Question 1

The FTC's advertising substantiation program allows the FTC to ensure that retailers have a reasonable basis for claims made about products they are selling.

Accepted Answer

The FTC's advertising substantiation program requires retailers to have a reasonable basis for any claims made about the products they sell. This helps to ensure that consumers are not misled by false or deceptive advertising.

Question 2

The FTC is required by law to sue all advertisers that publish deceptive ads.

Accepted Answer

While the FTC does have the authority to sue advertisers for publishing deceptive ads, it is not required to do so for every case. The FTC may choose to take other forms of action, such as issuing a warning or negotiating a settlement, depending on the specific situation.

Question 3

The FTC may not prosecute companies that sell investment scams;that responsibility falls with the Securities and Exchange Commission.

Accepted Answer

The FTC (Federal Trade Commission) can prosecute companies that engage in deceptive or unfair business practices, including those that sell investment scams, although the Securities and Exchange Commission (SEC) also has jurisdiction over securities-related fraud.

Question 4

Under the Lanham Act,a private party injured by the false ads of a competitor may sue the competitor for double value of lost profits.

Accepted Answer

Under Section 1117(a) of the Lanham Act, a private party injured by false advertising may sue the competitor for, among other things, "any damages sustained by the plaintiff" and "the costs of the action." In certain cases, the plaintiff may also be entitled to recover the defendant's profits. Specifically, if the plaintiff proves that the defendant's false advertising was done with "knowledge" or "reckless disregard" of its falsity, then the plaintiff may elect to recover either its actual damages or the defendant's profits, whichever is greater. Therefore, the plaintiff may potentially recover double the value of its lost profits.

Question 5

The FTC may not bring an action against a company for an unfair act;the act must be unfair and deceptive.

Accepted Answer

The FTC can bring an action against a company for practices that are either unfair or deceptive, not necessarily both. An act does not need to be deceptive to be considered unfair under the FTC Act.

Question 6

The FTC has held that if an automobile is advertised to get 35 miles per gallon in highway driving,that must be the average mileage that ordinary drivers will get in ordinary driving,otherwise it is deceptive advertising.

Accepted Answer

The answer of The FTC has held that if an...

Question 7

In Telebrands v.FTC,where the company marketed electronic muscle simulation abdominal belts,and the FTC sued for deceptive practices,the appeals court held the product was a medical device subject to FDA regulation,not FTC control.

Accepted Answer

The appeals court did not hold that the product was a medical device subject to FDA regulation instead of FTC control. The FTC's jurisdiction over deceptive advertising practices was upheld.

Question 8

The FTC may prosecute companies that solicit investments for things such as phony oil and gas wells.

Accepted Answer

The FTC (Federal Trade Commission) is responsible for protecting consumers from fraudulent or deceptive practices, including those involving investments in oil and gas wells. They have the authority to prosecute companies who engage in such practices.

Question 9

In FTC v.Accusearch the appeals court agreed that the FTC could not prosecute
Accusearch for selling personal phone records since that information was in the public domain.

Accepted Answer

The appeals court actually reversed the district court's decision and ruled that the FTC could prosecute Accusearch under the FTCA for their sale of personal phone records, even though some of the information may have been in the public domain.

Question 10

In Telebrands v.FTC,where the company marketed electronic muscle simulation abdominal belts,and the FTC sued for deceptive practices,the appeals court held the product may have been nearly useless,but there was no deception.

Accepted Answer

The statement is incorrect. In Telebrands v. FTC, the appeals court did not hold that there was no deception. The court determined that Telebrands had used deceptive advertising to promote its electronic muscle stimulation abdominal belts, which the court found to be virtually useless for weight loss or muscle toning. The court upheld the FTC's order requiring Telebrands to pay a $6 million fine and to modify its advertising for the product.

Question 11

The FTC's advertising substantiation program requires media ads to be registered with the FTC for review before being used to prevent deception.

Accepted Answer

The FTC's advertising substantiation program does not require media ads to be registered with the FTC for review before being used, but it does require advertisers to have adequate scientific evidence to back up their advertising claims.

Question 12

In FTC v.Accusearch the appeals court agreed that Accusearch did not violate the
Telecommunications Act by selling personal phone records since it made no use of the records;the buyers who made improper use of the records violated the Act.

Accepted Answer

The appeals court in FTC v. Accusearch found that Accusearch violated the Telecommunications Act by selling personal phone records, as it facilitated the improper use of those records.

Question 13

Under the FTC's advertising substantiation program,if any consumers will be misled by an advertisement,it must be modified.

Accepted Answer

The answer of Under the FTC's advertising substantiation program,if any...

Question 14

In FTC v.Accusearch the appeals court agreed that Accusearch violated the
Telecommunications Act by selling personal phone records.

Accepted Answer

The appeals court did agree that Accusearch violated the Telecommunications Act by selling personal phone records.

Question 15

The FTC may not regulate products sold by telemarketing;those are controlled by the Federal Communications Commission.

Accepted Answer

The FTC does regulate products sold by telemarketing, as well as other types of sales. The Federal Communications Commission primarily regulates telemarketing calls and other telecommunications issues.

Question 16

Under the FTC's advertising substantiation program,if the FTC attacks an ad the usual result is that the advertiser agrees to stop running the ad.

Accepted Answer

Generally, if the FTC challenges an ad through its substantiation program, the advertiser will agree to discontinue the ad, modify it, or provide evidence to back up its claims. However, in some cases, the advertiser may contest the FTC's allegations and the case may proceed to litigation.

Question 17

The FTC may sue a company for an unfair act that is not deceptive.

Accepted Answer

The FTC can bring a lawsuit against a company for unfair practices that do not necessarily involve deception. The FTC Act defines an unfair practice as an act that causes or is likely to cause substantial injury to consumers that is not reasonably avoidable and is not outweighed by countervailing benefits to consumers or competition. Deceptive practices, on the other hand, involve misleading or false statements or omissions that are likely to mislead consumers.

Question 18

Under the Lanham Act,Ford was able to sue General Motors for false advertising that hurt Ford pickup sales,and collected over $100 million in damages.

Accepted Answer

The answer of Under the Lanham Act,Ford was able to...

Question 19

In Telebrands v.FTC,where the company marketed electronic muscle simulation abdominal belts,and the FTC sued for deceptive practices,the appeals court held the advertising campaign was deceptive.

Accepted Answer

The statement accurately reflects the outcome of the Telebrands v. FTC case.

Question 20

Under the Lanham Act,the FTC may sue advertisers for damages for deceptive ads.

Accepted Answer

Under the Lanham Act, it is not the FTC but rather competitors or other injured parties who may sue advertisers for damages due to deceptive advertising. The FTC can take action against deceptive advertising under the FTC Act, but it does not sue for damages; it seeks to stop the deceptive practices.

Quiz 19: Consumer Protection