ADPR 3100- Exam 3 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS
what are three major constraints on advertising? 1) laws and regulations of legally constituted bodies such as congress and the
FCC.
2) control by the media through advertising acceptability guidelines.
3) self-regulation by advertisers and agencies using various trade practice
recommendations and codes of conduct.
caveat emptor latin for "let the buyer beware"; represents notion that there should be no
government interference in the marketplace.
wheeler-lea amendment broadened the scope of the FTC to include consumer advertising
substantiate the key to FTC enforcement is that advertisers must be able to prove the claims
made in their advertising.
three part test of the FTC to determine if an 1) there must be a representation, omission, or practice that is likely to mislead the
advertisement is deceptive or untruthful: consumer.
2) the act or practice must be considered from the perspective of a consumer
who is acting reasonably.
3) the representation, omission, or practice must be material.
six step typical model for FTC intervention in alleged 1) there is a claim of deceptive practices to the FTC.
deception: 2) the FTC begins its investigation with a request for substantiating from the
advertiser.
3) if the FTC finds the practice to be unsubstantiated and, therefore, deceptive, a
complaint is issued.
4) if an advertiser refuses to sign a consent decree, the FTC issues a cease-and-
desist order.
5) even if an advertiser agrees to abide by a cease-and-desist order, the FTC may
find that simply stopping a particular practice does not repair past damages to
consumers.
6) if a company cannot reach agreement with the FTC, its next recourse is the
federal courts.
consent decree issued by the FTC. an advertiser signs the decree, stops the practice under
investigation, but admits no guilt
cease-and-desist orders if an advertiser refuses to sign a consent decree, the FTC may issue a cease-and-
desist order that can carry a $10,000-per-day fine
corrective advertising to counteract the past residual effect of previous deceptive advertising, the FTC
may require the advertiser to devote future space and time to disclosure of
previous deception. Began around the late 1960s
puffery advertiser's opinion of a product that is considered a legitimate expression of
biased opinion
, Virginia State Board of Pharmacy v. Virginia Citizens many advertisers consider this the major breakthrough for commercially
Consumer Council (1976) protected speech. the court held that the state of virginia could not prohibit the
advertising of prescription drug prices.
Friedman v. Rogers (1979) court upheld the right of the state of texas to prevent an optometrist from using
an "assumed name, corporate name, trade name, or any other than the name
under which he is licensed to practice optometry in texas." in its decision, the
court said the first amendment protection for commercial speech is not absolute
and that regulation of commercial speech can be allowed even when the
restrictions would be unconstitutional.
Central Hudson Gas & Electric Corp. v. Public Service this case concerned a prohibition by the new york public service commission
Commission of New York against utility advertising. case met first three guidelines of the central hudson
four part test, a total prohibition of utility advertising was more extensive than
necessary. was ruled unconstitutional.
what are three major constraints on advertising? 1) laws and regulations of legally constituted bodies such as congress and the
FCC.
2) control by the media through advertising acceptability guidelines.
3) self-regulation by advertisers and agencies using various trade practice
recommendations and codes of conduct.
caveat emptor latin for "let the buyer beware"; represents notion that there should be no
government interference in the marketplace.
wheeler-lea amendment broadened the scope of the FTC to include consumer advertising
substantiate the key to FTC enforcement is that advertisers must be able to prove the claims
made in their advertising.
three part test of the FTC to determine if an 1) there must be a representation, omission, or practice that is likely to mislead the
advertisement is deceptive or untruthful: consumer.
2) the act or practice must be considered from the perspective of a consumer
who is acting reasonably.
3) the representation, omission, or practice must be material.
six step typical model for FTC intervention in alleged 1) there is a claim of deceptive practices to the FTC.
deception: 2) the FTC begins its investigation with a request for substantiating from the
advertiser.
3) if the FTC finds the practice to be unsubstantiated and, therefore, deceptive, a
complaint is issued.
4) if an advertiser refuses to sign a consent decree, the FTC issues a cease-and-
desist order.
5) even if an advertiser agrees to abide by a cease-and-desist order, the FTC may
find that simply stopping a particular practice does not repair past damages to
consumers.
6) if a company cannot reach agreement with the FTC, its next recourse is the
federal courts.
consent decree issued by the FTC. an advertiser signs the decree, stops the practice under
investigation, but admits no guilt
cease-and-desist orders if an advertiser refuses to sign a consent decree, the FTC may issue a cease-and-
desist order that can carry a $10,000-per-day fine
corrective advertising to counteract the past residual effect of previous deceptive advertising, the FTC
may require the advertiser to devote future space and time to disclosure of
previous deception. Began around the late 1960s
puffery advertiser's opinion of a product that is considered a legitimate expression of
biased opinion
, Virginia State Board of Pharmacy v. Virginia Citizens many advertisers consider this the major breakthrough for commercially
Consumer Council (1976) protected speech. the court held that the state of virginia could not prohibit the
advertising of prescription drug prices.
Friedman v. Rogers (1979) court upheld the right of the state of texas to prevent an optometrist from using
an "assumed name, corporate name, trade name, or any other than the name
under which he is licensed to practice optometry in texas." in its decision, the
court said the first amendment protection for commercial speech is not absolute
and that regulation of commercial speech can be allowed even when the
restrictions would be unconstitutional.
Central Hudson Gas & Electric Corp. v. Public Service this case concerned a prohibition by the new york public service commission
Commission of New York against utility advertising. case met first three guidelines of the central hudson
four part test, a total prohibition of utility advertising was more extensive than
necessary. was ruled unconstitutional.
