Question 1

POM advertised that its pomegranate-based products had significant health benefits that were backed by medical studies. The FTC sued, contending that the advertising was misleading. The agency ordered POM to stop making such health benefit claims. POM appealed. The court of appeals held that POM:
A) ​had "adequate" medical information to back up its claims, so could continue such ads.
B) ​was protected by the First Amendment right to free speech.
C) ​was engaged in deceptive advertising, so the FTC had authority to stop the ads.
D) ​had "significant" medical information to back up its claims, so could continue such ads.
E) ​none of the other choices are correct.

Accepted Answer

The court of appeals held that POM was engaged in deceptive advertising, so the FTC had authority to stop the ads. Despite POM's claims of having medically-backed health benefits of its pomegranate-based products, the FTC found that the advertisements were misleading and unsupported by adequate scientific evidence. Therefore, the court upheld the FTC's order for POM to stop making such claims.

Question 2

Wyndham hotels used poor cybersecurity that made it easier for hackers to steal customer information, costing them millions of dollars. Wyndham's website claimed the company used good cybersecurity. The FTC sued for deceptive trade practices for failure to maintain proper computer security. Wyndham appealed. The court of appeals held that:
A) ​poor cybersecurity is not a deceptive trade practice, so is not under FTC jurisdiction.
B) ​poor cybersecurity is in the eye of the beholder as many companies are hacked; Wyndham is another victim that should not be singled out by the FTC.
C) ​consumers who suffered losses could bring breach of contract suit against Wyndham, negating the need for such FTC action.
D) ​Congress gave authority over cybersecurity to the Federal Communications Commission, not the FTC, so such action would have to come from the FCC.
E) ​none of the other choices are correct.

Accepted Answer

The court of appeals likely held that the FTC could sue Wyndham for deceptive trade practices due to their failure to maintain proper computer security, despite the specific options provided not directly stating this outcome. This implies that the FTC has jurisdiction over such matters, contrary to the specific scenarios outlined in the other choices.

Question 3

POM advertised that its pomegranate-based products had significant health benefits that were backed by medical studies. The FTC sued, contending that the advertising was misleading. The agency ordered POM to stop making such health benefit claims. POM appealed. The court of appeals held that POM:
A) ​had "adequate" medical information to support its claims, so could continue such ads.
B) ​was protected by the First Amendment right to free speech.
C) ​had no intent to deceive, so could not be liable for intentionally deceptive ads.
D) ​had "significant" medical information to support its claims, so could continue such ads.
E) ​none of the other choices are correct.

Accepted Answer

The court of appeals likely found that POM's claims were not sufficiently supported by medical studies to the extent claimed in the advertisements, thus not fitting the descriptions provided in options A, B, C, or D. The FTC's action suggests that the claims might have been misleading, which is why the court would not simply allow POM to continue such ads based on the reasons given in the other choices.

Quiz 19: Consumer Protection

POM advertised that its pomegranate-based products had significant health benefits that were backed by medical studies. The FTC sued, contending that the advertising was misleading. The agency ordered POM to stop making such health benefit claims. POM appealed. The court of appeals held that POM:

POM advertised that its pomegranate-based products had significant health benefits that were backed by medical studies. The FTC sued, contending that the advertising was misleading. The agency ordered POM to stop making such health benefit claims. POM appealed. The court of appeals held that POM: