MGMT 311 Exam 2 - FLASHCARDS - Chapter 24
What is deceptive/false advertising?
when a reasonable consumer would be misled by the advertising claim
What was Cruz v. Anheuser-Busch Companies, LLC?
Sheila Cruz and others sued Anheuser-Busch Companies, LLC, for falsely advertising “Bud Light Lime-A-Rita” beverages as “light.” She argued that the word “light” was misleading because the drinks contained more calories than light beer (Bud Light). The court dismissed Cruz’s case, and a federal appellate court affirmed. The Lime-A-Rita beverages were advertised as “Margaritas with a Twist,” so no reasonable consumer would believe they were the same as light beer. Thus, the court concluded that the label was not misleading
What are claims based on half-truths?
The presented information is true but incomplete and may therefore lead consumers to a false conclusion
What is bait and switch advertising?
Advertising a very low price for a particular item that will likely be unavailable to the consumer, who will then be encouraged to purchase a more expensive item
How do we identify bait and switch advertising?
It is the first day of a sale, and the store has sold out of all of the item. The salesperson then shows you a much more expensive item
What does the FTC do when they go after deceptive advertisers?
When the FTC is after our business with deceptive advertising, if we cannot get a negitiated settlement, then the FTC will file a formal complaint
What are the orders and remedies of the FTC if they find your company responsible for deceptive advertising? What are they ordering your company to do?
1) Cease and Desist Order
2) Counter Advertising
3) Multiple Product Orders
4) Damages
5) Restitution
What is a document that instructs a person or company to stop an activity that is considered suspicious or unlawful?
Cease and desist order
What is corrective information for consumers which can be expensive and embarrasing to advertisers?
Counter advertising
What is an example of counter advertising?
Listerine was engaging in deceptive advertising by claiming that the mouthwash prevented colds. Once the FTC found out about their false advertising, they order Listerine to do counter advertising and run ads using the words” contrary to prior advertising, Listerine will not prevent colds”. They had to do this until they had spent 10 million dollars.
What are the remedies of the FTC if they find your company responsible for deceptive advertising?
Damages
Restitution
Who is the plaintiff in a deceptive advertising case?
The FTC
Who is the defendant in a deceptive advertising case?
The company engaging in deceptive advertising
Who do damages go to in deceptive advertising cases?
The plaintiff (FTC). If the FTC wins, they get the money
To who is restitution awarded to in a deceptive advertising case?
The defendant (company being sued)
What is the Texas Deceptive Trade Practices Act (DTPA)?
Texas consumer law that has a long list of deceptive and unfair practices for which a merchant/seller of goods can be liable
What are remedies under the DTPA?
Triple DAS, attorney fees, and costs of court
What act prohibits telephone solicitation using automatic dialing or a prerecorded voice?
Telephone Consumer Protection Act of 1991 (TCPA)
What act prohibits ads via fax without first obtaining the recipient’s consent?
Telephone Consumer Protection Act of 1991 (TCPA)
Who is the telephone consumer protection act enforced by?
The Federal Communications Commission (FCC)
What is the fine amount for violations of the Telephone Consumer Protection Act?
$11,000 per day
How does the Telephone Consumer Protection Act allow for private lawsuits?
1). Consumer can recover actual monetary loss; or
2). $500 for each violation, whichever is greater.
3). If willful or knowing violation of the Act, court can triple the damages.
What are the requirements of the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994?
a. Before making sales pitch, telemarketer must inform the recipient that the call is a sales call and to identify the seller and the product.
b. Telemarketers must inform recipients of the total cost of the goods, any restrictions in obtaining or using the goods, and whether a sale will be considered final and nonrefundable.
c. Telemarketer must remove a consumer’s name from its list of potential contacts if the consumer requests
What act requires that before making sales pitch, the telemarketer must inform the recipient that the call is a sales call and to identify the seller and the product?
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994