Marketing ch 14

Question 1

What does the FDA monitor?

Answer 1

The Food and Drug Administration is responsible for protecting the public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices; and by ensuring the safety of our nation’s food supply, cosmetics, and products that emit radiation.

Question 2

What does the FCC monitor?

Answer 2

Who controls all of the non-governmental agencies in the US for radio communications for appropriate usage. Require all broadcast advertisements to disclose
source of funding for ad.

Question 3

What does the FTC monitor?

Answer 3

FTC protects consumers and promotes competition
Monitors: Unfair and Deceptive Marketing Practice
Levy fines
Three Powers:
Investigate cases of unfair and deceptive advertising
To stop unfair and deceptive marketing practices
To levy fines
Created in 1915 by the FTC Act
Presides over Marketing Communications
Originally enforced antitrust laws
Grantyed FTC access to courts
Investigation begins from:
Consumers, businesses, congress, media - Businesses are the main ones

Question 4

What is puffery?

Answer 4

In contrast to Deception, Puffery is an exaggerated statement that is not factual statement or claim. (eg. Best, greatest, and finest. [better is a claim that must be supported])
Deceptive if:
A substantial number of people or a typical person is left with false impressions or misrepresentation
The misrepresentation includes people or typical person to make a purchase.

Question 5

What does The FTC test of substantiation require?

Answer 5

Endorser must be truthful
Must represent endorser’s personal experience or opinion
Expert endorsement must be based on legitimate tests

Question 6

What is a consent order?

Answer 6

Issued when FTC believes a law has been violated
Company agrees to stop (or settles)
Does not admit guilt
FTC Process:
If company feels consent order is wrong, and wants to appeal or does not abide by the consent order and continues the marketing practice, the next step is an administrative complaint. (before tan administrative judge and is handled just like a court proceeding)
Filed if no consent order or settlement agreement
Formal proceeding
Administrative judge
Both sides submit evidence
If ruled as a violation, then… Cease and desist order:

Question 7

What is a cease and desist order?

Answer 7

Requires company to stop
Company can appeal
If they appeal, the next step would be the full FTC commission.
Then to the US Court of Appeals 
and then to the US Supreme Court.
Most cases stop with a consent order.
Few will go to the cease and desist order, 
And very few get appealed any further. 
If found guilty, may have to pay fines.

Question 8

What is corrective advertising?

Answer 8

Where the company is required to correct the false and deceptive ad, and bring people back to a state before the deceptive ad

Question 9

Why might someone contact the Better Business Bureau?

Answer 9

Council of BBC keeps record of complaints

Provides summary report on companies