Customized by Professor Ludlum November 29, 2016 Unit U Customized by Professor Ludlum November 29, 2016 Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning.

The Parthenon, Athens, Greece, 2008

Deceptive Advertising Advertising is deceptive if a consumer would be misled by the advertising claims. __________________________: Vague generalities and obvious exaggerations are permissible and not considered deceptive.

Examples It’s the NUMBER ONE movie in America… Best car ever built… Recommended by dentists…. I promise once I am elected…

Contrast with: Minute Maid’s New “Pomegranate Blueberry” Juice POM complained, their similar product was 100% juice Minute Maid’s product was only ½ of 1% pomegrante/blueberry juice Wall Street Journal, April 22, 2014

Deceptive Advertising Bait and Switch: The advertising of a product at an attractively low price to lure customers in to buy more expensive items.

How did businesses adapt to this regulation How did businesses adapt to this regulation? No more commissioned salespeople

FTC Actions Against Deceptive Advertising The FTC, charged with enforcing federal laws against deceptive advertising, can, in appropriate circumstances: Issue cease and desist orders. With respect to a particular product or advertisement With regard to multiple product orders. Impose counteradvertising.

Why counter-advertising. Council on Tobacco Research http://www

Telemarketing and E-Advertising The Telephone Consumer Protection Act (1991) prohibits automated solicitation using automatic telephone dialing system or a prerecorded voice. Telemarketing and Consumer Fraud and Abuse Prevention Act (1994). FTC’s Telemarketing Sales Rule (Do Not Call Registry).

Consumers responded No land line phones

Door-to-Door Sales Most states requires that, for door-to-door sales, consumers have a post-sale “cooling-off” period during which they can cancel their purchase without obligation. Consumers are given the most favorable benefits of the FTC rule and their own state statutes.

How did businesses adapt to this regulation How did businesses adapt to this regulation? No more door to door salespeople

Online Sales Federal trade commission is enforcing actions against internet marketing scams. Some states (e.g.,California) have enacted state law to enforce fraudulent online marketing and sales practices.

Health and Safety Protection Federal Food, Drug, and Cosmetic Act. This statute protects consumers against adulterated and misbranded foods and drugs. Consumer Product Safety Act. This act created the Consumer Product Safety Commission which has broad regulatory authority over the safety of consumer products.

100,000 tubes of toothpaste on streets of NYC Hello Products sold toothpaste with claim of “99% natural” Problem: “99% Natural” is not really defined by the F.D.A. So toothpaste was discarded http://www.hello-products.com/products/toothpaste Wall Street Journal, March 20, 2014

“Free Range” eggs Unlike in poultry production, there's no government oversight of the term "free range" when it comes to eggs, so companies can more or less interpret it as they see fit.

Credit Protection Consumer Credit is protected by: Truth in Lending Act: Protects credit card holders. Equal Credit Opportunity Act. Fair Credit Reporting Act.

Update May, 2014 Consumer Financial Protection Bureau Payday lenders are scum (rough translation) Wall Street Journal, May 23, 2014