Deck 18: Regulation of Advertising and Promotion

Question 1

The advertising industry's most effective self-regulatory mechanism is the:

A)Association of National Advertisers.
B)Federal Trade Commission.
C)NAD/NARB.
D)Distilled Spirits Council.
E)National Association of Broadcasters.

Answer 1

C

Question 2

In 1977,the _____ ruled that restrictions on advertising by lawyers are unconstitutional and that they have a First Amendment right to advertise.

A)Federal Trade Commission
B)American Bar Association
C)U.S.Supreme Court
D)Better Business Bureau
E)U.S.Department of Justice

Answer 2

C

Question 3

Advertisers are often supportive of voluntary self-regulation because:

A)self-regulation is viewed as a way of limiting government interference of advertising.
B)all clients and agencies are affected by voluntary self-regulation.
C)self-regulation does not require interaction between agency and client.
D)self-regulation results in even more stringent regulations than state and federal agencies want.
E)it is simple and less time consuming.

Answer 3

A

Question 4

The NARC became involved in the self-regulation of electronic retailing when it initiated the:

A)Information Technology Act (ITA).
B)Centre for Electronic Technology.
C)Electronic Retailing Agency.
D)Electronic Retailing Self-Regulation Program (ERSP).
E)Federal Trade Commission (FTC).

Question 5

BBB is the largest and best known self-regulatory mechanism in United States,for controlling advertising practices,that has been established by the business community.BBB stands for:

A)Board for Business Broadcasting.
B)Board of the Best Businessmen.
C)Board for Betterment of Broadcasting.
D)Better Business Bureau.
E)Best Business Bureau.

Question 6

Policies and procedures for self-regulation of advertising industry are established by the ____.

A)National Association of Broadcasters
B)Vision Council of America
C)National Advertising Review Council
D)Independent Business Alliance
E)Association of American Publishers

Question 7

Which of the following statements about advertising by attorneys,dentists and physicians is true?

A)Attorneys are not allowed to advertise,but dentists and physicians are.
B)Dentists and physicians are not allowed to advertise,but attorneys are.
C)Most consumers are against the use of professional advertising.
D)The Supreme Court has ruled that professionals such as attorneys,dentists and physicians have the right to advertise.
E)Attorneys,dentists,and physicians do not advertise because they believe that advertising demeans their professions.

Question 8

If an advertiser refuses to comply with rulings made by the National Advertising Review Board (NARB),the NARB is most likely to:

A)order the company to stop running the ad.
B)refer the case to an industry trade association.
C)refer the matter to an appropriate government agency.
D)impose a fine.
E)lodge a class action suit for customers who have been in some way negatively affected by the ad.

Question 9

The _____ was formed by three advertising associations and the Council of Better Business Bureaus to sustain high standards of truth,accuracy,morality and social responsibility in national advertising.

A)National Advertising Board
B)National Advertising Review Council
C)American Association of Advertisers
D)Ad Council
E)Board of Advertising Ombudsmen

Question 10

The _____ is a major trade association of the advertising business in the United States.It has its own standards of practice and creative code.

A)Vision Council of America
B)Independent Business Alliance
C)American Association of Advertising Agencies
D)Federal Trade Commission
E)National Association of Broadcasters

Question 11

Which of the following statements describes the NAD/NARB review process?

A)If a case is not resolved to its satisfaction,the NARB has the power to order an advertiser to stop running its ads.
B)If the NAD and an advertiser fail to resolve an advertising controversy,either party can appeal the case to the NARB.
C)Advertisers who participate in the full process of an NAD investigation,and NARB appeal often do not abide by the panel's decision.
D)Most advertising cases investigated by the NAD are resolved without being sent to the NARB.
E)Advertisers who do not comply with the NAD/NARB review process will find themselves encumbered with a class action lawsuit.

Question 12

Which of the following is the appellate unit of the National Advertising Review Council?

A)National Advertising Division
B)Independent Business Alliance
C)National Advertising Review Board
D)Vision Council of America
E)National Association of Broadcasters

Question 13

The _____ accepts cases dealing with product performance claims,superiority claims against competitive products,and all kinds of scientific and technical claims made in national advertising.

A)National Advertising Division (NAD)
B)U.S.Department of Justice
C)National Association of Attorneys General
D)American Association of Advertising Agencies
E)Federal Trade Commission

Question 14

A number of self-regulatory mechanisms have been established by the business community in an effort to control advertising practices and among them the largest and best known is the ____.

A)Federal Trade Commission
B)Federal Communications Commission
C)Better Business Bureau (BBB)
D)World Trade Organization
E)Chamber of Deputies

Question 15

Self-regulation begins with the interaction of client and agency when:

A)a consent order is signed.
B)the company is charged with a lawsuit for deceptive advertising.
C)there has been omission of advertising substantiation.
D)creative ideas are generated and submitted for consideration.
E)the ads are aired in foreign nations.

Question 16

Better Business Bureaus provide control over advertising practices at a _____ level while the Council of Better Business Bureaus plays a major role in controlling advertising practices at a(n)_____ level.

A)local;national
B)national;local
C)distributor;manufacturer
D)industry-wide;individual company
E)regional;local

Question 17

The _____ is sponsored by the Electronic Retailing Association (ERA),although it works independently of the ERA to create an unbiased self-regulatory system.

A)National Advertising Review Board
B)Federal Trade Commission
C)Council of Better Business Bureaus
D)Electronic Retailing Self-Regulation Program
E)Information Technology Act

Question 18

Which of the following statements concerning advertising by attorneys is true?

A)Advertising by attorneys is legal in the entire United States.
B)The U.S.Supreme Court does not permit lawyers to advertise if they earn more than $100,000 per year.
C)Attorneys are in agreement that advertising is an important part of their marketing mix.
D)The American Bar Association recently removed all restrictions on the type of advertising attorneys can use.
E)By its very nature,advertising can only have a positive impact on the legal profession.

Question 19

The _____ examines advertising claims in direct-response advertising,including infomercials and home-shopping channels.

A)Children's Advertising Review Unit (CARU)
B)Vision Council of America
C)National Association of Broadcasters
D)Electronic Retailing Self-Regulation Program
E)Independent Business Alliance

Question 20

Which of the following statements is true about National Advertising Review Council (NARC)?

A)Cases brought to NARC are subject to more publicity as compared to the cases brought to a court.
B)It is very expensive to get a case solved through NARC.
C)NARC takes longer to solve a case when compared to Federal Trade Commission (FTC).
D)NARC can handle cases at lower cost as compared to a court.
E)NARC is a government agency regulating advertising agency.

Question 21

Three major divisions of the Federal Trade Commission are the Bureaus of:

A)employment,national security,and trade.
B)governance,compliance,and cooperation.
C)regulation,restriction,and reconstruction.
D)economics,consumer protection,and competition.
E)distribution,distillation,and diversity.

Question 22

Television advertising:

A)is generally used for hard liquor advertising.
B)is regulated through codes developed and enforced by the Federal Trade Commission.
C)is regulated by affiliates.
D)is more stringently self-regulated than any other medium.
E)is experiencing a tightening of the rules concerning the rating system used for commercials.

Question 23

The _____ gave the FTC the power to issue cease-and-desist orders and levy fines on violators.

A)Central Hudson Test
B)National Advertising Review Board
C)Lanham Act
D)Wheeler-Lea Amendment
E)Sherman Antitrust Act

Question 24

The three major participants in the advertising process that work individually and collectively to encourage truthful,ethical,and responsible advertising are:

A)advertisers,creatives,and the cable operators.
B)creative boutiques,copywriters,and consumers.
C)children,advertisers,and agencies.
D)advertisers,agencies,and the media.
E)advertisers,government,and the television networks.

Question 25

Which of the following divisions of the Federal Trade Commission protects consumers from deceptive and unsubstantiated advertising and enforces the provisions of the FTC Act that forbid misrepresentation,unfairness,and deception in general advertising at the national and regional level?

A)The division of Consumer Protection
B)The division of Broadcasting
C)The division of Marketing Practices
D)The division of Advertising Practices
E)The division of Economic Practices

Question 26

The reason a magazine such as 'Good Housekeeping' regularly tests products and offers a "seal of approval" is to:

A)enhance the credibility of the publication.
B)encourage advertisers to buy more media space.
C)avoid self-regulation.
D)discourage comparative advertising.
E)avoid questionable advocacy advertising.

Question 27

The U.S.Supreme Court established the ____,a four-part test,to determine restrictions on commercial speech.

A)Virginia Consumer Council Test
B)Free Speech Matrix
C)First-Amendment Analysis
D)California Test of Affirmation
E)Central Hudson Test

Question 28

Under the original Federal Trade Commission Act of 1914,the FTC:

A)was given the power to issue cease-and-desist orders against firms engaging in deceptive practices.
B)was given the power to pursue corrective advertising remedies to deceptive practices.
C)could not prohibit false advertising unless there was evidence of injury to competition.
D)was given the power to regulate all false and deceptive advertising practices that might injure competition or mislead consumers.
E)was given the authority to establish a National Advertising Review Board.

Question 29

The _____ is the division of the Federal Trade Commission that is responsible for investigating cases involving deceptive or misleading advertising.

A)Bureau of Economics
B)Bureau of Competition
C)National Advertising Review Board
D)Bureau of Consumer Protection
E)Trade Regulation Bureau

Question 30

Advertising on television and radio was regulated for many years through codes developed by the _____ until the courts found some of its regulations served to restrain trade.

A)National Advertising Review Board
B)Federal Trade Commission
C)Federal Communications Commission
D)National Association of Broadcasters
E)Standards and Practices Division

Question 31

Which division of the Federal Trade Commission would deal with antitrust and consumer protection investigations?

A)Bureau of Economics
B)Bureau of Compliance
C)National Advertising Review Board
D)Bureau of Reconstruction
E)Trade Regulation Bureau

Question 32

Which of the following media has the most stringent review and approval process for advertising?

A)Local radio
B)Magazines
C)Newspapers
D)Internet
E)The four major television networks

Question 33

Which of the following statements describes the media's role in the self-regulation of advertising?

A)The media must accept all advertising they receive because of First Amendment that guarantees the freedom of speech.
B)The media cannot refuse to accept advertising for an entire product class such as hard liquor.
C)The media can refuse to accept individual ads they find offensive or objectionable.
D)Most media accept any advertising they receive since advertising is their major source of revenue.
E)Most media reject political ads.

Question 34

Which of the following statements about self - regulation by media is true?

A)Most commercials once rejected cannot be rerun.
B)Network standards regarding acceptable advertising have remained constant over the past 30 to 40 years.
C)Advertising for contraceptives is completely banned on all networks since 1995.
D)Television is the most carefully scrutinized of all forms of advertising.
E)Network standards have become more stringent in response to competition from independent and cable stations.

Question 35

____,as defined by the First Amendment to the U.S.Constitution,is the most basic federal law governing advertising in the United States.

A)Freedom of using any media vehicle
B)Freedom to advertise
C)Freedom to stop the airing of any advertisement
D)Freedom of speech
E)Freedom of press

Question 36

The _____ empowered the Federal Trade Commission to regulate unfair or deceptive practices including those in advertising.

A)Lanham Act
B)Sherman Antitrust Act
C)Wheeler Lea Amendment to the FTC Act
D)FDA Act
E)Consumer Protection Act

Question 37

Federal regulation of advertising originated in 1914 with the passage of the _____ Act.

A)Information Technology
B)Competition
C)Consumer Protection
D)Federal Trade Commission
E)Central Hudson

Question 38

Commercial speech is most accurately defined as:

A)both an encoding and a decoding tool for communications.
B)speech that promotes a commercial transaction.
C)any type of comparative advertising.
D)any advertising on a broadcast media.
E)speech governed by the First Amendment to the U.S.Constitution.

Question 39

The courts have extended First Amendment protection to:

A)commercial speech.
B)advertisers so that they can sue media for not providing them with the promised reach and frequency.
C)the findings of marketing research studies.
D)advertisers who want to use misleading wording in their ads.
E)advertisers who do not want to be self-regulated.

Question 40

A very frustrating,and often expensive,scenario for both an agency and its client occurs when:

A)a commercial is rejected at the storyboard stage.
B)a commercial that was rejected at the storyboard stage is accepted at the final stage.
C)a commercial is rejected for reasons such as sex and politics.
D)a commercial is approved at the storyboard stage but then is rejected after it is produced.
E)a commercial is rejected at the idea generation stage.

Question 41

_____ are industry-wide rules used by the Federal Trade Commission that define unfair or deceptive practices.

A)Trade regulation rules
B)Affirmative disclosures
C)Corrective advertising
D)Cease-and-desist orders
E)Advertising guidelines

Question 42

A prepackaged milkshake sold in convenience stores advertises that it has more chocolate-taste than shakes purchased at restaurants.This is an example of:

A)an unfair claim.
B)puffery.
C)an illegal deception.
D)an affirmative disclosure.
E)an illegal comparative advertisement.

Question 43

_____ has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions,superlatives,or exaggerations,vaguely and generally,stating no specific facts."

A)Deceptive advertising
B)Unfairness
C)Comparative advertising
D)Puffery
E)Affirmative disclosure

Question 44

An advertiser who says that his product is the "best," "greatest," etc.is using ____,which is a(n)______ form of advertising.

A)deception;legal
B)a superlative;illegal
C)puffery;illegal
D)puffery;legal
E)puffery,unethical

Question 45

As per FTC,_____ occurs when qualifying information necessary to prevent a practice,claim,representation,or reasonable belief from being misleading is not disclosed.

A)misinterpretation
B)affirmative disclosure
C)coercion
D)misleading omission
E)fraud

Question 46

According to the FTC's definition of deception,a representation,omission,or practice has materiality if it:

A)uses puffery.
B)can be decoded to have several different meanings.
C)is important to consumer and would likely have an effect on the purchase decision.
D)uses any superlatives.
E)can be substantiated.

Question 47

The key elements in the FTC's definition of deception are that the representation,omission,or practice must be likely to mislead the reasonable consumer and that it has:

A)materiality.
B)selective exposure.
C)selective retention.
D)multiple interpretations.
E)peripheral importance.

Question 48

The Federal Trade Commission may require affirmative disclosure if:

A)previous advertising has led to the formation of false beliefs about a product.
B)consumers need to know information about consequences,conditions,and limitations associated with the use of the product.
C)there has been material injury to reasonable consumers.
D)an advertisement has the potential to mislead an unsophisticated consumer.
E)the advertising relies on the use of puffery to make its point.

Question 49

According to the Federal Trade Commission _____ exists if there is a misrepresentation,omission,or practice that is likely to mislead the consumer acting reasonably in the circumstances to the consumer's detriment.

A)puffery
B)affirmative disclosure
C)selective retention
D)deception
E)selective disclosure

Question 50

Which of the following is the best example of the use of puffery in advertising?

A)Central Bank advertises free checking with a minimum balance of $1,000.
B)Michelin advertises a 50,000-mile guarantee for its tires.
C)Godiva claims that it makes the finest chocolates in the world.
D)Head & Shoulders shampoo advertises that it has been proven to be effective in preventing dandruff.
E)Federal Express advertises guaranteed overnight delivery service.

Question 51

In 1995,the Federal Trade Commission issued a complaint against the manufacturers of New Balance and Saucony athletic shoes based on their "Made in the USA" advertising claims.The FTC claimed the ads were misleading since imported soles and upper parts were used to make the shoes.These claims can be viewed as deceptive under the FTC's requirement of:

A)cease-and-desist.
B)puffery.
C)affirmative disclosure.
D)fairness.
E)advertising substantiation.

Question 52

Controversy over the FTC's authority to regulate unfair advertising practices began in 1978,when the agency relied on this mandate to formulate its controversial _____ rule restricting advertising to children.

A)cease-and-desist
B)kid vid
C)affirmative disclosures
D)Wheeler-Lea
E)Magnuson-Moss

Question 53

it must not be outweighed by countervailing benefits to consumers or competition.

A)unfairness
B)deception
C)puffery
D)affirmative disclosure
E)the impact of cease-and-desist orders

Question 54

The Federal Trade Commission takes the position that:

A)consumers cannot distinguish between factual information and puffery.
B)puffery has detrimental effect on consumers' purchase decisions.
C)consumers recognize puffery and don't believe it.
D)puffery is illegal.
E)consumers believe in puffery.

Question 55

Nestlé claims "Nestlé makes the very best chocolate," Snapple advertises that its beverages are "made from the best stuff on Earth," are all examples of:

A)deceptive advertising.
B)superiority advocacy.
C)puffery.
D)comparative advertising.
E)noncompetitive advertising.

Question 56

The Magnuson-Moss Act of 1975:

A)defined commercial speech.
B)provides for the review and evaluation of all child-directed advertising.
C)defined the requirements for advertising substantiation.
D)is concerned with the misrepresentation of premiums when used in sales promotions.
E)dealt with consumers' rights regarding product warranties.

Question 57

Which of the following is one of the two of the factors the FTC considers in evaluating an ad for deception?

A)Presence of superlative words in the advertisement
B)Significant omission of important information
C)Lack of selective disclosure
D)Presence of puffery in the advertisement
E)Violation of trade regulation rules

Question 58

The _____ gave the Federal Trade Commission the power to establish trade regulation rules.

A)Magnuson-Moss Act of 1975
B)FTC Act
C)Wheeler-Lea Amendment
D)Sherman Antitrust Act
E)Trade Regulation Act

Question 59

The Federal Trade Commission (FTC)defines _____ as an express or implied statement contrary to fact.

A)selective exposure
B)affirmative disclosure
C)selective retention
D)misrepresentation
E)comparative disclosure

Question 60

Which of the following statements about the use of puffery in advertising is true?

A)Puffery is illegal.
B)Puffery is banned in a 1996 revision of the Uniform Commercial Code.
C)According to the Federal Trade Commission consumers believe in puffery.
D)Superlatives such as greatest,best,and finest are puffs that are often used in advertising.
E)Puffery is only illegal if it eliminates a competitive advantage.

Question 61

Which of the following programs is more likely to be the most controversial of all the Federal Trade Commission's programs?

A)Ad substantiation
B)Implied uniqueness
C)Puffery legitimization
D)Advertising deregulation
E)Corrective advertising

Question 62

The _____ is a federal agency that was founded in 1934 to regulate broadcast communication that include the radio,television,telephone and telegraph industries.

A)Federal Trade Commission
B)Federal Communications Commission
C)Fairness Doctrine
D)U.S.Postal Service
E)National Association of Broadcasters

Question 63

In 1996,President Clinton signed an executive order declaring that nicotine was an addictive drug and gave the _____ broad jurisdiction to regulate the advertising of cigarettes and smokeless tobacco.

A)U.S.Postal Service
B)Federal Trade Commission
C)Bureau of Alcohol,Tobacco and Firearms
D)Food and Drug Administration
E)The Tobacco Institute

Question 64

The FTC program that requires an advertiser who is found guilty of false or misleading advertising claims to run ads to rectify the situation is known as:

A)the fairness doctrine.
B)ad substantiation.
C)affirmative disclosure.
D)corrective advertising.
E)puffery.

Question 65

A(n)_____ is an agreement to stop engaging in a particular practice for settlement purposes only and does not constitute an admission of guilt by the advertiser.

A)cease-and-desist order
B)consent order
C)ad substantiation agreement
D)affirmative disclosure order
E)injunction

Question 66

Federal Trade Commission's (FTC's)???_____ program required advertisers to have supporting documentation for their claims and to prove the claims are truthful.

A)Central Hudson
B)Lanham
C)Cease-and-Desist
D)advertising substantiation
E)affirmative disclosure

Question 67

Under the Children's Television Act,:

A)advertising aimed at children is prohibited.
B)advertising on children's programs is limited to 12 minutes per hour on weekdays and 10.5 minutes per hour on weekends.
C)broadcasters are required to provide time for opposing viewpoints on important issues.
D)limits on the amount of television advertising per hour targeted to children are eliminated.
E)the FCC is granted the right to fine advertisers who exceeded advertising limits as defined by the act.

Question 68

Critics of the FTC's ad substantiation program argue that:

A)ad substantiation has been proven unnecessary as long as the advertising industry is self-regulating.
B)ad substantiation is not needed because most advertisements make very legitimate claims.
C)ad substantiation will result in advertisers resorting to puffery to avoid the need for claim verification.
D)the burden of proof for advertising claims lies with the consumer.
E)the burden of proof for advertising claims lies with the Federal Trade Commission.

Question 69

Under which of the following FTC programs might a firm be required to have product information verifying the veracity of its advertising claims before making any advertising claims about the product?

A)Corrective advertising
B)Implied uniqueness
C)Comparative advertising
D)Affirmative disclosure
E)Advertising substantiation

Question 70

Under the Reagan administration,the controversial _____ Doctrine,which required broadcasters to provide time for opposing viewpoints on important issues,was repealed on the grounds that it was counterproductive.

A)Deception
B)Misinterpretation
C)Affirmative Disclosure
D)Fairness
E)Substantiation

Question 71

The Federal Trade Commission requires advertising for any product that is sweetened with saccharin to contain a warning that saccharin may be hazardous to one's health.This requirement falls under the FTC's _____ requirement.

A)misleading omission
B)advertising substantiation
C)affirmative disclosure
D)cease-and-desist
E)materiality

Question 72

The origin of the Federal Trade Commission's corrective advertising program came from a deceptive advertising case involving:

A)Listerine.
B)Ocean Spray Cranberry Juice.
C)Campbell Soup.
D)STP Corporation.
E)McDonald's.

Question 73

Under the FTC's program of ____,Novartis Corporation was required to run advertising informing consumers that it could not substantiate its claim that Doan's pills were superior to other over-the-counter analgesics in treating back pain.The FTC wanted to make sure consumers were not under any false impression that Doan's was a superior medication.

A)ad substantiation
B)implied uniqueness
C)puffery legitimization
D)advertising deregulation
E)corrective advertising

Question 74

Cease-and-desist orders:

A)are used to regulate public service announcements.
B)require an advertiser to run comparative advertisement.
C)are issued by the Federal Trade Commission.
D)were made legally binding by the Robinson-Patman Act.
E)are issued by the National Association of Attorneys General.

Question 75

Which of the following statements about a consent order is true?

A)The signing of a consent order is an admission of guilt by the advertiser.
B)If an advertiser refuses to sign a consent order,the inquiry is handed to the U.S.Department of Justice.
C)Most FTC inquiries are settled by consent order.
D)A consent order prohibits an advertiser from making a specified advertising claim for 30 days.
E)Consent orders lead to excessive adverse publicity.

Question 76

Federal Trade Commission's advertising substantiation program requires advertisers to substantiate their claims:

A)within one month of the appearance of the ad.
B)if the ad does not provide sufficient information to the consumers so as to make an informed decision.
C)if the ad uses puffery.
D)before the ad appears.
E)if the ad runs for more than six months.

Question 77

The ____ has been heavily involved in the regulation of advertising of prescription drugs.

A)Better Business Bureau
B)Food and Drug Administration
C)U.S.Postal Service
D)U.S.Department of Welfare
E)Federal Communications Commission

Question 78

Under the Wheeler-Lea Amendment,the Federal Trade Commission is empowered to stop an advertiser from making a specified claim within 30 days and refrain from doing so until a hearing is held.This is known as:

A)a consent order.
B)injunctive power.
C)a cease-and-desist order.
D)corrective advertising.
E)advertising substantiation.

Question 79

Under the _____ Doctrine,the Federal Communications Commission (FCC)required stations to run commercials about the harmful effects of smoking.

A)Substantial Omission
B)Misinterpretation
C)Affirmative Disclosure
D)Fairness
E)Substantiation

Question 80

The _____ is the government agency that has authority over the labeling,packaging,branding,ingredient listing and advertising of packaged foods and drug products.

A)Federal Trade Commission
B)Federal Communications Commission
C)U.S.Postal Service
D)Bureau of Alcohol,Tobacco,and Firearms
E)Food and Drug Administration