Transcript Deceptive
4.01 Foundational knowledge of promotion Part F: Explain the need for truthfulness in promotional messages and claims 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 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 What makes an ad Deceptive • 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 Unfair • 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 Laws that protect • Consumers from unwanted promotions – FTC adopted rules that prohibit sending unwanted commercial email messages to wireless devices without prior permission. Took effect, March 2005 – FTC adopted detailed rules that restrict sending unwanted commercial email messages to computers 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 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 Regulation of • Telemarketing – National Do Not Call Registry: www.donotcall.gov or 1-888-382-1222. 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 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 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 Reasons for regulation • Protect children • Protect consumers from false or misleading information • Health risks involved • Protection against harm to animals 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