Deck 8: Commercial Speech

Question 1

The government has greater latitude under the First Amendment to regulate commercial speech than political speech.

Answer 1

True

Question 2

In the Virginia Pharmacy case, the U.S. Supreme Court ruled that commercial speech is protected under the First Amendment because of the consumer's interest in receiving commercial information.

Answer 2

True

Question 3

Although considerable falsehood is permitted in the political arena, the U.S. Supreme Court stated in the Virginia Pharmacy case that the government may ban commercial promotions that are false or misleading or that promote illegal goods and services.

Answer 3

True

Question 4

The U.S. Supreme Court's commercial speech decisions have been inconsistent.

Question 5

The government can ban advertisements for certain "personal" products, such as contraceptives, to prevent audience members from being offended.

Question 6

Commercial speech is deceptive if an average consumer, acting reasonably, would be deceived.

Question 7

Puffery must be substantiated with factual proof.

Question 8

At the heart of FTC advertising regulations is its power to require that advertisers substantiate the accuracy of advertising claims.

Question 9

The FTC is more concerned with deception than unfairness.

Question 10

A material statement in advertising, like a material statement in corporate securities transactions, is one that is likely to affect a purchasing decision.

Question 11

A Volvo television advertisement emphasizing the strength and safety of Volvos shows a Volvo and several other brands of cars being run over by a giant truck. The audience is not informed that the ad production crew reinforced the roof of the Volvo but cut the roof supports of the other cars so that they would collapse easily. The primary message of the ad is that Volvos are safer than other cars in the advertisements, a conclusion that is true, whether or not the roof supports are cut. This is an example of a non-deceptive mock-up.

Question 12

More than 90 percent of FTC cases are settled by consent decrees in which a party admits guilt and pays a heavy fine.

Question 13

The FTC has considered power over advertising a power that the government does not enjoy in regulating political speech. Not only can the FTC halt deceptive advertising and punish the advertiser, the FTC may also order alterations in advertisements to make them truthful and non-misleading.

Question 14

A broadcaster, located in a state where lotteries are illegal, may carry advertisements for an adjoining state's lawful lotteries.

Question 15

Although advertising can be limited during children's television programs, the amount of commercial time in other broadcast programming is not restricted.

Question 16

Federal law prohibits the broadcast of advertising for hard liquor.

Question 17

In Lowe v. SEC, the U.S. Supreme Court ruled that financial newsletters that do not offer individualized advice to investors are exempt from SEC registration requirements.

Question 18

Public relations counsel who have access to nonpublic material information that is intended only for corporate use are subject to insider trading rules, just like corporate executives.

Question 19

A California court ruled that Nike engaged in false advertising-not protected political speech-when it defended its labor practices in Southeast Asia.

Question 20

Even though the government may have a "legitimate" interest in regulating advertising for tobacco, alcohol and many other products, it is more difficult for the government to demonstrate that the government regulation will advance the government's interest.

Question 21

A ban on billboards advertising smokeless tobacco within 1,000 feet of a school is unconstitutionally overbroad.

Question 22

Bloggers are forbidden from endorsing products.

Question 23

Congress has banned cigarette advertising after determining smoking is a leading cause of preventable deaths.

Question 24

Commercial speech is deceptive if a stupid, ignorant, and unreasonable person would be deceived.

Question 25

The Supreme Court ruled in Sorrell v. IMS Health Inc. that drug prescription data is protected commercial speech that pharmaceutical companies may use to market drugs to doctors.

Question 26

One of the main goals of the Family Smoking Prevention and Tobacco Control Act Smoking Act of 2009 was to reduce smoking by youth.

Question 27

The Family Smoking Prevention and Tobacco Control Act authorized the Food and Drug Administration-not the Federal Trade Commission-to control the manufacturing, marketing, advertising, and labeling of tobacco products because the FDA has the scientific expertise to regulate addictive drugs, such as nicotine, and other cancer-causing ingredients.

Question 28

Lax FTC regulations under the Children's Online Privacy Protection Act allow web sites to collect names, addresses, and phone numbers from children as young as 12 without parental permission.

Question 29

Under FTC regulations, advertisers can track and record a consumer's web browsing and purchases only if the consumer "opts in" to the tracking.

Question 30

The FTC requires sponsors of "native advertisements" to make its sponsorship of content clear and obvious to the audience, recommending that the word "advertisement" be featured prominently.

Question 31

After a 2012 settlement with the FTC over allegations that Facebook was unfair and deceptive in its privacy practices, Facebook continuously violated the order, resulting in a $5 billion civil penalty in 2019, the largest ever issued by the FTC.

Question 32

In response to spikes in e-cigarette use among high school-age children, the FTC ordered vaping companies, such as Juul, to turn over information about how they market their e-cigarettes.

Question 33

Endorsement disclosures made by social media influencers on live streams should be repeated regularly so they are not missed by people who do not watch the whole thing.

Question 34

The FTC can halt-through the use of consent decrees-deceptive ads that violate native advertising and sponsorship guidelines.

Question 35

It does not violate the Consumer Review Fairness Act for companies to include provisions in their contracts that bar customers from posting negative online reviews.

Question 36

The FTC has the authority to order businesses to remove provisions in their contracts that bar customers from posting negative online reviews and that require businesses to notify current customers that the provisions are not enforceable.

Question 37

The 1976 case in which the U.S. Supreme Court ruled that pharmacy advertisements conveyed constitutionally protected information of value to consumers:

A) Bolger v. Youngs Drug Products Co.
B) Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council
C) Bigelow v. Virginia
D) Carey v. Population Services
E) none of the above

Question 38

Although commercial advertising now has constitutional status, the U.S. Supreme Court has ruled that advertising may be subject to:

A) prior restraints
B) prohibitions on false or misleading advertising
C) requirements that clarifying messages be included in ads
D) all of the above
E) none of the above.

Question 39

A presumption against the constitutionality of prior restraints is fundamental to First Amendment law. Yet prior restraints are acceptable to the courts where:

A) the government can show that publication would endanger national security
B) a film is obscene
C) advertising is misleading
D) all of the above
E) none of the above

Question 40

In commercial speech cases, the U.S. Supreme Court employs:

A) the clear and present danger test
B) the bad tendency test
C) the totality of circumstances test
D) the four-part Central Hudson test
E) none of the above

Question 41

The 1986 case in which the U.S. Supreme Court upheld a ban on non-misleading casino advertising:

A) Greater New Orleans Broadcasting v. United States
B) United States v. Edge Broadcasting
C) Posadas de Puerto Rico Associates v. Tourism Board
D) Cincinnati v. Discovery Network
E) none of the above

Question 42

Comparative advertisements are:

A) discouraged by the FTC
B) encouraged by the FTC, if accurate, as a way of helping consumers make better choices
C) inherently misleading
D) must not identify a competitor's product, but must use terms such as "Brand X"
E) none of the above

Question 43

In FTC v. Colgate-Palmolive Co., the Rapid Shave case, the U.S. Supreme Court ruled that the Plexiglas mock-up was:

A) not deceptive
B) not material
C) materially deceptive because it was a fake demonstration that was used as proof of an advertising claim
D) a permissible alteration to compensate for the technical distortions of television
E) none of the above

Question 44

Advertising substantiation rules require that:

A) the basis for advertising claims be included in an ad
B) the advertiser has a reasonable basis for claims in an ad
C) the basis for an advertising claim be available but not necessarily included in the ad
D) B and C
E) none of the above

Question 45

The FTC requires corrective advertising:

A) frequently
B) infrequently
C) to counteract wrong impressions built up during a long campaign of deceptive advertisements
D) B and C
E) none of the above.

Question 46

In a long-running racketeering case, U.S. District Judge Gladys Kessler ordered Philip Morris, R.J. Reynolds, and other cigarette manufacturers to publish corrective statements about:

A) the adverse health effects of smoking
B) the addictiveness of smoking and nicotine
C) the adverse effects of exposure to secondhand smoke
D) all of the above
E) none of the above; a court cannot compel a company to run corrective ads

Question 47

In 2013, the federal government abandoned its attempts to require color graphics on cigarette packages depicting the ravages of smoking after a federal appeals court ruled the gruesome images:

A) presented unconstitutional emotional appeals to discourage smoking
B) failed to present uncontested factual statements to counter earlier misleading and deceptive cigarette advertising
C) were backed by not a "shred" of evidence that the graphic images would reduce smoking
D) all of the above
E) A and B

Question 48

In a settlement with the FTC in 2012, Facebook tried to end long-running complaints about its privacy policy by agreeing to all of the following EXCEPT:

A) Establish a comprehensive privacy program that the company would not misrepresent
B) Obtain consumer consent before changing consumers' privacy preferences
C) No longer use Facebook members' "Likes" in advertising and endorsements to friends
D) Prohibit access to user information shortly after a user deletes an account
E) Facebook agreed to all of the above

Question 49

Facebook's $5 billion settlement with the FTC for unfair and deceptive privacy practices:

A) was the largest civil penalty ever issued by the FTC
B) required Facebook to establish an external monitor approved by the FTC to provide additional oversight of privacy practices
C) resulted in Facebook's stock value increasing significantly the same day
D) A & B only
E) all of the above

Question 50

In 2019, the FTC ordered vaping companies to turn over marketing materials related to which of the following?

A) e-cigarette giveaway programs
B) promotions on college campuses
C) use of online influencers
D) A & C only
E) all of the above

Question 51

The FTC's disclosure requirements for social media influencers:

A) make influencers, not companies, responsible for making the disclosures
B) include any financial, employment, personal, or family relationship with a brand
C) specify that disclosures should be placed so that they are hard to miss
D) all of the above
E) none of the above

Question 52

Advocates for consensual adult sex workers argue that the Fight Online Sex Trafficking Act (FOSTA):

A) violates the First Amendment by unconstitutionally restricting commercial speech
B) should not apply to their ads because the average consumer, acting reasonably, would not be deceived
C) puts them in danger by removing the possibility of any safe platforms for them to offer their services
D) all of the above
E) none of the above

Question 53

The FTC has been very active in investigation and enforcement efforts involving online advertisement and marketing. Which one of these statements is NOT true?

A) When social media companies have violated the privacy promises they made in their terms of service, the FTC has brought enforcement actions against them, including Facebook, Google, and Snapchat.
B) Cryptocurrency scams have been the target of FTC enforcement actions in recent years, with $80 million in losses reported by consumers in a six-month period in 2020.
C) In 2021, the FTC reported consumers were defrauded out of $2 million on scams involving Elon Musk impersonators alone.
D) All of the above
E) None of the above

Question 54

What is the definition of the following term:
-Deceptive advertising.

Question 55

What is the definition of the following term:
-Proof implication.

Question 56

What is the definition of the following term:
-Puffery.

Question 57

What is the definition of the following term:
-Lottery.

Question 58

What is the definition of the following term:
-Insider trading.

Question 59

What is the definition of the following term:
-Fight Online Sex Trafficking Act (FOSTA).

Question 60

The town of Intolerance decides to ban the outdoor advertising of alcohol in media such as billboards. Establishments selling or serving alcohol may have on-site outdoor signs identifying the business, and may include alcohol-related terms in their name, such as "The Liquor Store," but may not have outdoor displays identifying the brands of alcohol or the price of alcohol sold. The city claims that these measures will reduce alcohol consumption and thereby reduce alcohol-related problems, such as drunk driving. A brewery and a bar challenge this law as a violation of the First Amendment. The brewery wants to advertise the "fresh, natural taste" of its beer. The bar wants to advertise the brands and prices of beer it sells. Is this ordinance constitutional? In your answer, apply the Central Hudson test, and relevant precedents, to this ordinance.