Chapter 14 Flashcards
What does the FDA (Food and Drug Administration) monitor?
ensures food quality and drug safety, screens advertising on food and drugs, and oversees the packaging and labeling of products
What does the FCC (Federal Communications Commission) monitor?
regulates television, radio, and the telephone industry
*controls operating licenses and jurisdiction but doesn’t control advertisements (with the exception of those targeted at children)
What does the FTC (Federal Trade Commission) monitor?
monitors potentially deceptive, false, or misleading marketing and prevents antitrust violations
*can enforce fines for violations
What is puffery?
when a firm makes an exaggerated statement about it goods or services that does not constitute a factual statement (whereas as a claim can be proven true or false)
(e.g. saying something is the “best,” “greatest,” or “finest”– “better” is not always protected as puffery)
What does the FTC test of substantiation require?
requires that a claim or promise must be proven with data, facts, or reliable evidence
e.g. Kleenex Cottonelle proved they were softer
What is a consent order?
a directive issued when the FTC believes a violation has occurred
*companies that sign a consent order agree to stop the disputed practice without admitting guilt
What is a cease and desist order?
requires a company to stop a particular practice or advertisement
*occurs after a formal proceeding has occurred
What is corrective advertising?
ads that bring consumers back to a neutral state, so consumers once again hold beliefs they had prior to being exposed to false or misleading advertisement
What are business ethics?
moral principle that serve as guidelines
What is brand infringement?
when a company creates a brand name that closely resembles a popular or successful brand
What is domain squatting?
buying domain names (e.g. kohls.com) that are valuable to specific people or businesses in the hopes of making a profit by reselling the name
