Deck 20: Regulation of Advertising and Promotion

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Question
The U.S. Postal Service has regulations that affect advertising.
Federal agencies such as the Federal Communications Commission, the Food and Drug Administration, the U.S. Postal Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives may have regulations that affect advertising.
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Question
The Federal Trade Commission (FTC) Improvements Act empowered the FTC to establish industrywide rules that define unfair practices before they occur.
The FTC Improvements Act empowered the FTC to establish trade regulation rules (TRRs), which are industrywide rules that define unfair practices before they occur.
Question
Self-regulation and control of advertising emanate from individual advertisers and their agencies.
Self-regulation and control of advertising emanate from individual advertisers and their agencies.
Question
The Central Hudson Test is typically a two-part test established by the American Marketing Association.
The Central Hudson Test is a four-part test established by the courts.
Question
Puffery is as an illegal, deceptive practice.
Puffery has generally been viewed as a form of poetic license or allowable exaggeration.
Question
Advertising practices considered unfair include claims that might exploit such vulnerable groups as children and older adults.
Practices considered unfair are claims made without prior substantiation, claims that might exploit such vulnerable groups as children and older adults, and instances where consumers cannot make a valid choice because an advertiser omits important information about a product or competing products mentioned in an ad.
Question
The Wheeler-Lea Act withdrew the Federal Trade Commission's (FTC's) power to regulate advertising.
The FTC has had the power to regulate advertising since the passage of the Wheeler-Lea Amendment.
Question
The Federal Trade Commission (FTC) is responsible for protecting businesses, and not consumers, from anticompetitive behavior and unfair and deceptive practices.
The FTC is responsible for protecting both consumers and businesses from anticompetitive behavior and unfair and deceptive practices.
Question
Federal law requires that advertisers possess substantiation for their advertising claims before the claims are published.
Federal law requires that advertisers possess substantiation for their advertising claims before the claims are published. After initiating or receiving a complaint, NAD requests the advertiser's substantiation, reviews the information, and reaches a determination.
Question
Policies and procedures for industry self-regulation are established by the Advertising Self-Regulatory Council.
Policies and procedures for industry self-regulation are established by the Advertising Self-Regulatory Council.
Question
Network standards regarding acceptable advertising typically remain constant.
Network standards regarding acceptable advertising change constantly.
Question
Trade-oriented promotions are not subject to regulations by various agencies.
Both consumer- and trade-oriented promotions are subject to various regulations. The Federal Trade Commission regulates many areas of sales promotion through the Marketing Practices Division of the Bureau of Consumer Protection.
Question
Self-regulation begins with the interaction of client and agency when creative ideas are generated and submitted for consideration.
Self-regulation begins with the interaction of client and agency when creative ideas are generated and submitted for consideration. Most companies have specific guidelines, standards, and policies to which their ads must adhere.
Question
The Second Amendment protection has been extended to commercial speech.
The courts have extended First Amendment protection to commercial speech, which is speech that promotes a commercial transaction.
Question
Spamming is the sending of unsolicited multiple commercial electronic messages.
Spamming is the sending of unsolicited multiple commercial electronic messages.
Question
Regulatory concerns never play a major role in the advertising decision-making process.
Regulatory concerns can play a major role in the advertising decision-making process.
Question
A promotion is not considered a lottery if a prize is offered.
A promotion is considered a lottery if a prize is offered, if winning a prize depends on chance and not skill, and if a participant is required to give up something of value in order to participate.
Question
Self-regulation of advertising has been ineffective in the development of stringent practices and standards.
Self-regulation of advertising has been effective and in many instances probably led to the development of more stringent standards and practices than those imposed by or beyond the scope of legislation.
Question
The Federal Trade Commission (FTC) Act was originally intended to help enforce antitrust laws such as the Sherman and Clayton Acts.
The FTC Act was originally intended to help enforce antitrust laws, such as the Sherman and Clayton Acts, by helping restrain unfair methods of competition.
Question
The Wheeler-Lea Amendment gave the Federal Trade Commission (FTC) the power to issue cease-and-desist orders and levy fines on violators.
The Wheeler-Lea Amendment gave the FTC the power to issue cease-and-desist orders and levy fines on violators. It extended the FTC's jurisdiction over false advertising of foods, drugs, cosmetics, and therapeutic devices.
Question
Which of the following statements is true of the National Advertising Division (NAD)?

A)The NAD's advertising monitoring program only reviews complaints from local Better Business Bureaus.
B)Advertisers that disagree with the NAD's findings have an automatic right to appeal the NAD's decision to the National Advertising Review Board.
C)The NAD has no authority to direct an advertiser to stop running an ad in case the required substantiating evidence does not support the advertiser's claim.
D)Lawyers at the NAD usually seek help from local advertising agencies to find misleading advertisements.
E)The NAD does not deal with complaints that come from marketers who are threatened by comparative advertising.
Question
Which of the following is the appellate unit of the Advertising Self-Regulatory Council?

A)The National Advertising Division
B)The Independent Business Alliance
C)The National Advertising Review Board
D)The American Marketing Association
E)The National Association of Broadcasters
Question
The _____ plays a major role at the national level as the third-party administrator of the advertising industry self-regulatory system.

A)National Advertising Review Board
B)Council of Better Business Bureaus
C)American Marketing Association
D)Federal Trade Commission
E)National Advertising Review Council
Question
The Council of Better Business Bureaus plays a major role in controlling advertising practices at the _____ level.

A)national
B)local
C)manufacturer
D)international
E)regional
Question
In 1977, the _____ held that state bar associations' restrictions on advertising are unconstitutional and that attorneys have First Amendment freedom of speech rights to advertise.

A)Federal Trade Commission
B)American Bar Association
C)U.S.Supreme Court
D)Better Business Bureau
E)American Marketing Association
Question
Self-regulation begins with the interaction of client and agency when:

A)a consent order is signed.
B)a company is charged with a lawsuit for deceptive advertising.
C)there has been an omission of advertising substantiation.
D)creative ideas are generated and submitted for consideration.
E)ads are aired in foreign nations.
Question
Which of the following statements concerning advertising by attorneys is true?

A)A sizable faction within the American Bar Association blames the legal profession's image problem on sleazy ads.
B)The U.S.Supreme Court does not permit lawyers to advertise if they earn more than $100,000 per year.
C)Ads soliciting personal injury victims help in enhancing the public's perception of attorneys.
D)The American Bar Association recently removed all restrictions on the type of advertising attorneys can use.
E)Typically, traditional law firms are in favor of using advertising, particularly on TV, because they believe that it might boost a profession's imagE.A sizable faction within the American Bar Association (ABA) blames the legal profession's image problem on sleazy ads.The ABA's Commission on Advertising held a series of public hearings on what, if any, restrictive measures to recommend to state ethics panels.
Question
A number of self-regulatory mechanisms have been established by the business community in an effort to control advertising practices, and among them, the largest and best known is the _____.

A)Federal Trade Commission
B)Federal Communications Commission
C)Better Business Bureau
D)World Trade Organization
E)Chamber of Deputies
Question
Advertisers are often supportive of voluntary self-regulation because:

A)self-regulation is viewed as a way of limiting government interference in advertising.
B)all clients and agencies are affected by voluntary self-regulation.
C)self-regulation does not require interaction between an agency and a client.
D)self-regulation results in even more stringent regulations than what state and federal agencies want.
E)it is simple and less time consuming.
Question
Which of the following statements is true of advertising by members of professional associations?

A)Both government regulatory agencies and consumer groups are against advertising by members of professional associations.
B)Professional associations have always authorized advertising by their members on the basis that such promotional activities heighten members' professional status.
C)Research has shown that consumers generally disfavor the use of professional advertising.
D)The Supreme Court has ruled that professionals, such as dentists and physicians, have the right to advertise.
E)Professional advertising is typically considered unethical and fraudulent.
Question
The _____ examines advertising claims in direct-response advertising, including infomercials and home shopping channels.

A)Children's Advertising Review Unit
B)Vision Council of America
C)National Association of Broadcasters
D)Electronic Retailing Self-Regulation Program
E)Independent Business Alliance
Question
The BBB is the largest and best known self-regulatory mechanism in the United States for controlling advertising practices that has been established by the business community. BBB stands for:

A)Board for Business Broadcasting.
B)Board of the Best Businessmen.
C)Board for Betterment of Broadcasting.
D)Better Business Bureau.
E)Best Business Bureau.
Question
The _____ of the Council of Better Business Bureaus focuses on areas that include product performance claims, superiority claims against competitive products, and all kinds of scientific and technical claims made in countrywide advertising.

A)National Advertising Division
B)National Review Board
C)National Association of Attorneys General
D)American Marketing Association
E)Federal Trade Commission
Question
Better Business Bureaus (BBBs) provide effective control over advertising practices at the _____ level.

A)local
B)national
C)global
D)industry-wide
E)international
Question
Which of the following sentences is true of the Better Business Bureau (BBB)?

A)The BBB is a federal regulatory agency that controls advertising.
B)The BBB promotes fair advertising and selling practices across all industries.
C)The BBB was established to handle client complaints about regional business practices.
D)The BBB is regulated by the American Marketing Association.
E)Local BBBs are located in only two cities across America.
Question
Policies and procedures for self-regulation of the advertising industry are established by the _____.

A)National Association of Broadcasters
B)Vision Council of America
C)National Advertising Review Council
D)Independent Business Alliance
E)Association of American Publishers
Question
Local Better Business Bureaus (BBBs):

A)receive and investigate complaints from consumers regarding advertising in their area.
B)are located in small cities throughout the United States with population less than 200,000.
C)are government-aided agencies.
D)follow a standard operating procedure for handling complaints as implemented by the Federal Trade Commission.
E)are funded by the Council of Better Business Bureaus.
Question
Which of the following is a federal agency that controls advertising?

A)The National Advertising Review Board
B)The Better Business Bureau
C)The National Advertising Review Council
D)The Food and Drug Administration
E)The National Association of Attorneys General
Question
The _____ was formed by three advertising associations and the Council of Better Business Bureaus to sustain high standards of truth and accuracy in national advertising.

A)National Advertising Board
B)National Advertising Review Council
C)American Association of Advertisers
D)Ad Council
E)Board of Advertising Ombudsmen
Question
Which of the following statements is true of policies and procedures established for industry self-regulation by the Advertising Self-Regulatory Council (ASRC)?

A)The Children's Advertising Review Unit (CARU) reviews advertising directed to children between the age of 12 and 16.
B)The National Advertising Division of the Council of Better Business Bureaus (NAD) examines advertising claims in direct-response advertising.
C)The Electronic Retailing Self-Regulation Program (ERSP) examines all advertising claims excluding infomercials and home shopping channels.
D)The National Advertising Division of the Council of Better Business Bureaus (NAD) is staffed primarily by attorneys.
E)The Electronic Retailing Self-Regulation Program (ERSP) reviews advertising claims that are local in scopE.Staffed primarily by attorneys, National Advertising Division of the Council of Better Business Bureaus (NAD), Children's Advertising Review Unit (CARU), and Electronic Retailing Self-Regulation Program (ERSP) review advertising claims that are national in scope.
Question
Commercial speech is most accurately defined as:

A)an encoding and decoding tool for commercial communications.
B)communication that promotes a commercial transaction.
C)a type of comparative advertising used in TV commercials.
D)an advertising component of broadcast media.
E)speech governed by the Fifth Amendment to the U.S.Constitution.
Question
Which of the following statements about self-regulation by media is true?

A)Most commercials once rejected cannot be rerun.
B)Network standards regarding acceptable advertising have remained constant over the past 30 to 40 years.
C)Advertising for contraceptives is completely banned on all networks since 1995.
D)Television is probably the most carefully scrutinized of all forms of advertising.
E)Network standards have become more stringent in response to competition from independent and cable stations.
Question
Which of the following statements is true of online behavioral advertising (OBA)?

A)OBA permits only those advertisements that provide detailed information about an advertiser's products and services.
B)Companies engaged in OBA are monitored by the Federal Trade Commission (FTC).
C)OBA is based on the seven Self-Regulatory Principles for Electronic Retailing.
D)OBA uses information collected across multiple unaffiliated websites to predict a user's preferences.
E)OBA is regulated by the Electronic Retailing Self-Regulation Program (ERSP).
Question
Which of the following statements is true of self-regulation of advertising?

A)Self-regulation of advertising is typically restricted to liquor and tobacco advertisements.
B)Self-regulation was initially introduced to eliminate the problem of puffery.
C)Self-regulation of advertising has led to the development of more lenient standards and practices than those imposed by the legislation.
D)The advertising industry views self-regulation as an effective mechanism for controlling advertising abuses.
E)The advertising industry prefers government intervention over self-regulation.
Question
The courts have extended First Amendment protection to:

A)commercial speech, a speech that promotes a commercial transaction.
B)advertisers to enable them to sue the media for not providing them with the promised reach and frequency.
C)the findings of marketing research studies.
D)advertisers who want to use delusory wording in their ads.
E)advertisers who do not want to be self-regulated.
Question
Which of the following media has the most stringent review and approval process for advertising?

A)Community radio
B)Business magazines
C)Newspaper and trade publications
D)The Internet
E)The four major television networks
Question
The _____ is a self-regulatory program implemented by the Advertising Self-Regulatory Council (ASRC) that regulates online behavioral advertising (OBA) across the Internet.

A)Internet Advertising Review Board
B)Internet Retailing Self-Regulation Program
C)Council of Better Business Bureaus
D)Internet-Based Advertising Accountability Program
E)Information Technology Act
Question
Television advertising is:

A)typically not used for hard liquor advertising.
B)regulated through codes developed and enforced by the Federal Trade Commission.
C)regulated by affiliate networks.
D)more stringently self-regulated than any other medium.
E)considered a declining advertising medium.
Question
The _____ is a major trade association of the advertising business in the United States and has established standards of practice and its own creative code.

A)Vision Council of America
B)Independent Business Alliance
C)American Association of Advertising Agencies
D)Federal Trade Commission
E)National Association of Broadcasters
Question
_____, as defined by the First Amendment to the U.S. Constitution, is the most basic federal law governing advertising in the United States.

A)Freedom of using any media vehicle
B)Freedom to advertise
C)Freedom to stop the airing of any advertisement
D)Freedom of speech
E)Freedom of press
Question
Advertising on television and radio was initially regulated through codes developed by the _____ until the courts found that portions of its regulations were in restraint of trade.

A)National Advertising Review Board
B)Federal Trade Commission
C)Federal Communications Commission
D)National Association of Broadcasters
E)Standards and Practices Division
Question
A very frustrating, and often expensive, scenario for both an agency and its client occurs when:

A)a commercial is rejected at the storyboard stage.
B)a commercial that was rejected at the storyboard stage is accepted at the final stage.
C)a commercial is rejected for reasons such as sex, politics, and religion.
D)a commercial is approved at the storyboard stage but then is rejected after it is produced.
E)a commercial is rejected at the idea-generation stagE.A very frustrating, and often expensive, scenario for both an agency and its client occurs when a commercial is approved at the storyboard stage but then is rejected after it is produced.
Question
If an advertiser refuses to comply with rulings made by the National Advertising Review Board (NARB), the NARB is most likely to:

A)order the advertiser to stop running the ad.
B)refer the case to an industry trade association.
C)refer the matter to an appropriate federal agency.
D)impose a fine.
E)lodge a class action suit for customers who have been in some way negatively affected by the ad.
Question
Which of the following statements describes the media's role in the self-regulation of advertising?

A)The media must accept all the advertising campaigns they receive because of the First Amendment that guarantees the freedom of speech.
B)The media cannot refuse to accept advertising for an entire product class such as hard liquor.
C)The media can refuse to accept individual ads they find offensive or objectionable.
D)The media is expected to reject ads that are targeted toward children and older adults.
E)The broadcast is required by law to reject political ads.
Question
Federal regulation of advertising originated in 1914 with the passage of the _____ Act.

A)Information Technology
B)Advertising Self-Regulatory
C)Federal Consumer Protection
D)Federal Trade Commission
E)Central Hudson
Question
The three major participants in the advertising process that work individually and collectively to encourage truthful, ethical, and responsible advertising are:

A)advertisers, advertising review boards, and the cable operators.
B)creative boutiques, copywriters, and consumer panels.
C)consumer panels, advertisers, and agencies.
D)advertisers, advertising agencies, and the media.
E)advertisers, the government, and the television networks.
Question
Certain magazines regularly test the products they advertise and offer a "seal of approval" and refunds if the products are later found to be defective. They do so in order to:

A)enhance the credibility of the publication.
B)encourage advertisers to buy more media space.
C)eliminate puffery in their ads.
D)discourage comparative advertising.
E)avoid questionable advocacy advertising.
Question
The U.S. Supreme Court established the _____, a four-part test, to determine restrictions on commercial speech.

A)Virginia Consumer Council Test
B)Free Speech Matrix
C)First Amendment Analysis
D)California Test of Affirmation
E)Central Hudson Test
Question
Which of the following statements is true of the Electronic Retailing Self-Regulation Program (ERSP)?

A)The mission of the ERSP is to discourage advertising and marketing in the electronic retailing industry that contains comparative advertising.
B)The majority of claims reviewed under the ERSP program are for online advertising, including search media optimization and social media marketing.
C)ERSP works under the scope of the Electronic Retailing Association (ERA) to create a predisposed self-regulatory system.
D)Spam e-mails along with Internet pop-up ads that lead to further e-commerce are in the ERSP's purview as well as advertising on TV shopping channels.
E)ERSP is an initiative of the Federal Trade Commission (FTC) to work toward the self-regulation of electronic retailing.
Question
Which of the following statements is true of the National Advertising Review Council (NARC)?

A)Cases brought to NARC are subject to extensive publicity as compared to the cases brought to court.
B)It is very expensive to get a case solved through NARC.
C)The NARC takes longer to solve a case when compared to the Federal Trade Commission (FTC).
D)The NARC can handle cases at a lower cost as compared to a court.
E)The NARC is a government agency regulating advertising agencies.
Question
Esme Inc., a manufacturer of cosmetics, ran an ad campaign in which it claimed that Esme's "Vivid" range of water-proof mascara is the best mascara in the world. It also claimed that the mascara gives 10 times more volume to the eyelashes and provides more definition to the eyes than any other mascara brand. This scenario is an illustration of:

A)deception.
B)superlative advertising.
C)unfairness.
D)puffery.
E)unethical advertising.
Question
The three major divisions of the Federal Trade Commission (FTC) are the bureaus of:

A)employment, national security, and trade.
B)governance, compliance, and cooperation.
C)regulation, restriction, and economic reconstruction.
D)economics, consumer protection, and competition.
E)distribution, distillation, and consumer diversity.
Question
The _____ gave the Federal Trade Commission (FTC) the power to issue cease-and-desist orders and levy fines on violators.

A)Central Hudson Test
B)National Advertising Review Board
C)Lanham Act
D)Wheeler-Lea Amendment
E)Sherman Antitrust Act
Question
The use of superlatives such as "greatest," "best," and "finest" in advertising would constitute:

A)an unfair claim.
B)puffery.
C)deception.
D)an affirmative disclosure.
E)advertising substantiation.
Question
Which of the following statements about the use of puffery in advertising is true?

A)Puffery is a sales presentation that praises the item to be sold based on objective opinions.
B)Puffery was banned in a 1996 revision of the Uniform Commercial Code.
C)According to the Federal Trade Commission, consumers believe in puffery.
D)Superlatives such as greatest, best, and finest are puffs that are often used in advertising.
E)Puffery is illegal only if it eliminates a competitive advantagE.Puffery has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts." Superlatives such as greatest, best, and finest are puffs that are often used.
Question
Which of the following divisions of the Federal Trade Commission (FTC) protects consumers from deceptive and unsubstantiated advertising and enforces the provisions of the FTC Act that forbid misrepresentation, unfairness, and deception in general advertising at the national and regional level?

A)The Division of Consumer Advertising & Protection
B)The Division of Advertising Broadcasts
C)The Division of Marketing Practices
D)The Division of Advertising Practices
E)The Division of Economic Practices
Question
Which of the following is the best example of the use of puffery in advertising?

A)A bank advertises free checking with a minimum balance of $1,000.
B)A tire manufacturer advertises a 50,000-mile guarantee for its tires.
C)A manufacturer of premium chocolates claims that it makes the finest chocolates in the world.
D)A popular shampoo brand advertises that it has been proven to be effective in preventing dandruff.
E)A provider of courier services advertises guaranteed overnight delivery servicE.In the above scenario, the manufacturer of premium chocolates claiming that it makes the finest chocolates in the world is using puffery in advertising.Puffery has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts."
Question
The first section of the Magnuson-Moss Act of 1975:

A)defined commercial speech.
B)provided guidelines for the review and evaluation of all child-directed advertising.
C)defined the requirements for advertising substantiation.
D)was concerned with the misrepresentation of premiums when used in sales promotions.
E)dealt with consumers' rights regarding product warranties.
Question
_____ are industrywide guidelines used by the Federal Trade Commission (FTC) that define unfair practices before they occur.

A)Trade regulation rules
B)Affirmative disclosures
C)Corrective advertising disclosures
D)Cease-and-desist orders
E)Advertising guidelines
Question
The _____ empowered the Federal Trade Commission to regulate unfair or deceptive practices in commerce including those in advertising.

A)Lanham Amendment
B)Sherman and Clayton Antitrust Act
C)Wheeler-Lea Amendment
D)Food and Drug Administration Act
E)Consumer Protection Act
Question
The _____ gave the Federal Trade Commission (FTC) the power to establish trade regulation rules.

A)Magnuson-Moss Act
B)FTC Act
C)Wheeler-Lea Amendment
D)Sherman Antitrust Act
E)Trade Regulation Act
Question
_____ has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts."

A)Deceptive advertising
B)Unfairness
C)Comparative advertising
D)Puffery
E)Affirmative disclosure
Question
Scrumptious Inc., an American food and beverages company, claims that "Scrumptious makes the world's best chocolate fondant." This is an example of:

A)sales promotion.
B)superiority advocacy.
C)puffery.
D)comparative advertising.
E)trickery.
Question
Controversy over the Federal Trade Commission's (FTC's) authority to regulate unfair advertising practices began in 1978, when the agency relied on this mandate to formulate its controversial _____ rule restricting advertising to children.

A)"cease-and-desist"
B)"kid vid"
C)affirmative disclosures
D)Wheeler-Lea
E)Magnuson-Moss
Question
Which of the following divisions of the Federal Trade Commission (FTC) deals with antitrust and consumer protection investigations?

A)The Bureau of Economics
B)The Bureau of Compliance
C)The National Advertising Review Board
D)The Bureau of Reconstruction
E)The Trade Regulation Bureau
Question
Under the original Federal Trade Commission Act of 1914, the FTC:

A)was given the power to issue cease-and-desist orders against firms engaging in deceptive practices.
B)was given the power to pursue corrective advertising remedies to deceptive practices.
C)could not prohibit false advertising unless there was evidence of injury to a competitor.
D)was given the power to regulate all false and deceptive advertising practices that might injure competition or mislead consumers.
E)could not enforce antitrust laws or protect major competitors from one another.
Question
According to Federal Trade Commission (FTC) policy, the basis for determining _____ is that a trade practice causes substantial physical or economic injury to consumers, could not reasonably be avoided by consumers, and must not be outweighed by countervailing benefits to consumers or competition.

A)unfairness
B)deception
C)puffery
D)affirmative disclosure
E)cease-and-desist orders
Question
The Federal Trade Commission (FTC) takes the position that:

A)consumers cannot distinguish between factual information and puffery.
B)puffery has detrimental effect on consumers' purchase decisions.
C)consumers recognize puffery and don't believe it.
D)puffery is illegal under the Wheeler-Lea Act.
E)consumers believe in puffery.
Question
The _____ is the division of the Federal Trade Commission (FTC) that is responsible for investigating cases involving deceptive or misleading advertising.

A)Bureau of Economics
B)Bureau of Competition
C)National Advertising Review Board
D)Bureau of Consumer Protection
E)Trade Regulation Bureau
Question
The Federal Trade Commission (FTC) defines _____ as an express or implied statement contrary to fact.

A)selective exposure
B)affirmative disclosure
C)selective retention
D)misrepresentation
E)comparative disclosure
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Deck 20: Regulation of Advertising and Promotion
1
The U.S. Postal Service has regulations that affect advertising.
Federal agencies such as the Federal Communications Commission, the Food and Drug Administration, the U.S. Postal Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives may have regulations that affect advertising.
True
2
The Federal Trade Commission (FTC) Improvements Act empowered the FTC to establish industrywide rules that define unfair practices before they occur.
The FTC Improvements Act empowered the FTC to establish trade regulation rules (TRRs), which are industrywide rules that define unfair practices before they occur.
False
3
Self-regulation and control of advertising emanate from individual advertisers and their agencies.
Self-regulation and control of advertising emanate from individual advertisers and their agencies.
True
4
The Central Hudson Test is typically a two-part test established by the American Marketing Association.
The Central Hudson Test is a four-part test established by the courts.
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5
Puffery is as an illegal, deceptive practice.
Puffery has generally been viewed as a form of poetic license or allowable exaggeration.
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6
Advertising practices considered unfair include claims that might exploit such vulnerable groups as children and older adults.
Practices considered unfair are claims made without prior substantiation, claims that might exploit such vulnerable groups as children and older adults, and instances where consumers cannot make a valid choice because an advertiser omits important information about a product or competing products mentioned in an ad.
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7
The Wheeler-Lea Act withdrew the Federal Trade Commission's (FTC's) power to regulate advertising.
The FTC has had the power to regulate advertising since the passage of the Wheeler-Lea Amendment.
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8
The Federal Trade Commission (FTC) is responsible for protecting businesses, and not consumers, from anticompetitive behavior and unfair and deceptive practices.
The FTC is responsible for protecting both consumers and businesses from anticompetitive behavior and unfair and deceptive practices.
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9
Federal law requires that advertisers possess substantiation for their advertising claims before the claims are published.
Federal law requires that advertisers possess substantiation for their advertising claims before the claims are published. After initiating or receiving a complaint, NAD requests the advertiser's substantiation, reviews the information, and reaches a determination.
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10
Policies and procedures for industry self-regulation are established by the Advertising Self-Regulatory Council.
Policies and procedures for industry self-regulation are established by the Advertising Self-Regulatory Council.
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11
Network standards regarding acceptable advertising typically remain constant.
Network standards regarding acceptable advertising change constantly.
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12
Trade-oriented promotions are not subject to regulations by various agencies.
Both consumer- and trade-oriented promotions are subject to various regulations. The Federal Trade Commission regulates many areas of sales promotion through the Marketing Practices Division of the Bureau of Consumer Protection.
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13
Self-regulation begins with the interaction of client and agency when creative ideas are generated and submitted for consideration.
Self-regulation begins with the interaction of client and agency when creative ideas are generated and submitted for consideration. Most companies have specific guidelines, standards, and policies to which their ads must adhere.
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14
The Second Amendment protection has been extended to commercial speech.
The courts have extended First Amendment protection to commercial speech, which is speech that promotes a commercial transaction.
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15
Spamming is the sending of unsolicited multiple commercial electronic messages.
Spamming is the sending of unsolicited multiple commercial electronic messages.
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16
Regulatory concerns never play a major role in the advertising decision-making process.
Regulatory concerns can play a major role in the advertising decision-making process.
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17
A promotion is not considered a lottery if a prize is offered.
A promotion is considered a lottery if a prize is offered, if winning a prize depends on chance and not skill, and if a participant is required to give up something of value in order to participate.
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18
Self-regulation of advertising has been ineffective in the development of stringent practices and standards.
Self-regulation of advertising has been effective and in many instances probably led to the development of more stringent standards and practices than those imposed by or beyond the scope of legislation.
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19
The Federal Trade Commission (FTC) Act was originally intended to help enforce antitrust laws such as the Sherman and Clayton Acts.
The FTC Act was originally intended to help enforce antitrust laws, such as the Sherman and Clayton Acts, by helping restrain unfair methods of competition.
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20
The Wheeler-Lea Amendment gave the Federal Trade Commission (FTC) the power to issue cease-and-desist orders and levy fines on violators.
The Wheeler-Lea Amendment gave the FTC the power to issue cease-and-desist orders and levy fines on violators. It extended the FTC's jurisdiction over false advertising of foods, drugs, cosmetics, and therapeutic devices.
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21
Which of the following statements is true of the National Advertising Division (NAD)?

A)The NAD's advertising monitoring program only reviews complaints from local Better Business Bureaus.
B)Advertisers that disagree with the NAD's findings have an automatic right to appeal the NAD's decision to the National Advertising Review Board.
C)The NAD has no authority to direct an advertiser to stop running an ad in case the required substantiating evidence does not support the advertiser's claim.
D)Lawyers at the NAD usually seek help from local advertising agencies to find misleading advertisements.
E)The NAD does not deal with complaints that come from marketers who are threatened by comparative advertising.
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22
Which of the following is the appellate unit of the Advertising Self-Regulatory Council?

A)The National Advertising Division
B)The Independent Business Alliance
C)The National Advertising Review Board
D)The American Marketing Association
E)The National Association of Broadcasters
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23
The _____ plays a major role at the national level as the third-party administrator of the advertising industry self-regulatory system.

A)National Advertising Review Board
B)Council of Better Business Bureaus
C)American Marketing Association
D)Federal Trade Commission
E)National Advertising Review Council
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24
The Council of Better Business Bureaus plays a major role in controlling advertising practices at the _____ level.

A)national
B)local
C)manufacturer
D)international
E)regional
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25
In 1977, the _____ held that state bar associations' restrictions on advertising are unconstitutional and that attorneys have First Amendment freedom of speech rights to advertise.

A)Federal Trade Commission
B)American Bar Association
C)U.S.Supreme Court
D)Better Business Bureau
E)American Marketing Association
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26
Self-regulation begins with the interaction of client and agency when:

A)a consent order is signed.
B)a company is charged with a lawsuit for deceptive advertising.
C)there has been an omission of advertising substantiation.
D)creative ideas are generated and submitted for consideration.
E)ads are aired in foreign nations.
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27
Which of the following statements concerning advertising by attorneys is true?

A)A sizable faction within the American Bar Association blames the legal profession's image problem on sleazy ads.
B)The U.S.Supreme Court does not permit lawyers to advertise if they earn more than $100,000 per year.
C)Ads soliciting personal injury victims help in enhancing the public's perception of attorneys.
D)The American Bar Association recently removed all restrictions on the type of advertising attorneys can use.
E)Typically, traditional law firms are in favor of using advertising, particularly on TV, because they believe that it might boost a profession's imagE.A sizable faction within the American Bar Association (ABA) blames the legal profession's image problem on sleazy ads.The ABA's Commission on Advertising held a series of public hearings on what, if any, restrictive measures to recommend to state ethics panels.
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28
A number of self-regulatory mechanisms have been established by the business community in an effort to control advertising practices, and among them, the largest and best known is the _____.

A)Federal Trade Commission
B)Federal Communications Commission
C)Better Business Bureau
D)World Trade Organization
E)Chamber of Deputies
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29
Advertisers are often supportive of voluntary self-regulation because:

A)self-regulation is viewed as a way of limiting government interference in advertising.
B)all clients and agencies are affected by voluntary self-regulation.
C)self-regulation does not require interaction between an agency and a client.
D)self-regulation results in even more stringent regulations than what state and federal agencies want.
E)it is simple and less time consuming.
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30
Which of the following statements is true of advertising by members of professional associations?

A)Both government regulatory agencies and consumer groups are against advertising by members of professional associations.
B)Professional associations have always authorized advertising by their members on the basis that such promotional activities heighten members' professional status.
C)Research has shown that consumers generally disfavor the use of professional advertising.
D)The Supreme Court has ruled that professionals, such as dentists and physicians, have the right to advertise.
E)Professional advertising is typically considered unethical and fraudulent.
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31
The _____ examines advertising claims in direct-response advertising, including infomercials and home shopping channels.

A)Children's Advertising Review Unit
B)Vision Council of America
C)National Association of Broadcasters
D)Electronic Retailing Self-Regulation Program
E)Independent Business Alliance
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32
The BBB is the largest and best known self-regulatory mechanism in the United States for controlling advertising practices that has been established by the business community. BBB stands for:

A)Board for Business Broadcasting.
B)Board of the Best Businessmen.
C)Board for Betterment of Broadcasting.
D)Better Business Bureau.
E)Best Business Bureau.
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33
The _____ of the Council of Better Business Bureaus focuses on areas that include product performance claims, superiority claims against competitive products, and all kinds of scientific and technical claims made in countrywide advertising.

A)National Advertising Division
B)National Review Board
C)National Association of Attorneys General
D)American Marketing Association
E)Federal Trade Commission
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34
Better Business Bureaus (BBBs) provide effective control over advertising practices at the _____ level.

A)local
B)national
C)global
D)industry-wide
E)international
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35
Which of the following sentences is true of the Better Business Bureau (BBB)?

A)The BBB is a federal regulatory agency that controls advertising.
B)The BBB promotes fair advertising and selling practices across all industries.
C)The BBB was established to handle client complaints about regional business practices.
D)The BBB is regulated by the American Marketing Association.
E)Local BBBs are located in only two cities across America.
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36
Policies and procedures for self-regulation of the advertising industry are established by the _____.

A)National Association of Broadcasters
B)Vision Council of America
C)National Advertising Review Council
D)Independent Business Alliance
E)Association of American Publishers
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37
Local Better Business Bureaus (BBBs):

A)receive and investigate complaints from consumers regarding advertising in their area.
B)are located in small cities throughout the United States with population less than 200,000.
C)are government-aided agencies.
D)follow a standard operating procedure for handling complaints as implemented by the Federal Trade Commission.
E)are funded by the Council of Better Business Bureaus.
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38
Which of the following is a federal agency that controls advertising?

A)The National Advertising Review Board
B)The Better Business Bureau
C)The National Advertising Review Council
D)The Food and Drug Administration
E)The National Association of Attorneys General
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39
The _____ was formed by three advertising associations and the Council of Better Business Bureaus to sustain high standards of truth and accuracy in national advertising.

A)National Advertising Board
B)National Advertising Review Council
C)American Association of Advertisers
D)Ad Council
E)Board of Advertising Ombudsmen
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40
Which of the following statements is true of policies and procedures established for industry self-regulation by the Advertising Self-Regulatory Council (ASRC)?

A)The Children's Advertising Review Unit (CARU) reviews advertising directed to children between the age of 12 and 16.
B)The National Advertising Division of the Council of Better Business Bureaus (NAD) examines advertising claims in direct-response advertising.
C)The Electronic Retailing Self-Regulation Program (ERSP) examines all advertising claims excluding infomercials and home shopping channels.
D)The National Advertising Division of the Council of Better Business Bureaus (NAD) is staffed primarily by attorneys.
E)The Electronic Retailing Self-Regulation Program (ERSP) reviews advertising claims that are local in scopE.Staffed primarily by attorneys, National Advertising Division of the Council of Better Business Bureaus (NAD), Children's Advertising Review Unit (CARU), and Electronic Retailing Self-Regulation Program (ERSP) review advertising claims that are national in scope.
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41
Commercial speech is most accurately defined as:

A)an encoding and decoding tool for commercial communications.
B)communication that promotes a commercial transaction.
C)a type of comparative advertising used in TV commercials.
D)an advertising component of broadcast media.
E)speech governed by the Fifth Amendment to the U.S.Constitution.
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42
Which of the following statements about self-regulation by media is true?

A)Most commercials once rejected cannot be rerun.
B)Network standards regarding acceptable advertising have remained constant over the past 30 to 40 years.
C)Advertising for contraceptives is completely banned on all networks since 1995.
D)Television is probably the most carefully scrutinized of all forms of advertising.
E)Network standards have become more stringent in response to competition from independent and cable stations.
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43
Which of the following statements is true of online behavioral advertising (OBA)?

A)OBA permits only those advertisements that provide detailed information about an advertiser's products and services.
B)Companies engaged in OBA are monitored by the Federal Trade Commission (FTC).
C)OBA is based on the seven Self-Regulatory Principles for Electronic Retailing.
D)OBA uses information collected across multiple unaffiliated websites to predict a user's preferences.
E)OBA is regulated by the Electronic Retailing Self-Regulation Program (ERSP).
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44
Which of the following statements is true of self-regulation of advertising?

A)Self-regulation of advertising is typically restricted to liquor and tobacco advertisements.
B)Self-regulation was initially introduced to eliminate the problem of puffery.
C)Self-regulation of advertising has led to the development of more lenient standards and practices than those imposed by the legislation.
D)The advertising industry views self-regulation as an effective mechanism for controlling advertising abuses.
E)The advertising industry prefers government intervention over self-regulation.
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45
The courts have extended First Amendment protection to:

A)commercial speech, a speech that promotes a commercial transaction.
B)advertisers to enable them to sue the media for not providing them with the promised reach and frequency.
C)the findings of marketing research studies.
D)advertisers who want to use delusory wording in their ads.
E)advertisers who do not want to be self-regulated.
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46
Which of the following media has the most stringent review and approval process for advertising?

A)Community radio
B)Business magazines
C)Newspaper and trade publications
D)The Internet
E)The four major television networks
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47
The _____ is a self-regulatory program implemented by the Advertising Self-Regulatory Council (ASRC) that regulates online behavioral advertising (OBA) across the Internet.

A)Internet Advertising Review Board
B)Internet Retailing Self-Regulation Program
C)Council of Better Business Bureaus
D)Internet-Based Advertising Accountability Program
E)Information Technology Act
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48
Television advertising is:

A)typically not used for hard liquor advertising.
B)regulated through codes developed and enforced by the Federal Trade Commission.
C)regulated by affiliate networks.
D)more stringently self-regulated than any other medium.
E)considered a declining advertising medium.
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49
The _____ is a major trade association of the advertising business in the United States and has established standards of practice and its own creative code.

A)Vision Council of America
B)Independent Business Alliance
C)American Association of Advertising Agencies
D)Federal Trade Commission
E)National Association of Broadcasters
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50
_____, as defined by the First Amendment to the U.S. Constitution, is the most basic federal law governing advertising in the United States.

A)Freedom of using any media vehicle
B)Freedom to advertise
C)Freedom to stop the airing of any advertisement
D)Freedom of speech
E)Freedom of press
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51
Advertising on television and radio was initially regulated through codes developed by the _____ until the courts found that portions of its regulations were in restraint of trade.

A)National Advertising Review Board
B)Federal Trade Commission
C)Federal Communications Commission
D)National Association of Broadcasters
E)Standards and Practices Division
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52
A very frustrating, and often expensive, scenario for both an agency and its client occurs when:

A)a commercial is rejected at the storyboard stage.
B)a commercial that was rejected at the storyboard stage is accepted at the final stage.
C)a commercial is rejected for reasons such as sex, politics, and religion.
D)a commercial is approved at the storyboard stage but then is rejected after it is produced.
E)a commercial is rejected at the idea-generation stagE.A very frustrating, and often expensive, scenario for both an agency and its client occurs when a commercial is approved at the storyboard stage but then is rejected after it is produced.
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53
If an advertiser refuses to comply with rulings made by the National Advertising Review Board (NARB), the NARB is most likely to:

A)order the advertiser to stop running the ad.
B)refer the case to an industry trade association.
C)refer the matter to an appropriate federal agency.
D)impose a fine.
E)lodge a class action suit for customers who have been in some way negatively affected by the ad.
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54
Which of the following statements describes the media's role in the self-regulation of advertising?

A)The media must accept all the advertising campaigns they receive because of the First Amendment that guarantees the freedom of speech.
B)The media cannot refuse to accept advertising for an entire product class such as hard liquor.
C)The media can refuse to accept individual ads they find offensive or objectionable.
D)The media is expected to reject ads that are targeted toward children and older adults.
E)The broadcast is required by law to reject political ads.
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55
Federal regulation of advertising originated in 1914 with the passage of the _____ Act.

A)Information Technology
B)Advertising Self-Regulatory
C)Federal Consumer Protection
D)Federal Trade Commission
E)Central Hudson
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56
The three major participants in the advertising process that work individually and collectively to encourage truthful, ethical, and responsible advertising are:

A)advertisers, advertising review boards, and the cable operators.
B)creative boutiques, copywriters, and consumer panels.
C)consumer panels, advertisers, and agencies.
D)advertisers, advertising agencies, and the media.
E)advertisers, the government, and the television networks.
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57
Certain magazines regularly test the products they advertise and offer a "seal of approval" and refunds if the products are later found to be defective. They do so in order to:

A)enhance the credibility of the publication.
B)encourage advertisers to buy more media space.
C)eliminate puffery in their ads.
D)discourage comparative advertising.
E)avoid questionable advocacy advertising.
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58
The U.S. Supreme Court established the _____, a four-part test, to determine restrictions on commercial speech.

A)Virginia Consumer Council Test
B)Free Speech Matrix
C)First Amendment Analysis
D)California Test of Affirmation
E)Central Hudson Test
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59
Which of the following statements is true of the Electronic Retailing Self-Regulation Program (ERSP)?

A)The mission of the ERSP is to discourage advertising and marketing in the electronic retailing industry that contains comparative advertising.
B)The majority of claims reviewed under the ERSP program are for online advertising, including search media optimization and social media marketing.
C)ERSP works under the scope of the Electronic Retailing Association (ERA) to create a predisposed self-regulatory system.
D)Spam e-mails along with Internet pop-up ads that lead to further e-commerce are in the ERSP's purview as well as advertising on TV shopping channels.
E)ERSP is an initiative of the Federal Trade Commission (FTC) to work toward the self-regulation of electronic retailing.
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60
Which of the following statements is true of the National Advertising Review Council (NARC)?

A)Cases brought to NARC are subject to extensive publicity as compared to the cases brought to court.
B)It is very expensive to get a case solved through NARC.
C)The NARC takes longer to solve a case when compared to the Federal Trade Commission (FTC).
D)The NARC can handle cases at a lower cost as compared to a court.
E)The NARC is a government agency regulating advertising agencies.
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61
Esme Inc., a manufacturer of cosmetics, ran an ad campaign in which it claimed that Esme's "Vivid" range of water-proof mascara is the best mascara in the world. It also claimed that the mascara gives 10 times more volume to the eyelashes and provides more definition to the eyes than any other mascara brand. This scenario is an illustration of:

A)deception.
B)superlative advertising.
C)unfairness.
D)puffery.
E)unethical advertising.
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62
The three major divisions of the Federal Trade Commission (FTC) are the bureaus of:

A)employment, national security, and trade.
B)governance, compliance, and cooperation.
C)regulation, restriction, and economic reconstruction.
D)economics, consumer protection, and competition.
E)distribution, distillation, and consumer diversity.
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63
The _____ gave the Federal Trade Commission (FTC) the power to issue cease-and-desist orders and levy fines on violators.

A)Central Hudson Test
B)National Advertising Review Board
C)Lanham Act
D)Wheeler-Lea Amendment
E)Sherman Antitrust Act
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64
The use of superlatives such as "greatest," "best," and "finest" in advertising would constitute:

A)an unfair claim.
B)puffery.
C)deception.
D)an affirmative disclosure.
E)advertising substantiation.
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65
Which of the following statements about the use of puffery in advertising is true?

A)Puffery is a sales presentation that praises the item to be sold based on objective opinions.
B)Puffery was banned in a 1996 revision of the Uniform Commercial Code.
C)According to the Federal Trade Commission, consumers believe in puffery.
D)Superlatives such as greatest, best, and finest are puffs that are often used in advertising.
E)Puffery is illegal only if it eliminates a competitive advantagE.Puffery has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts." Superlatives such as greatest, best, and finest are puffs that are often used.
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66
Which of the following divisions of the Federal Trade Commission (FTC) protects consumers from deceptive and unsubstantiated advertising and enforces the provisions of the FTC Act that forbid misrepresentation, unfairness, and deception in general advertising at the national and regional level?

A)The Division of Consumer Advertising & Protection
B)The Division of Advertising Broadcasts
C)The Division of Marketing Practices
D)The Division of Advertising Practices
E)The Division of Economic Practices
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67
Which of the following is the best example of the use of puffery in advertising?

A)A bank advertises free checking with a minimum balance of $1,000.
B)A tire manufacturer advertises a 50,000-mile guarantee for its tires.
C)A manufacturer of premium chocolates claims that it makes the finest chocolates in the world.
D)A popular shampoo brand advertises that it has been proven to be effective in preventing dandruff.
E)A provider of courier services advertises guaranteed overnight delivery servicE.In the above scenario, the manufacturer of premium chocolates claiming that it makes the finest chocolates in the world is using puffery in advertising.Puffery has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts."
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68
The first section of the Magnuson-Moss Act of 1975:

A)defined commercial speech.
B)provided guidelines for the review and evaluation of all child-directed advertising.
C)defined the requirements for advertising substantiation.
D)was concerned with the misrepresentation of premiums when used in sales promotions.
E)dealt with consumers' rights regarding product warranties.
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69
_____ are industrywide guidelines used by the Federal Trade Commission (FTC) that define unfair practices before they occur.

A)Trade regulation rules
B)Affirmative disclosures
C)Corrective advertising disclosures
D)Cease-and-desist orders
E)Advertising guidelines
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70
The _____ empowered the Federal Trade Commission to regulate unfair or deceptive practices in commerce including those in advertising.

A)Lanham Amendment
B)Sherman and Clayton Antitrust Act
C)Wheeler-Lea Amendment
D)Food and Drug Administration Act
E)Consumer Protection Act
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71
The _____ gave the Federal Trade Commission (FTC) the power to establish trade regulation rules.

A)Magnuson-Moss Act
B)FTC Act
C)Wheeler-Lea Amendment
D)Sherman Antitrust Act
E)Trade Regulation Act
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72
_____ has been legally defined as "advertising or other sales presentations which praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely and generally, stating no specific facts."

A)Deceptive advertising
B)Unfairness
C)Comparative advertising
D)Puffery
E)Affirmative disclosure
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73
Scrumptious Inc., an American food and beverages company, claims that "Scrumptious makes the world's best chocolate fondant." This is an example of:

A)sales promotion.
B)superiority advocacy.
C)puffery.
D)comparative advertising.
E)trickery.
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74
Controversy over the Federal Trade Commission's (FTC's) authority to regulate unfair advertising practices began in 1978, when the agency relied on this mandate to formulate its controversial _____ rule restricting advertising to children.

A)"cease-and-desist"
B)"kid vid"
C)affirmative disclosures
D)Wheeler-Lea
E)Magnuson-Moss
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75
Which of the following divisions of the Federal Trade Commission (FTC) deals with antitrust and consumer protection investigations?

A)The Bureau of Economics
B)The Bureau of Compliance
C)The National Advertising Review Board
D)The Bureau of Reconstruction
E)The Trade Regulation Bureau
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76
Under the original Federal Trade Commission Act of 1914, the FTC:

A)was given the power to issue cease-and-desist orders against firms engaging in deceptive practices.
B)was given the power to pursue corrective advertising remedies to deceptive practices.
C)could not prohibit false advertising unless there was evidence of injury to a competitor.
D)was given the power to regulate all false and deceptive advertising practices that might injure competition or mislead consumers.
E)could not enforce antitrust laws or protect major competitors from one another.
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77
According to Federal Trade Commission (FTC) policy, the basis for determining _____ is that a trade practice causes substantial physical or economic injury to consumers, could not reasonably be avoided by consumers, and must not be outweighed by countervailing benefits to consumers or competition.

A)unfairness
B)deception
C)puffery
D)affirmative disclosure
E)cease-and-desist orders
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78
The Federal Trade Commission (FTC) takes the position that:

A)consumers cannot distinguish between factual information and puffery.
B)puffery has detrimental effect on consumers' purchase decisions.
C)consumers recognize puffery and don't believe it.
D)puffery is illegal under the Wheeler-Lea Act.
E)consumers believe in puffery.
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79
The _____ is the division of the Federal Trade Commission (FTC) that is responsible for investigating cases involving deceptive or misleading advertising.

A)Bureau of Economics
B)Bureau of Competition
C)National Advertising Review Board
D)Bureau of Consumer Protection
E)Trade Regulation Bureau
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80
The Federal Trade Commission (FTC) defines _____ as an express or implied statement contrary to fact.

A)selective exposure
B)affirmative disclosure
C)selective retention
D)misrepresentation
E)comparative disclosure
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Unlock for access to all 126 flashcards in this deck.