what does liklihood of misleading a consumer mean?
the representation, omission or oractice must be likely to mislead the customer
what does perspective of reasonable consumer mean?
the act or practice must be considered from the perspective of the reasonable consumer
what does materiality mean?
misrepresentation or practice is likely to affect consumers purchase decisions
providing useful information, increased price sensitivity and increase in competition from a company leads to what from consumers?
pressure for high quality, pressure to lower prices and forces inefficent firms out of business
the first ammendment includes commercial speech. what is commercial speech?
speech that promotes a commercial transaction
according to the FTC the basis for determining unfair ads is based off of what three principals?
if the ad... causes substancial physical or economic injury could not reasonably be avoided by consumers must not be outweighed by countervailing benefits to consumers
a general mistrust of advertising, abuses from sales promotions or sweepstakes and unethical or deceptive practices involving mail orders, telemarketing etc can lead to what?
major complaints against advertising
what is puffery?
advertising that praises the item to be sold with subjective opinions exagerations etc that are vague and state no specific facts
why do advertisers get away with puffery?
bc it has been deemed as a poetic license or allowable exageration
how can the FTC deal with deception before it occurs?
affirmative disclosure (requires advertisers to include certain infromation about product) and advertising substantiation (requires advertisers to have documentations supporting their claims)
how an the FTC deal with deception after if occurs?
cease and desist orders (requires the ad to be stopped within 30 days and does not allow advertiser to reveal that ad until court) and corrective advertising (make the advertiser send out an additional ad claiming where they went wrong and fixing the info)
what can advertising do for the economy?
make peole aware of products, provide information to consumers, encourage consumption of goods and services
advertising equals market power. what does this mean?
advertising is a way to change consumer tastes, lower sensitivity to price and build brand loyalty
advertising equals information. what does this mean?
advertising provides consumers with useful info, increases proce sensitivity and increases competition