MC 4163 — FINAL EXAM STUDY GUIDE:

Regulating Deceptive Advertising; Defenses; Liability

• Self-regulation
  • What are the NAD and CARU? What do they do?
  • If an advertiser disagrees with an NAD or CARU decision, to whom can it appeal?
  
   
  
• Lanham Act
  • Be familiar with how companies have won lawsuits against competitors under the Lanham Act. What important lesson can the Schick Manufacturing v. Gillette Co. case teach undergraduates majoring in advertising?
  • What is the Lanham Act intended to do?
  • What does Section 43(a) create? What does it allow companies to sue competitors over?
  • Are companies prohibited from comparative advertising?
  • What is the three-part test that makes it easier for plaintiffs to win Lanham Act lawsuits for false advertising?
  • What monetary claims can the plaintiff win?
  • Why do consumers, as opposed to competitors, have a much more difficult time winning under the Lanham Act?
  
   
  
• Federal Trade Commission
  • What is the FTC? Its background and purpose? How many members? How are they selected? What limitation is placed upon the FTC membership?
     
    
  • What is the FTC's basic definition of advertising?
     
    
  • How is it that the FTC can regulate nearly all advertising in the country?
     
    
  • The FTC's rules against deceptive advertising break down into what two critical components? What should advertising majors remember from those rules?
     
    
  • Know the FTC's definition of deceptive advertising and how the elements have been applied.
    • From whose perspective are advertisements and sales practices viewed?
    • Are advertisers responsible for every interpretation or behavior by a consumer?
    • What does it mean for the FTC to evaluate the entire advertisement for misrepresentation? May accurate information in text remedy a false headline? Why? May an advertiser correct a misrepresentation in an advertisement with point-of-sale information? Qualifying disclosures must be what?
    • Why doesn't the FTC generally bring cases based on subjective claims? What are examples of puffery?
    • What other products or services does the FTC scrutinize in a less critical manner? Why?
    • What does the FTC mean by "material"? Which categories of information are considered material?
    • When are mock-ups and fake demonstrations deceptive?
    
     
    
  • What are the FTC's tools to combat deceptive ads? Understand consent agreements. Express claims require what level of substantiation? Understand corrective advertising.
     
    
  • Understand the FTC's regulatory process. Under what circumstances may a court reverse an FTC ruling?
  
   
  
• What is the basic defense against any false advertising complaint?
   
  
• When may an ad agency be held liable for false advertising?
   
  
• Why is deceptive advertising not granted any constitutional protection?
   
  
• How do Oklahoma's statutes define deceptive advertising?
   
  
• Be familiar with the types of deceptive advertising targeted by Oklahoma's Deceptive Trade Practices Act.
  • What civil lawsuits may be brought against deceptive advertising? What damages may the plaintiff recover?
     
    
  • What liability do the media have for disseminating deceptive advertising?
  
   
  
• KFC
  • What specific claims were considered deceptive?
     
    
  • Why were the claims deceptive? (What kind of lie did KFC tell?)
     
    
  • To which consumer group was the advertising directed?
     
    
  • In signing the consent order, did KFC admit to any wrongdoing? What penalties would it face if it violates the consent order?
  
   
  

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