Deck 12: Advertising Law

Question 1

The Latin term _________ was originally applied to the area of consumer advocacy signifying the attitude that consumers should be skeptical of all advertisements

A) res ipsa
B) caveat emptor
C) cassus omissus
D) odium
E) certiorari

Answer 1

B

Question 2

The first case heard by the U.S. Supreme Court explicitly addressing commercial speech was ____.

A) Patterson Drug Co. v. Kingery (1969)
B) Bigelow v. Virginia (1974)
C) Central Hudson Gas & Electric Corp. v. Public Service Commission (1980)
D) Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council (1976)
E) Valentine v. Christensen (1942)

Answer 2

E

Question 3

In the 1976 case of Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, the U.S. Supreme Court held that the state's interests in the advertising regulation were outweighed by the ____________.

A) First Amendment
B) consumer's interest in gaining accurate price information
C) inherent personal autonomy of each individual
D) holding in Roe v. Wade
E) right to privacy

Answer 3

B

Question 4

Which of the following questions is not a part of the commercial regulation test set forth by the Supreme Court in its Central Hudson decision?

A) Does the government have a substantial interest in regulating the speech?
B) Does the advertisement pertain to a lawful product?
C) Is the regulation narrowly drawn?
D) Is their pricing involved in the promotion?
E) Does the regulation actually advance the interest asserted by the government?

Question 5

Mail-out advertising for energy saving appliances was the subject of the litigation in the landmark case of Central Hudson Gas & Electric Corp. v. Public Service Commission (1980), but the winner was the __________?

A) government because the rule was proper and narrowly drawn.
B) energy company because it was only reaching out to its customers
C) energy company because the rule articulated was overly broad.
D) government because it was trying to fulfill the mandate for energy conservation.
E) none of the above

Question 6

Under the Central Hudson test, government must be pursuing a(n) ___________ interest in regulating commercial speech.

A) substantive
B) democratic
C) citizens
D) advertising
E) none of the above

Question 7

The Federal Trade Commission (FTC) was originally created to prevent anti-competitive business practices, but that has allowed it to deal with which of the following issues?

A) prevent deceptive advertising
B) intervene on illegal securities and exchange trading
C) review disputes between electronic media stockholders
D) prohibit trade in indecent pornography
E) none of the above

Question 8

The __________ Act, passed in 1938, declared unlawful "unfair or deceptive acts or practices in commerce."

A) Norris-LaGuardia
B) Wagner
C) Wheeler-Lea
D) Sherman
E) Federal Trade Commission Act

Question 9

To be lawful, the FTC requires advertisements be all of the following except ___ .

A) truthful
B) succinct
C) non-deceptive
D) fair
E) substantiated

Question 10

The Federal Trade Commission (FTC) is led by ____ commissioners all of whom are appointed by the ____.

A) five, Senate
B) nine, President
C) nine, House of Representatives
D) five, President
E) three, Senate

Question 11

Where will an allegation made by the FTC of criminal wrongdoing be heard first?

A) federal district court
B) administrative law judge
C) full panel of the FTC
D) federal court of appeals
E) U.S. Supreme Court

Question 12

The Federal Trade Commission investigates all of the following elements in deceptive advertising as set forth in the Deception Policy Statement except for ___ ?

A) omissions
B) reasonable consumer
C) material to decision
D) representations
E) profit and earnings

Question 13

A product's claim considered too outlandish to be believed by a reasonable person is __?

A) exaggeration
B) deception
C) puffery
D) unreasonable
E) parody

Question 14

Advertisements are scrutinized under the legal standard of the ____ consumer to determine if they are deceptive in nature.

A) American
B) female
C) high-school educated
D) 18-or-older
E) reasonable

Question 15

A local car dealership runs a commercial spot featuring the dealer standing beside a white sport utility vehicle boasting of its safety and its fuel efficiency -- twenty-five miles to the gallon, fully loaded with a seven-year warranty of $32,000. Which of the following elements would be described as unfair advertising based on what you know at this point?

A) spot fails to mention JD Powers rating for vehicle
B) spot ignores faulty airbags failing to discharge properly
C) warranty comes without comparable dealer information
D) gas mileage actually is less in the city than on the highway
E) price does not include tax, title and license

Question 16

Which of the following advertising tag lines would most likely be considered a factual claim in an advertisement that must be backed by substantiating evidence?

A) "They're amazing!"
B) "Tastes great!"
C) "Nine out of ten people loved it."
D) "The smoothest ride I've ever had."
E) "It's breathtakingly beautiful."

Question 17

All of the following are measures taken by the Federal Trade Commission to deal with deceptive advertising complaints except for one item. Which one below does not belong?

A) staff advisory letters
B) cease and desist orders
C) corrective advertising
D) consent agreements
E) factory rebates

Question 18

The ____________ is an extension of the Council of Better Business Bureaus that investigates deceptive advertising claims.

A) Federal Communications Commission
B) Securities and Exchange Commission
C) National Advertising Division
D) Federal Trade Commission
E) Federal Advertising Agency

Question 19

Which advertising law below would be unlikely approved by the Central Hudson test?

A) A medicinal marijuana commercial in a state where all products of cannabis are illegal.
B) A rule requiring automobile spots reveal price tags include tax, title, and license.
C) An FDA regulation requiring prominent language warning of health risks for medications.
D) A rule for children's cereal labeling all ingredients including glutens.
E) A federal law requiring survey data sample information for doctor polling ads.

Question 20

The government has no substantial interest in regulating the following advertising claim: "All custom pipes twenty percent off…applies to all shapes and glass colors." The smoking pipes are sold by a small shop with products geared toward fans of the Grateful Dead, The Who, and Pearl Jam as well as various herbs and tobacco products.

Question 21

Orange County has received no rainfall in three months. Orange County may implement a water conservation plan prohibiting the use of water for any non-essential domestic purpose and ban encouragement of such non-essential uses for domestic purposes.

Question 22

The Federal Trade Commission is responsible solely for investigating, regulating, and enforcing regulations on deceptive advertising.

Question 23

SofTP bathroom tissue runs an advertisement intended to show that SofTP is the perfect balance of both soft and strong. The commercial references "other bathroom tissues" and depicts one scraping paint off the wall and another one deteorating to powder. The commercial also depicts a woman removing water from her arm with SofTP. SofTP neither damages her skin nor leaves any tissue behind. This is a deceptive advertisement.

Question 24

A national fast food restaurant chain, Fancy Burger, is trying to makeover their image to be more high-end. Suppose the research team for Fancy Burger conducts a blind taste test comparing Fancy's burger to burgers produced by Fancy's competitors. For the test, Fancy's burger is a full patty while the competitor's patties are just halves. Taste testers chose Fancy's burger four out of five times, so now it can run an advertisement containing the statement: "Four out of five people prefer Fancy Burger."

Question 25

A locally prominent dentist appears in advertisements for the VibraDent toothbrush, a locally produced specialty toothbrush. In the advertisement, the dentist claims VibraDent provides the only comprehensive brushing to keep teeth healthy. The dentist does not have to provide any substantiating evidence in support of his opinion.

Question 26

Well-known mixed-martial-arts fighter, Ulta Mitt, appears in a TV infomercial claiming his daily 10X workout helped him to shed many pounds and become a "lean, mean fighting machine!" Ulta has done the 10X workout several times, but also trains daily with his personal trainer, although nowhere does the infomercial mention any of this additional information. Ulta's testimonial therefore is not deceptive.

Question 27

Flabby Abs, Inc. is peddling the AbFirm through local television spots. As part of its advertising campaign, the corporation claims using the AbFirm fifteen minutes every day for two weeks alone produces a loss of 30 percent body fat. The FTC declared the ad to be misleading. In order to remedy the misleading impression created by such a remarkable claim, the FTC can order Flabby Abs, Inc. to spend five million dollars on advertising to include the statement "contrary to prior claims."

Question 28

The Federal Trade Commission is the only government agency with the power to enforce regulations regarding deceptive advertising.

Question 29

Alky Hall owns a small chain of liquor stores in the metro area of your school. In order to bring business to a newly opened store, Hall decides to run several commercials featuring the store's specials on rum, vodka, and tequila. Hall's commercials violate FTC regulations.