Question 1

In terms of substantiation of advertising claims, the FTC and the courts consider the totality of evidence, not the results of just one study if other studies find different results.

Accepted Answer

The FTC and the courts consider the totality of evidence, which includes multiple studies and sources, and not just the results of one study, especially if other studies find different results. This helps to ensure that advertising claims are supported by reliable and credible evidence.

Question 2

If a company uses endorsers, the statements made by the endorsers must be truthful but can represent the experiences of typical people rather than the endorsers.

Accepted Answer

The statements made by endorsers must be truthful and must represent the endorser's actual experience or typical experiences of the product or service; they cannot imply results that are not typical.

Question 3

When the Federal Trade Commission insists that a company stop making a false claim in an advertisement and that company agrees to stop, it is an example of a(n):

Accepted Answer

A consent order is a formal agreement between the Federal Trade Commission and a company in which the company agrees to stop making a false claim in an advertisement or engaging in unfair business practices. It is an enforceable legal document, and violation of the consent order can result in penalties and fines.

Question 4

Company leaders who are not satisfied with the ruling of the full FTC can appeal to the U.S. Court of Appeals. The danger in appealing is:

Accepted Answer

The answer of Company leaders who are not satisfied with...

Question 5

Occasionally the FTC bypasses its typical process and uses the court system to stop an unfair marketing practice. Of the following, which would be the most likely to trigger this type of action?

Accepted Answer

If a company has already been ordered by the FTC to cease and desist from an unfair marketing practice and they continue to engage in the practice, the FTC may choose to bypass its typical process and take the company to court to enforce compliance. This is because the company has already been given a warning and opportunity to stop the illegal behavior.

Question 6

In terms of substantiation of advertising claims, the 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 often assume that consumers do not read the fine print or qualifying language in advertisements, and therefore, advertisers cannot rely solely on fine print to correct or clarify the overall misleading impression created by the main claims of an ad.

Question 7

When a company must pay for ads that refute false claims it made in previous ads, it is called a(n):

Accepted Answer

A corrective advertisement is when a company is required to pay for ads that correct or refute false claims made in previous ads. This is often a result of a settlement with a regulatory agency or a court order. Consent orders and cease and desist orders also involve legal orders, but they do not specifically require corrective advertisements. Administrative rulings are decisions made by regulatory agencies, but they also do not necessarily involve corrective advertising.

Question 8

Substantiation means that an advertising claim or promise must be proven with data, facts, or through competent and reliable evidence.

Accepted Answer

Substantiation is the requirement for advertising claims or promises to be backed up by data, facts, or reliable evidence. Therefore, the statement is true.

Question 9

When the FTC makes a judgment against a company for false or misleading advertising, which of the following would come first?

Accepted Answer

The answer of When the FTC makes a judgment against...

Question 10

If after an administrative hearing a company is still not satisfied with the ruling of the FTC, the next step would be to:

Accepted Answer

The answer of If after an administrative hearing a company...

Question 11

The Federal Trade Commission orders corrective advertising in:

Accepted Answer

Corrective advertising is ordered by the Federal Trade Commission (FTC) only in the most severe instances of deceptive and misleading advertising to correct the misinformation and protect consumers.

Question 12

An administrative complaint is:

Accepted Answer

An administrative complaint is a formal proceeding before an administrative law judge used by the Federal Trade Commission. This is where the FTC can present evidence, cross-examine witnesses, and make legal arguments in support of its allegations against a company or individual.

Question 13

Occasionally the Federal Trade Commission bypasses its typical process and uses the court system to stop an unfair or deceptive marketing practice. Of the following, which would be the most likely to trigger this type of action?

Accepted Answer

If a company's actions are deemed severe enough that they require immediate action, the FTC may choose to bypass its typical process and use the court system to stop the unfair or deceptive marketing practice. This is typically reserved for serious cases where prompt action is necessary to protect consumers.

Question 14

Which agency has the authority to order corrective advertising?

Accepted Answer

The Federal Trade Commission has the authority to order corrective advertising when they find that an advertisement is false or misleading. This means that the advertiser must run new ads correcting the misinformation they previously conveyed.

Question 15

In terms of substantiation of advertising claims, the FTC and the courts state that evidence presented must be for the exact product being tested, not for a similar product.

Accepted Answer

The FTC and the courts require evidence presented for the exact product being advertised, not for a similar product. This helps ensure that the claims made are true and accurate for the product actually being sold.

Question 16

Explain the difference between deception and puffery.

Accepted Answer

The answer of Explain the difference between deception and puffery....

Question 17

What principles should be used when creating substantiation of an advertising claim?

Accepted Answer

The answer of What principles should be used when creating...

Question 18

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 is a requirement outlined by the Federal Trade Commission (FTC) in the United States to prevent deceptive advertising practices. Advertisements should accurately represent what a customer can expect from a product or service, and any exceptions or limitations should be clearly disclosed.

Question 19

If at the end of an administrative hearing of an FTC case, the judge feels a violation of the law has taken place, the judge issues a:

Accepted Answer

A cease and desist order is a typical remedy issued by a judge in an FTC administrative hearing if they find that there has been a violation of the law. It orders the respondent to discontinue the specified unfair or deceptive practices which were the subject of the proceeding. The other options may also be applicable remedies in certain cases, but a cease and desist order is most commonly issued.

Question 20

If a consent agreement cannot be reached with a company, the Federal Trade Commission then issues a(n):

Accepted Answer

If a consent agreement cannot be reached, the FTC issues an administrative complaint, which is a formal proceeding similar to a court trial.

Quiz 14: Regulations and Ethical Concerns