Deck 14: Regulations and Ethical Concerns

Question 1

Public complaints about the amount of violence on television would be sent to the:

A) FCC.
B) FDA.
C) FTC.
D) BATF.

Answer 1

A

Question 2

The law states that advertising to children cannot exceed 12 minutes per hour during weekdays. Which organization is responsible for making sure this time limit is not exceeded?

A) Federal Communications Commission
B) Federal Trade Commission
C) Food and Drug Administration
D) United States Postal Service

Answer 2

A

Question 3

The agency that would be concerned with the salt content in foods would be the:

A) Federal Trade Commission.
B) Federal Communications Commission.
C) United States Postal Service.
D) Food and Drug Administration.

Answer 3

D

Question 4

The original role of the FTC was to:

A) provide protection for consumers from big businesses.
B) oversee the marketing industry.
C) enforce antitrust laws and protect businesses from one another.
D) regulate advertising and marketing communications.

Question 5

The Federal Communications Commission) is responsible for monitoring television advertising directed to children, in terms of the number of minutes per hour that are directed to children.

Question 6

The Federal Communications Commission holds jurisdiction over the content of advertisements transmitted by mass media.

Question 7

All of the following are components of the Wheeler-Lea Amendment to the FTC Act except:

A) expanded authority of the FTC to prohibit false and misleading advertising practices.
B) granted the FTC power to monitor the amount of time television stations advertise to children.
C) gave the FTC power to levy fines when necessary.
D) granted the FTC access to the courts to enforce the law and ensure compliance with FTC rulings.

Question 8

The agency with the greatest degree of jurisdiction over marketing and advertising is the:

A) FTC.
B) FCC.
C) USPS.
D) FDA.

Question 9

The FCC places limits on advertising to children on weekends, but not on weekdays.

Question 10

The Wheeler-Lea Amendment to the FTC Act:

A) regulates excessive advertising to children.
B) prohibits deceptive and misleading advertising.
C) prohibits puffery and comparative advertising.
D) sets the substantiation requirements that an ad must meet when claims are made about a product.

Question 11

If a customer is concerned about the labeling on a bag of potato chips, the regulatory agency to contact is the:

A) Federal Communications Commission.
B) Food and Drug Administration.
C) Federal Trade Commission.
D) United States Postal Service.

Question 12

The Food and Drug Administration regulates and oversees the packaging and labeling of products. It also monitors advertising on food packages and advertisements for drugs.

Question 13

When the FTC Act was passed in 1914, the Federal Trade Commission's responsibility was to enforce antitrust laws and to protect businesses from one another.

Question 14

The agency that monitors advertising on food packages and advertisements for medicines is the:

A) Federal Trade Commission.
B) Federal Communications Commission.
C) United States Postal Service.
D) Food and Drug Administration.

Question 15

An advertisement or communication is deemed to be deceptive or misleading when:

A) the misrepresentation induces anyone or someone to make a purchase.
B) a substantial number of people make a purchase or are influenced by the advertisement.
C) a substantial number of people or the "typical person" is left with a false impression or misrepresentation that relates to the product.
D) a competing firm makes the same claim.

Question 16

Reebok and Skechers were both forced to pay fines for misleading advertising about shoe products.

Question 17

The federal agency that presides over marketing communications is the Federal Communications Commission.

Question 18

The Food and Drug Administration regulates and oversees:

A) marketing materials sent through the mail.
B) packaging and labeling of products, advertising on food products, and advertising of drugs.
C) television, radio, and the telephone industries.
D) the amount of time that television stations are permitted to advertise to children.

Question 19

The Federal Trade Commission monitors advertising on food packages and advertisements for drugs.

Question 20

A person targeted by a mail fraud campaign should contact the Federal Communications Commission.

Question 21

A "typical person" must believe the content of an advertisement to be false in order for the Wheeler-Lea Amendment to apply.

Question 22

A claim is when a firm makes an exaggerated statement about a good or service, while puffery is when a firm makes a factual statement about a good or service.

Question 23

Words such as "best," "greatest," and "finest" used in advertising are examples of:

A) deceptive advertising.
B) misleading advertising.
C) standard industry practices.
D) puffery.

Question 24

Of the following taglines or slogans, which would most likely trigger an investigation by the Federal Trade Commission or National Advertising Division of the CBBB?

A) For the finest Asian food come to China Garden
B) Eat at Wendy's, the best hamburgers in town
C) Tree Top apple juice is twice as good
D) For better looking skin, use Avon

Question 25

If an advertiser uses expert endorsements, statements made by the expert in the advertisement must be based on:

A) legitimate tests performed by experts in the field.
B) the opinion of "typical persons" who would use the product.
C) truthful statements that represent the expert's personal experience.
D) lab or engineering tests.

Question 26

The Wheeler-Lea Amendment (1938) of the Federal Trade Commission Act prohibits false and misleading advertisements.

Question 27

Identify the five major federal government agencies that deal with some aspect of marketing as its primary responsibility.

Question 28

To substantiate an advertisement, the Federal Trade Commission and courts tend to use each of the following principles except:

A) the federal government assumes consumers read ads "broadly" and do not notice details hidden in fine print.
B) tests have to be with the actual product or one that is considered similar.
C) evidence should come from individuals or companies that would be considered experts by others in the field.
D) the courts and FTC will consider the totality of evidence concerning a claim, not just one particular study that may support a claim.

Question 29

The FTC test of substantiation requires:

A) a comparison of marketing claims made by competing firms.
B) the use of a code of ethics.
C) data, facts, or competent and reliable evidence.
D) testimony from an expert in the field.

Question 30

The key difference, in terms of the FTC and the courts, between puffery and a claim is that puffery is not considered to be a factual statement while a claim is considered to be a factual statement that can be proven true or false.

Question 31

The substantiation test for false and misleading advertising requires:

A) scientific tests.
B) consumer testimonials.
C) competent and reliable evidence.
D) the average person to be convinced it is not false and misleading.

Question 32

What criteria must be met to deem an advertisement deceptive or misleading?

Question 33

The Federal Trade Commission, National Advertising Division, and the courts would consider the word "better" used in an advertisement to be:

A) deceptive and misleading advertising.
B) puffery.
C) puffery, but it also implies a comparison, which, if challenged, may require substantiation.
D) a violation of the Federal Trade Commission Act.

Question 34

Although the word "better" is normally accepted as puffery, the word "best" is somewhat vague and implies a comparison, which has recently been tested through the FTC.

Question 35

Puffery is:

A) a deliberate attempt to mislead and deceive.
B) any illegal marketing activity.
C) increased product prices to cover advertising costs.
D) an exaggerated claim with no overt attempt to mislead or deceive.

Question 36

The Wheeler-Lea Amendment makes advertising using puffery illegal.

Question 37

When a substantial number of people are misled by a series of commercials or an advertisement, it is deemed to be deceptive or misleading.

Question 38

If Wendy's makes an advertising claim that the company offers great-tasting hamburgers, the practice is:

A) a violation of the company's code of ethics.
B) misleading and deceptive advertising.
C) puffery.
D) cross-promotion claim.

Question 39

When a statement is made that is deemed to be puffery, the concept of substantiation applies.

Question 40

Terms normally associated with puffery include "best," "greatest," and "finest."

Question 41

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.

Question 42

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.

Question 43

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

A) appeal the decision to the Court of Appeals.
B) hold a hearing before the full FTC.
C) appeal the decision to the Supreme Court.
D) hold a hearing before an administrative law judge.

Question 44

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):

A) legal review.
B) cease and desist order.
C) administrative complaint.
D) consent order.

Question 45

A trade regulatory ruling by the Federal Trade Commission applies to:

A) wholesalers.
B) international companies.
C) an industry.
D) retailers.

Question 46

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.

Question 47

Explain the difference between deception and puffery.

Question 48

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

A) cease and desist order.
B) corrective advertising directive.
C) appeal to the Court of Appeals.
D) administrative complaint.

Question 49

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

A) Administrative complaint
B) Cease and desist order
C) Consent order
D) Court-ordered reparations

Question 50

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

A) consent order.
B) administrative ruling.
C) cease and desist order.
D) corrective advertisement.

Question 51

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.

Question 52

Which agency has the authority to order corrective advertising?

A) Federal Communications Commission
B) Federal Trade Commission
C) Food and Drug Administration
D) Bureau of Alcohol, Tobacco, and Firearms

Question 53

The Federal Trade Commission orders corrective advertising in:

A) only the most severe instances of deceptive and misleading advertising.
B) cases involving advertising to children.
C) cases that are appealed to the U.S. Court of Appeals.
D) most cases that are investigated.

Question 54

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

Question 55

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?

A) A company violates an FTC cease and desist order
B) A full commission of the FTC is not available to hear a case
C) A company violates a consent order
D) A company appeals a consent order

Question 56

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.

Question 57

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:

A) cease and desist order.
B) consent agreement.
C) corrective advertising directive.
D) trade regulation ruling.

Question 58

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:

A) the company does not have the opportunity to present oral arguments.
B) the cease and desist orders are normally upheld.
C) a company may be ordered to pay civil penalties.
D) the decision is not binding.

Question 59

An administrative complaint is:

A) a formal proceeding before an administrative law judge used by the Federal Trade Commission.
B) a formal hearing before the Court of Appeals.
C) a formal hearing before the full Federal Trade Commission.
D) used by the National Advertising Review Board when the NAD cannot solve a complaint.

Question 60

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?

A) The actions of a company are so severe that immediate action is needed
B) A full commission of the FTC is not available to hear a case
C) A company violates a consent order
D) A company appeals a consent order

Question 61

Identify the typical steps in an FTC investigation sequence from the initial complaint to a decision that is appealed to the Supreme Court.

Question 62

The NARB is supported by the Federal Trade Commission and has legal authority over cases it reviews.

Question 63

When the FTC issues an administrative complaint and an administrative judge rules a violation has occurred, the judge issues a cease and desist order.

Question 64

Cases before the full commission of the FTC can be appealed to the U.S. Court of Appeals and even to the U.S. Supreme Court.

Question 65

The FTC can use the court system to stop unfair and deceptive advertising and communication practices but must go through the normal steps of starting with a consent agreement.

Question 66

Before issuing trade regulation rulings, the FTC normally holds a public hearing and accepts both oral and written arguments.

Question 67

Complaints that are made to the Federal Trade Commission are made public and registered on the FTC's website.

Question 68

When a consent order issued by the Federal Trade Commission is signed, the company has agreed to a corrective advertising program.

Question 69

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

Question 70

The funeral industry was sanctioned by the FTC in 1984 and 1994 for practices common in the industry that the FTC believed were not fair to consumers. To correct these misleading practices, the FTC issued a:

A) cease and desist order.
B) consent order.
C) corrective advertising order.
D) trade regulation ruling.

Question 71

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

Question 72

The first step a firm can take to end a FTC investigation of a complaint is the signing of a consent order.

Question 73

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.

Question 74

The large number of cases of false and misleading advertising has lead the FTC to order corrective advertising a substantial number of times.

Question 75

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.

Question 76

Recently the FTC investigated bloggers who were being sponsored to pitch products. The FTC ruled that the blogger must disclose any type of compensation that is received. This is an example of a:

A) cease and desist order.
B) consent order.
C) corrective advertising order.
D) trade regulation ruling.

Question 77

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.

Question 78

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

Question 79

When a company's management team signs a consent order issued by the FTC they agree to stop the advertisement or marketing practice and they admit they are guilty of false or deceptive advertising.

Question 80

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