the U.S.Court of Appeals.

Question 24

Anyone can file a complaint to the FTC concerning what he or she deems to be a deceptive or misleading advertising or marketing practice.

Question 25

Cases before the full commission of the FTC can be appealed to the U.S.Court of Appeals and even to the U.S.Supreme Court.

Question 26

When the FTC issues a trade regulating ruling,the ruling applies to each firm in an industry,whether the individual company is guilty or not guilty of the marketing practice in question.

Question 27

When a company's management team signs a consent order issued by the FTC,they agree to stop the advertisement or marketing practice that was investigated,but they do so without admitting guilt.

Question 28

The large number of cases of false and misleading advertising has lead the FTC to order corrective advertising a high percentage of the time.

Question 29

The Federal Trade Commission (FTC)has the power to order firms to prepare and disseminate corrective advertising.

Question 30

If consent agreement cannot be reached after an investigation by the Federal Trade Commission (FTC),the case would next go to the full commission.

Question 31

When the FTC orders a firm to prepare corrective advertisements,the goal is to bring people back to the neutral state that existed before the false and deceptive advertising was used by the company.

Question 32

In terms of substantiation of ad claims,the Federal Trade Commission (FTC)and the courts assume that consumers can and will read fine print or qualifying language that is placed in an advertisement.

Question 33

Complaints that are made to the FTC are made public and registered on the FTC's Web site,regardless of the source.

Question 34

The first step a firm can take to end a Federal Trade Commission (FTC)investigation of a complaint is the signing of a consent order,if a violation has occurred.

Question 35

In terms of substantiation of a claim in an advertisement,all claims must reflect the typical experience that a customer would expect to encounter from using a good or service,unless the advertisement clearly and prominently states otherwise.

Question 36

In terms of substantiation of ad claims,the Federal Trade Commission (FTC)and the courts will consider the totality of evidence.If the company has one study that supports the ad claim,but a number of other studies contradict the claim,the FTC and courts will state the ad claim has not been properly substantiated.

Question 37

When a consent order issued by the FTC is signed,the company has agreed to a corrective advertising program.

Question 38

In terms of substantiation of ad claims,the Federal Trade Commission (FTC)and the courts states that evidence presented must be for the exact product being tested,not for a similar product,regardless of similarity.

Question 39

The Federal Trade Commission (FTC)can use the court system to stop unfair and deceptive advertising and communication practices without going through the normal steps of starting with a consent agreement.

Question 40

When a company agrees with the FTC and signs a consent order,the company agrees to stop the ad or marketing practice and also agrees to pay a civil penalties.

Question 41

The Children's Advertising Review Unit of the CBBB operates very similar to the National Advertising Division of the CBBB.

Question 42

Ethics are moral principles that serve as guidelines for both individuals and organizations.

Question 43

One common complaint of advertising is that it causes people to buy more than they can afford.

Question 44

The National Advertising Review Board of the CBBB is composed of advertising professionals and prominent civic individuals.

Question 45

Morals are beliefs or principles that serve as guidelines for both individuals and organizations.

Question 46

The Children's Advertising Review Unite (CARU)of the CBBB investigates and monitors all forms of advertising in all media directed toward children younger than 18 years of age.

Question 47

If the National Advertising Review Board rules that a firm's advertisements are not substantiated,then it orders the firm to discontinue the ads.This is very similar to the cease and desist order of the FTC.

Question 48

The National Advertising Review Board (NARB)seldom refers cases to the FTC.

Question 49

If a complaint concerning false or misleading advertising is referred to the Better Business Bureau,it would first be heard by the National Advertising Review Board (NARB).

Question 50

Many social commentators suggest that advertising and other forms of marketing perpetuate negative stereotypes of males,females,and minorities when they segment markets based on these demographic variables and then create ads and marketing materials specifically for that demographic group.

Question 51

In 2002,NBC began running advertisements for liquor products with alcohol contents that are stronger than beer or wine.Despite a public outcry against it,NBC has continued running such ads.

Question 52

Cases that are not settled by the National Advertising Division (NAD)of the BBB are referred to the Federal Trade Commission.

Question 53

Cases filed with one of the agencies in the Council of Better Business Bureaus are normally heard sooner and are less costly than cases filed with the FTC.

Question 54

The most common and well-known industry regulatory agencies are all part of the Council of Better Business Bureaus.

Question 55

In addition to handling complaints about advertising to children,the NARB now prescreens ads directed to children.

Question 56

A complaint filed with the National Advertising Division (NAD)of the Council of Better Business Bureaus regarding an unsubstantiated advertising claim would be dismissed because substantiation is not a criterion.

Question 57

The Children's Advertising Review Unite (CARU)of the CBBB monitors online privacy practices of Web sites that involve children younger than 13 years of age.

Question 58

Although the National Advertising Division of the Council of Better Business Bureaus has no legal authority to enforce its decisions,the National Advertising Review Board of the CBBB is supported by the FTC and does have legal authority.

Question 59

The Council of Better Business Bureaus is an industry regulatory resource that is available to consumers,but not businesses.Businesses must use the FTC to file complaints.

Question 60

In investigating a complaint about deceptive advertising,the role of the National Advertising Division of the Better Business Bureau is to collect information and evaluate data concerning the complaint to determine whether the advertiser's claim is properly substantiated.

Question 61

In terms of foundations and frameworks for guiding human behavior,legal systems are designed to tell people what they can and cannot do.

Question 62

Ads featuring underwear,condoms,and feminine hygiene products may be offensive to some,which has lead to regulations restricting when and where the ads can be placed.

Question 63

Homeostasis is a philosophy of life that involves maximizing pleasure and minimizing pain.

Question 64

To influence purchase decisions,purchasing agents and other members of a buying organization are often the recipients of gifts,meals,entertainment,and free trips.

Question 65

Cyber squatting or domain squatting is the practice of using brand names on generic Web sites.

Question 66

The practice of restricting advertising of alcohol and tobacco products raises the questions of free speech and the freedom for a business to advertise its products,regardless of what those products are.

Question 67

Children are an attractive market segment for advertisers because they spend so much money each year.

Question 68

Utilitarianism is a means of making decisions based on what is the greatest good for the greatest number of people.

Question 69

In terms of using cookies to gather information,marketers must balance the need for information with the concern for costs and legal action.

Question 70

When Carter logged onto a Web site for information on camping,an advertisement popped up that he had to manually click on to remove it from the screen.This is called a cookie ad.

Question 71

One reasoning marketing professionals target ads to children is that the ads may produce loyal,lifelong customers.

Question 72

In the past attorneys,physicians,and dentists did not advertise for fear of negative reactions by patients and clients.

Question 73

Hedonism is the natural craving for balance in one's life.

Question 74

While sex sells,marketers must be careful and use good judgment in creating ads that are not offensive.

Question 75

Public service announcements by beer companies,such as Coors and Anheuser Busch,promoting not drinking until a person is 21,have been effective in reducing underage drinking problems.

Question 76

Brand infringement issues become more complex when a brand is so well established that it may be considered a generic term,such as Kleenex.

Question 77

In terms of ethical frameworks for reasoning,individualism involves making decisions based on the belief that each person has fundamental rights that should be respected and protected.

Question 78

Although giving or receiving bribes in business-to-business interactions is illegal in the United States,in some countries,such as France and Germany,bribes are accepted and companies may even deduct the amount as a legitimate income tax expense.

Question 79

When marketing products to other businesses through personal selling or trade shows,one ethical issue that arises is in regard to the use of gifts and or/bribes.

Question 80

Brand infringement occurs when a company creates a brand name that closely resembles a popular or successful brand.