Deck 14: Regulations and Ethical Concerns

Question 1

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

Answer 1

False

Question 2

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.

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 5

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 6

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

Question 7

The Federal Communications Commission (FCC) places limits on advertising to children on both weekdays and weekends.

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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 18

Both Reebok and Skechers were forced to pay fines for misleading advertising of show products.

Question 19

The Wheeler-Lea Amendment makes advertising puffery illegal.

Question 20

The Federal Communications Commission (FCC) is responsible for monitoring television advertising directed to children, in terms of the number of minutes per hour that are directed to children.

Question 21

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

Question 22

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 23

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

Question 24

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 25

To substantiate an advertising claim, the statement 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 26

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 27

When the Federal Trade Commission 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 28

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

Question 29

In terms of substantiation of advertising 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 30

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

Question 31

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 32

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

Question 33

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

Question 34

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 35

In terms of substantiation of advertising claims, the Federal Trade Commission (FTC) and the courts 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 find the claim has not been properly substantiated.

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

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 42

The Advertising Self-Regulatory Council (ASRC) seldom refers cases to the Federal Trade Commission.

Question 43

The Advertising Self-Regulatory Council (ASRC) is composed of advertising professionals and prominent civic individuals.

Question 44

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 Federal Trade Commission.

Question 45

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

Question 46

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

Question 47

Cases that are not settled by the National Advertising Division (NAD) of the Council of Better Business Bureaus (CBBB) are referred to the Federal Trade Commission.

Question 48

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 49

If the Advertising Self-Regulatory Council 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 Federal Trade Commission.

Question 50

In addition to handling complaints about advertising to children, the Advertising Self-Regulatory Council now prescreens ads directed to children.

Question 51

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

Question 52

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

Question 53

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 54

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 55

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 56

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

Question 57

The Children's Advertising Review Unit (CARU) of the Council of Better Business Bureaus (CBBB) monitors online privacy practices of websites that involve children younger than 13 years of age.

Question 58

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

Question 59

The Children's Advertising Review Unit of the Council of Better Business Bureaus (CBBB) operates very similar to the National Advertising Division of the CBBB in terms of handling complaints.

Question 60

The Advertising Self-Regulatory Council (ASCR) of the Council of Better Business Bureaus is supported by the Federal Trade Commission and does have legal authority over cases it reviews.

Question 61

Stealth marketing is an excellent means of getting around all of the advertising clutter to create buzz about a particular brand.

Question 62

Wanting to capitalize on the audience around the Olympics, a company increases its advertising budget substantially, but is not an official sponsor. This would be an example of distractive ambush marketing.

Question 63

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

Question 64

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 65

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

Question 66

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

Question 67

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 68

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

Question 69

If a company sets up a booth near a major sporting event, such as the Olympics, but is not an official sponsor of the event, it is called saturation ambush marketing.

Question 70

If a company creates an impression that it is a sponsor of an event when it is not, it is called allusion marketing.

Question 71

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 72

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

Question 73

Ambush marketing occurs when a brand attempts to associate itself with a major event, such as the Olympics, without being an official sponsor of the event.

Question 74

Cookie technology on computers allows a company to personalize and customize its website to match a consumer's interest.

Question 75

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

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

Stealth marketing involves pitching the benefits of a product to other people without revealing you are paid or compensated by the company to do so.

Question 78

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

Question 79

With direct ambush marketing, a brand suggests or hints it is associated with a major sporting event when it is not an official sponsor.

Question 80

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