1. 4.01 Foundational knowledge of promotion
Part F: Explain the need for truthfulness in promotional messages and claims

2. Definition & Need
Truthfulness refers to the ACT of giving TRUE information or facts about something
Is useful to customers because it helps them buy or use products satisfactorily
Will improve the customer’s purchase or use experience
Can enhance patronage of goods , enhance resale, repeat business
Can make a dynamic contribution to the economy, creating jobs

3. How misleading promo is regulated
Federal Trade Commission (FTC) – regulatory power to step in and end any potentially misleading or deceptive claims
Advertising must be truthful and non-deceptive
Advertisers must have evidence to back up their claims
Advertisements cannot be unfair

4. What makes an ad Deceptive Unfair
If it contains a statement or omits information that is likely to mislead consumers acting reasonable under circumstances
Is material – important to a consumer’s decision to buy or use the product
Consumers are also protected by state laws
If it causes or is likely to cause substantial consumer injury which a consumer could not reasonable avoid
It is not outweighed by the benefit to consumers

5. Laws that protect Consumers from unwanted promotions
FTC adopted rules that prohibit sending unwanted commercial messages to wireless devices without prior permission. Took effect, March 2005
FTC adopted detailed rules that restrict sending unwanted commercial messages to computers

6. Laws that protect Children
Children’s Advertising Review Unit (CARU): promotes responsible children’s advertising
CARU sets high standards to assure advertising is not deceptive, unfair or inappropriate
CARU monitors and reviews advertising directed to children, initiates and receives complaints about advertising practices, and determines violations

7. Laws that protect Children (continued)-
Federal Communications Commission (FCC) carried out the Children’s Television Act of 1990
Limits amount of commercials to be aired in certain children’s programming to 10.5 minutes per hour on weekend and 12 minutes per hour on weekdays
Programming at issue is original productions for audiences 12 and younger

8. Regulation of Telemarketing
National Do Not Call Registry: or Your number is registered for 5 years
Telemarketers have to purchase the list from the FTC and delete numbers from their registry
Violators are subject to penalties of $11,000 per call
Exemptions: preexisting relationship, surveys, political or charitable soliciation

9. Regulation of Data privacy
Children’s Online Privacy Protection Rule (COPPA), enacted by Congress in 1998 – parents control what information is collected online, protects 13>
Health Insurance Portability and Accountability Act (HIPPA) – covers handling of medical records
Gramm-Leach-Billey Act of 1999 (GLBA) – covers handling of financial records

10. Actions taken by FTC to correct misleading advertising
1st – establish that advertising is false or misleading
Typical inquiry follows these steps:
looks at the ad from the point of view of the "reasonable consumer"
looks at both "express" and "implied" claims
looks at what the ad does not say
looks at whether the claim would be "material"
looks at whether the advertiser has sufficient evidence to support the claims in the ad

11. Reasons for regulation
Protect children
Protect consumers from false or misleading information
Health risks involved
Protection against harm to animals

12. Legality of products used in advertising can vary from country to country
Laws vary from country to country
Don’t forget about cultural issues
Be flexible about the promotion structure
Be prepared to administer the promotion differently
Privacy
Don’t rely on One “Representative” Country
Budget time and Money to get it done right