Question 1

The funeral industry was sanctioned by the FTC in 1984 and 1994 for practices common in the industry that the FTC believed were not fair to consumers. To correct these misleading practices, the FTC issued a:

Accepted Answer

The FTC issued a trade regulation ruling, known as the Funeral Rule, to correct misleading practices in the funeral industry and ensure fair treatment of consumers. This rule requires funeral providers to give consumers accurate, itemized price information and other disclosures about funeral goods and services.

Question 2

When a company's management team signs a consent order issued by the FTC they agree to stop the advertisement or marketing practice and they admit they are guilty of false or deceptive advertising.

Accepted Answer

Signing a consent order with the FTC means the company agrees to stop the challenged practices but does not admit to guilt or wrongdoing. Consent orders are often used to resolve disputes without an admission of guilt to expedite the resolution process and avoid litigation.

Question 3

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

Accepted Answer

The answer of If a consent agreement cannot be reached...

Question 4

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.

Accepted Answer

When the FTC issues a trade regulating ruling, it usually applies to the entire industry regardless of individual company guilt. This is to ensure uniformity and fairness in the marketplace.

Question 5

Recently the FTC investigated bloggers who were being sponsored to pitch products. The FTC ruled that the blogger must disclose any type of compensation that it received. This is an example of a:

Accepted Answer

This is an example of a trade regulation ruling, where the FTC sets guidelines for how businesses, including bloggers, must disclose compensation to ensure transparency and protect consumers.

Question 6

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.

Accepted Answer

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

Question 7

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.

Accepted Answer

A consent order with the Federal Trade Commission typically requires a company to stop the disputed practices but does not necessarily involve agreeing to pay civil penalties. Civil penalties might be part of separate legal actions or settlements.

Question 8

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

Accepted Answer

The FTC can order firms to prepare and disseminate corrective advertising if they have engaged in false or deceptive advertising. This is one of the remedies available to the FTC to stop deceptive practices and provide redress to consumers who have been harmed.

Question 9

Before issuing trade regulation rulings, the FTC normally holds a public hearing and accepts both oral and written arguments.

Accepted Answer

The FTC typically holds a public hearing and accepts oral and written arguments before issuing trade regulation rulings. This allows for public input and ensures a fair and transparent review process.

Question 10

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

Accepted Answer

The answer of When a consent order issued by the...

Question 11

The first step a firm can take to end a FTC investigation of a complaint is the signing of a consent order.

Accepted Answer

Signing a consent order is an option for a firm to resolve an FTC investigation of a complaint. A consent order is a settlement where the firm agrees to comply with certain terms and conditions to resolve the investigation without admitting guilt or liability. It is a common way to resolve FTC investigations.

Question 12

Complaints that are made to the Federal Trade Commission are made public and registered on the FTC's website.

Accepted Answer

Complaints made to the Federal Trade Commission are not made public or registered on the FTC's website. The FTC uses the information from complaints to detect patterns of fraud and abuse, which can lead to investigations and prosecutions, but individual complaints are kept confidential.

Question 13

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

Accepted Answer

Federal Trade Commission industry regulation rulings can be challenged by an appeal to the U.S. Court of Appeals.

Question 14

When the FTC issues an administrative complaint and an administrative judge rules a violation has occurred, the judge issues a cease and desist order.

Accepted Answer

This is a correct statement. When the FTC issues an administrative complaint and an administrative judge rules a violation has occurred, the judge issues a cease and desist order to stop the illegal activity.

Question 15

The NARB is supported by the Federal Trade Commission and has legal authority over cases it reviews.

Accepted Answer

The NARB (National Advertising Review Board) is a self-regulatory organization and does not have legal authority. However, it is supported by the advertising industry and the Federal Trade Commission respects its decisions.

Question 16

A trade regulatory ruling by the Federal Trade Commission applies to:

Accepted Answer

The Federal Trade Commission (FTC) primarily applies its trade regulatory rulings to specific industries as a whole, rather than targeting specific types of businesses within those industries. This means that their rulings can affect all aspects of an industry, including production, distribution, and sale of goods and services, regardless of whether the businesses involved are wholesalers, retailers, or international companies.

Question 17

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

Accepted Answer

Yes, anyone can file a complaint to the FTC regarding deceptive or misleading advertising or marketing practices. However, the FTC will investigate the complaint and determine whether or not the practices are in fact deceptive or misleading.

Question 18

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.

Accepted Answer

The goal of corrective advertising is to bring people back to the neutral state that existed before the false and deceptive advertising was used by the company. This helps to correct any misinformation or harm caused by the initial false advertising.

Question 19

The large number of cases of false and misleading advertising has lead the FTC to order corrective advertising a substantial number of times.

Accepted Answer

The answer of The large number of cases of false...

Question 20

The FTC can use the court system to stop unfair and deceptive advertising and communication practices but must go through the normal steps of starting with a consent agreement.

Accepted Answer

The FTC can directly seek a court order to stop unfair and deceptive practices without first having to reach a consent agreement. Consent agreements are often used, but they are not a mandatory first step before the FTC can take legal action.

Quiz 14: Regulations and Ethical Concerns