Exam 14: Regulations and Ethical Concerns

Puffery exists when a firm makes an exaggerated statement about a good or service, while a claim is a factual statement made about a good or service.

In terms of ethical frameworks for reasoning, a method of decision making based on treating all people fairly and consistently is:

Although giving or receiving bribes in business-to-business interactions is illegal in the United States, in some countries, such as France and Germany, bribes are accepted and companies may even deduct the amount as a legitimate income tax expense.

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.

The substantiation test for false and misleading advertising requires:

The Advertising Self-Regulatory Council (ASCR) of the Council of Better Business Bureaus is supported by the Federal Trade Commission and does have legal authority over cases it reviews.

Anyone can file a complaint to the FTC concerning what he or she deems to be a deceptive or misleading advertising or marketing practice.

The funeral industry was sanctioned by the Federal Trade Commission (FTC) in 1984 and 1994 for practices common in the industry. To correct these misleading practices, the FTC would issue a:

Procedural justice concentrates on the fairness of rewards, punishments, and outcomes.

Ethics are:

The Federal Communications Commission (FCC) has jurisdiction over the content of advertisements transmitted by mass media.

If a customer is concerned about the labeling on a bag of potato chips, the regulatory agency that should be contacted is the:

Stealth marketing involves pitching the benefits of a product to other people without revealing you are paid or compensated by the company to do so.

Brand infringement issues become more complex when a brand is so well established that it may be considered a generic term, such as Kleenex.

Individuals and organizations have responded to the need for a more ethical environment by creating ethics training programs, codes of ethics, and ethics consulting systems.

An administrative complaint is:

Although the word "better" is normally accepted as puffery, the word "best" is somewhat vague and implies a comparison, which has recently been tested through the FTC.

Critics of the beer industry and marketers agree on the following statements about alcohol and underage individuals, except

While sex sells, marketers must be careful and use good judgment in creating ads that are not offensive.

If the Advertising Self-Regulatory Council rules that a firm's advertisements are not substantiated, then it orders the firm to discontinue the ads. This is very similar to the cease and desist order of the Federal Trade Commission.