Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
45) In terms of substantiation of advertising claims, the FTC and the courts state that evidence
presented must be for the exact product being tested, not for a similar product.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-2
46) In terms of substantiation of advertising claims, the FTC and the courts consider the totality
of evidence, not the results of just one study if other studies find different results.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-2
47) Explain the difference between deception and puffery.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-2
48) When the Federal Trade Commission insists that a company stop making a false claim in an
advertisement and that company agrees to stop, it is an example of a(n):
A) legal review.
B) cease and desist order.
C) administrative complaint.
D) consent order.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
11
49) When the FTC makes a judgment against a company for false or misleading advertising,
which of the following would come first?
A) Administrative complaint
B) Cease and desist order
C) Consent order
D) Court-ordered reparations
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
50) An administrative complaint is:
A) a formal proceeding before an administrative law judge used by the Federal Trade
Commission.
B) a formal hearing before the Court of Appeals.
C) a formal hearing before the full Federal Trade Commission.
D) used by the National Advertising Review Board when the NAD cannot solve a complaint.
Question Tag: Definition (Concept)
Objective: 14-3
51) If a consent agreement cannot be reached with a company, the Federal Trade Commission
then issues a(n):
A) cease and desist order.
B) corrective advertising directive.
C) appeal to the Court of Appeals.
D) administrative complaint.
Question Tag: Definition (Concept)
AACSB Category: Ethical understanding and reasoning
Objective: 14-3
52) If at the end of an administrative hearing of an FTC case, the judge feels a violation of the
law has taken place, the judge issues a:
A) cease and desist order.
B) consent agreement.
C) corrective advertising directive.
D) trade regulation ruling.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
12
53) If after an administrative hearing a company is still not satisfied with the ruling of the FTC,
the next step would be to:
A) appeal the decision to the Court of Appeals.
B) hold a hearing before the full FTC.
C) appeal the decision to the Supreme Court.
D) hold a hearing before an administrative law judge.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
54) Company leaders who are not satisfied with the ruling of the full FTC can appeal to the U.S.
Court of Appeals. The danger in appealing is:
A) the company does not have the opportunity to present oral arguments.
B) the cease and desist orders are normally upheld.
C) a company may be ordered to pay civil penalties.
D) the decision is not binding.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
55) Occasionally the FTC bypasses its typical process and uses the court system to stop an unfair
marketing practice. Of the following, which would be the most likely to trigger this type of
action?
A) A company violates an FTC cease and desist order
B) A full commission of the FTC is not available to hear a case
C) A company violates a consent order
D) A company appeals a consent order
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-3
13
56) Occasionally the Federal Trade Commission bypasses its typical process and uses the court
system to stop an unfair or deceptive marketing practice. Of the following, which would be the
most likely to trigger this type of action?
A) The actions of a company are so severe that immediate action is needed
B) A full commission of the FTC is not available to hear a case
C) A company violates a consent order
D) A company appeals a consent order
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-3
57) Which agency has the authority to order corrective advertising?
A) Federal Communications Commission
B) Federal Trade Commission
C) Food and Drug Administration
D) Bureau of Alcohol, Tobacco, and Firearms
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
58) When a company must pay for ads that refute false claims it made in previous ads, it is called
a(n):
A) consent order.
B) administrative ruling.
C) cease and desist order.
D) corrective advertisement.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
59) The Federal Trade Commission orders corrective advertising in:
A) only the most severe instances of deceptive and misleading advertising.
B) cases involving advertising to children.
C) cases that are appealed to the U.S. Court of Appeals.
D) most cases that are investigated.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-3
14
60) A trade regulatory ruling by the Federal Trade Commission applies to:
A) wholesalers.
B) international companies.
C) an industry.
D) retailers.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
61) The funeral industry was sanctioned by the FTC in 1984 and 1994 for practices common in
the industry that the FTC believed were not fair to consumers. To correct these misleading
practices, the FTC issued a:
A) cease and desist order.
B) consent order.
C) corrective advertising order.
D) trade regulation ruling.
Question Tag: Application
AACSB Category: Reflective thinking
Objective: 14-3
62) Recently the FTC investigated bloggers who were being sponsored to pitch products. The
FTC ruled that the blogger must disclose any type of compensation that is received. This is an
example of a:
A) cease and desist order.
B) consent order.
C) corrective advertising order.
D) trade regulation ruling.
Question Tag: Application
AACSB Category: Application of knowledge
Objective: 14-3
63) Anyone can file a complaint to the FTC concerning what someone deems to be a deceptive
or misleading advertising or marketing practice.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
15
64) Complaints that are made to the Federal Trade Commission are made public and registered
on the FTC's website.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
65) The first step a firm can take to end a FTC investigation of a complaint is the signing of a
consent order.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
66) When a consent order issued by the Federal Trade Commission is signed, the company has
agreed to a corrective advertising program.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
67) When a company's management team signs a consent order issued by the FTC they agree to
stop the advertisement or marketing practice and they admit they are guilty of false or deceptive
advertising.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
68) When a company agrees with the Federal Trade Commission and signs a consent order, the
company agrees to stop the ad or marketing practice and also agrees to pay civil penalties.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
16
69) If a consent agreement cannot be reached after an investigation by the Federal Trade
Commission, the case would next go to the full commission.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
70) When the FTC issues an administrative complaint and an administrative judge rules a
violation has occurred, the judge issues a cease and desist order.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
71) Cases before the full commission of the FTC can be appealed to the U.S. Court of Appeals
and even to the U.S. Supreme Court.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
72) The FTC can use the court system to stop unfair and deceptive advertising and
communication practices but must go through the normal steps of starting with a consent
agreement.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 14-3
73) The Federal Trade Commission has the power to order firms to prepare and disseminate
corrective advertising.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
17
74) When the Federal Trade Commission orders a firm to prepare corrective advertisements, the
goal is to bring people back to the neutral state that existed before the false and deceptive
advertising was used by the company.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
75) The large number of cases of false and misleading advertising has lead the FTC to order
corrective advertising a substantial number of times.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 14-3
76) When the Federal Trade Commission issues a trade regulating ruling, the ruling applies to
every firm in an industry, whether the individual company is guilty or not guilty of the marketing
practice in question.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
77) Before issuing trade regulation rulings, the FTC normally holds a public hearing and accepts
both oral and written arguments.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
78) Federal Trade Commission industry regulation rulings cannot be challenged by an appeal to
the U.S. Court of Appeals.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 14-3
18
79) The NARB is supported by the Federal Trade Commission and has legal authority over cases
it reviews.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 14-3
80) Identify the typical steps in an FTC investigation sequence from the initial complaint to a
decision that is appealed to the Supreme Court.
Question Tag: Definition (Concept)
AACSB Category: Ethical understanding and reasoning
Objective: 14-3
81) What is a trade regulation?
Question Tag: Definition (Concept)
Objective: 14-3
82) If Megan wants to know if people have complained about a particular health club being
unsafe or unclean, she should contact the:
A) National Advertising Division.
B) Federal Trade Commission.
C) Better Business Bureau.
D) National Advertising Review Board.
Question Tag: Application
AACSB Category: Application of knowledge
Objective: 14-4
19
83) If Isabelle contacted a local Better Business Bureau about a particular landscaping service,
she would receive a:
A) detailed report of all complaints filed against the company.
B) report about any complaints that were filed against the company by individuals.
C) copy of all communications the BBB had with the particular firm.
D) carefully worded report about any complaints that have been filed with the BBB against the
company.
Question Tag: Application
AACSB Category: Application of knowledge
Objective: 14-4
84) The NAD of the Council of Better Business Bureaus becomes involved in all of the
following except:
A) cases of mail fraud.
B) collecting information about misleading advertising.
C) negotiating modification of ads deemed to be misleading.
D) dismissing unsubstantiated complaints about an advertisement.
Question Tag: Definition (Concept)
AACSB Category: Ethical understanding and reasoning
Objective: 14-4
85) Chase files a complaint with his local Better Business Bureau about an advertisement he
feels is misleading and deceptive. The BBB would:
A) keep a copy of the complaint in the company's file for future use if someone asked about that
particular company.
B) refer the complaint to the National Advertising Division.
C) refer the complaint to the National Advertising Review Board.
D) refer the complaint to the Federal Trade Commission.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 14-4
20
