Question 1

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.

Accepted Answer

When a company signs a consent order, they agree to stop the practice investigated, but they do not have to admit guilt or liability.

Question 2

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.

Accepted Answer

The FTC has the authority to seek court orders to stop unfair and deceptive practices without first attempting to negotiate a settlement or consent agreement. This is known as a "litigated order." However, consent agreements are the preferred method of resolving FTC investigations as they are often quicker and less costly than going to court.

Question 3

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

Accepted Answer

The FTC industry regulation rulings can be challenged by an appeal to the U.S. Court of Appeals.

Question 4

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.

Accepted Answer

Signing a consent order is one way for a firm to resolve an FTC investigation of a complaint, typically when a violation has been found.

Question 5

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.

Accepted Answer

This statement is consistent with the Federal Trade Commission's guidelines for advertising and marketing in the United States, which require that claims be truthful and not misleading. The claim must represent the typical outcome that a consumer might reasonably expect from using the product, and if the results are not typical or are dependent on certain conditions, this must be clearly disclosed.

Question 6

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.

Accepted Answer

This is true. When the FTC issues an administrative complaint and an administrative judge rules that a violation has occurred, the judge can issue a cease and desist order. This order requires the violator to stop the illegal behavior or face additional fines and penalties.

Question 7

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 mitigate or counteract the effects of false or deceptive advertising and bring consumers back to their pre-deception state.

Question 8

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 9

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.

Accepted Answer

The FTC and courts generally assume that consumers may not notice or understand fine print or qualifying language, so advertisers must ensure that important information is clear and conspicuous.

Question 10

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 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

This is true. The FTC has the authority to order firms that have engaged in deceptive or misleading advertising to prepare and disseminate corrective advertising to rectify the harm caused by the initial advertising.

Question 13

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.

Accepted Answer

The Federal Trade Commission (FTC) orders corrective advertising only in specific cases where it deems necessary, not a high percentage of the time.

Question 14

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

Accepted Answer

This is true. The Federal Trade Commission (FTC) is responsible for enforcing laws related to advertising and marketing practices in the United States. Anyone can file a complaint with the FTC if they believe that an ad or marketing campaign is deceptive or misleading. The FTC will investigate the complaint and take action if necessary to prevent unfair or deceptive marketing practices.

Question 15

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.

Accepted Answer

The statement accurately describes the FTC and court's approach to substantiation of advertising claims. They consider all available evidence, not just a single study, and require the evidence to support the claim being made.

Question 16

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.

Accepted Answer

The statement accurately reflects the position of the FTC and the courts regarding substantiation of advertising claims. Evidence must be specifically for the product being tested, and cannot be for a similar product.

Question 17

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

The ruling applies to every firm in an industry, regardless of guilt or innocence.

Question 18

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

Accepted Answer

The FTC does not automatically make all complaints public; they may be used for law enforcement purposes and are not necessarily published on their website.

Question 19

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

Accepted Answer

The Federal Trade Commission typically holds a public hearing and accepts oral and written arguments before issuing trade regulation rulings.

Question 20

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.

Accepted Answer

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

Quiz 14: Regulations and Ethical Concerns