Chapter 24

Question 1

deceptive ads

Answer 1

unfair or deceptive advertising: Section 5 of FTC Act prohibits unfair and deceptive acts of practices

illegal

regulated by FTC (Federal Trade Commission)

Question 2

in order for the ads to deceptive ads - must be false or misleading facts (A)

Answer 2

1) must be truthful and not misleading
2) must have evidence to back up claims

Question 3

what does it mean when deceptive ads cannot be unfair (B)

Answer 3

likely to cause substantial consumer damage/could not be avoided/not outweighed by benefit

Question 4

Airborne example with deceptive ads

Answer 4

• Airborne ads claimed prevented colds
• no scientific studies to support claims
• had to pay money in class action lawsuit and settlement
• later toned down claims and now calls formulas immune boosters and is a dietary supplement

Question 5

puffery

Answer 5

exaggerated advertising, blustering and boasting

legal

“worlds best coffee”
“number 1 pizza”

Question 6

example of puffery with Papa Johns

Answer 6

“better ingredients. Better pizza.” - Papa Johns

Pizza Hut brought lawsuit challenging false advertising

courts said was puffery because word “better” is in a context that is unquantifiable

Question 7

FTC Actions Against Deceptive Advertising

Answer 7

remedies can be:

• remove product/revise ad so no longer deceptive
• money award (reimburse consumer)
• impose counter ads (correct ads)

Question 8

bait and switch ads

Answer 8

illegal

promoting an item that the store does not have at an unbelievably low price just to get people to come to their store

but when consumers arrive, salesperson tells them too late or sold last product - then offer better deal/higher priced item (more than what was advertised)

Question 9

TCPA

Answer 9

Telephone Consumer Protect Act

prohibits automated solicitation using automatic telephone dialing system or a prerecorded voice

file complaint with FCC

donotcall.gov

Robokiller app

Question 10

Robotext

Answer 10

FCC rules ban text messages sent to mobile phone using autodialer unless you previously gave consent to receive the message or the message is sent for emergency purposes - file complaints with FCC

• commercial texts must be in writing
• non commercial informational texts consent may be oral
• ban applies even if your mobile phone not placed on national Do-Not-Call-List

Federal Communications Commission

Commerical text - ad

Question 11

Postal Reorganization Act of 1970

Answer 11

provides any unsolicited merchandise sent by mail is free to be used by the recipient as he she sees fit with no obligation by the recipient to the sender

example: company sends you merchandise in the mail magazines - did not order gift

Question 12

truth in lending act

Answer 12

only applies to consumer loans - not small business loans

lenders - must offer loans on a regular basis, which the law defines at least 25x per year

many small business who finance their own products are exempt from the provision of the Truth in Lending Act

lenders have to be honest about money borrowerws owe

Question 14

under the truth and lending act all the terms of a consumer loan must be clearly and conspicuously disclosed:

Answer 14

• annual percentage rate
• finance charge
• amount financed
• total payments

Question 15

truth in lending - credit card example

Answer 15

liability to $50 per card for unauthorized charges to existing credit card

if unsolicited credit card application sent in mail and it is stolen - then liability 0

Question 16

fair credit reporting act

Answer 16

regulates consumer credit reporting agencies

rules to combat identity theft