Chapter 20 – Regulation of Advertising and Promotion
41. (p. 697) The _____ gave the Federal Trade Commission the power to establish trade
regulation rules.
42. (p. 697) The Magnuson-Moss Act of 1975:
Chapter 20 – Regulation of Advertising and Promotion
43. (p. 697) _____ are industry-wide rules used by the Federal Trade Commission that define
unfair or deceptive practices.
44. (p. 697) According to Federal Trade Commission policy, the criteria for determining _____
are (1) a trade practice causes substantial physical or economic injury to consumers, (2) could
be reasonably avoided by consumers, and (3) it must not be outweighed by countervailing
benefits to consumers or competition.
Chapter 20 – Regulation of Advertising and Promotion
45. (p. 697) Controversy over the FTC’s authority to regulate unfair advertising practices began
in 1978, when the agency relied on this mandate to formulate its controversial _____ rule
restricting advertising to children.
46. (p. 698) _____ has been legally defined as “advertising or other sales presentations which
praise the item to be sold with subjective opinions, superlatives, or exaggerations, vaguely
and generally, stating no specific facts.”
Chapter 20 – Regulation of Advertising and Promotion
47. (p. 698) Nestlé claims “Nestlé makes the very best chocolate,” Snapple advertises that its
beverages are “made from the best stuff on Earth,” are all examples of:
48. (p. 698) An advertiser who says that his product is the “best,” “greatest,” etc. is using ____,
which is a(n) ______ form of advertising.
Chapter 20 – Regulation of Advertising and Promotion
49. (p. 698) Which of the following is the best example of the use of puffery in advertising?
50. (p. 698) A prepackaged milkshake sold in convenience stores advertises that it has more
chocolate-taste than shakes purchased at restaurants. This is an example of:
Chapter 20 – Regulation of Advertising and Promotion
51. (p. 698) The Federal Trade Commission takes the position that:
52. (p. 698) Which of the following statements about the use of puffery in advertising is true?
Chapter 20 – Regulation of Advertising and Promotion
53. (p. 699) The Federal Trade Commission (FTC) defines _____ as an express or implied
statement contrary to fact.
54. (p. 699) The key elements in the FTC’s definition of deception are that the representation,
omission, or practice must be likely to mislead the reasonable consumer and that it has:
Chapter 20 – Regulation of Advertising and Promotion
55. (p. 699) According to the FTC’s definition of deception, a representation, omission, or
practice has materiality if it:
56. (p. 699) According to the Federal Trade Commission _____ exists if there is a
misrepresentation, omission, or practice that is likely to mislead the consumer acting
reasonably in the circumstances to the consumer’s detriment.
Chapter 20 – Regulation of Advertising and Promotion
57. (p. 699) As per FTC, _____ occurs when qualifying information necessary to prevent a
practice, claim, representation, or reasonable belief from being misleading is not disclosed.
58. (p. 699; 700) Which of the following is one of the two of the factors the FTC considers in
evaluating an ad for deception?
Chapter 20 – Regulation of Advertising and Promotion
59. (p. 700) The Federal Trade Commission may require affirmative disclosure if:
60. (p. 701) In 1995, the Federal Trade Commission issued a complaint against the
manufacturers of New Balance and Saucony athletic shoes based on their “Made in the USA”
advertising claims. The FTC claimed the ads were misleading since imported soles and upper
parts were used to make the shoes. These claims can be viewed as deceptive under the FTC’s
requirement of:
Chapter 20 – Regulation of Advertising and Promotion
61. (p. 702) Federal Trade Commission’s (FTC’s) _____ program required advertisers to have
supporting documentation for their claims and to prove the claims are truthful.
62. (p. 702) Federal Trade Commission’s advertising substantiation program requires advertisers
to substantiate their claims:
Chapter 20 – Regulation of Advertising and Promotion
63. (p. 702) The Federal Trade Commission requires advertising for any product that is
sweetened with saccharin to contain a warning that saccharin may be hazardous to one’s
health. This requirement falls under the FTC’s _____ requirement.
64. (p. 702) Under which of the following FTC programs might a firm be required to have
product information verifying the veracity of its advertising claims before making any
advertising claims about the product?
Chapter 20 – Regulation of Advertising and Promotion
65. (p. 703) Critics of the FTC’s ad substantiation program argue that:
66. (p. 704) A(n) _____ is an agreement to stop engaging in a particular practice for settlement
purposes only and does not constitute an admission of guilt by the advertiser.
Chapter 20 – Regulation of Advertising and Promotion
67. (p. 704) Which of the following statements about a consent order is true?
68. (p. 705) Under the Wheeler-Lea Amendment, the Federal Trade Commission is empowered
to stop an advertiser from making a specified claim within 30 days and refrain from doing so
until a hearing is held. This is known as:
Chapter 20 – Regulation of Advertising and Promotion
69. (p. 705) Cease-and-desist orders:
70. (p. 705) The FTC program that requires an advertiser who is found guilty of false or
misleading advertising claims to run ads to rectify the situation is known as: