1. CHAPTER 5
ETHICS IN ADVERTISING

2. Ethics in advertising
Advertising- the practice of attracting public attention to a product or business for the purpose of increasing sales.
Dishonest advertising and marketing cause harm through manipulation and exploitation.
False Advertising- making statement about products that the advertiser KNOWS are not true.
Can be about:
How it works
How it is made
How it will affect people (Ex. Cigarette companies)
Consumers eventually figure out the truth
Backlash can be severe (lawsuits)

3. Ethical Problems in advertising
Puffery- statements that are not outright lies, but merely exaggerations.
Ex. Gum company saying their gum is the best taste your mouth ever had.
Illegal or unethical?
FTC (Federal Trade Commission)- regulates advertisers and advertising
Allows puffery
Bait and Switch- advertising a product at a low price while intentionally stocking a low amount in hopes of luring shoppers to buy more expensive items.
Illegal, but difficult to prove
No mandated minimum number of products that must be in stock
If items are limited, the company must:
Clearly state the number in stock
Offer rain checks to customers who request them.

4. Ethical Problems in advertising
Advertising to Children- laws passed to protect children from deception and manipulation.
Children are vulnerable to deceptive advertising
Trouble separating fantasy from reality
Ex. Laws prohibit creators of children’s cartoons from advertising products related to the characters of that program during the broadcast.
Telemarketing- selling directly to people through unsolicited phone calls, s, or faxes.
Computers can dial hundreds of phones, send thousands of faxes and millions of s.
Laws allow people to sign up for “do not call” lists
“Spam” s must allow people to unsubscribe

5. Ethical Standard
Code of ethics- written set of principles and rules intended to serve as a guideline for ethical behavior for individuals under the organization’s authority.
American Advertising Federation (AAF)- wrote Advertising Ethics and Principles
Code sets the professional standard and provides a way to evaluate the ethics of advertisers.
8 Standards of Ethics in Advertising:
Truth
Substantiation
Comparisons
Bait Advertising
Guarantees and Warranties
Price Claims
Testimonials
Taste and Decency

6. Ethical Standard TRUTH Substantiation
Advertising shall tell the truth, and shall reveal significant facts, the omission of which would mislead the public. (AAF)
Lying about a product is unfair to customers who are cheated and exploited by dishonest claims.
2 key parts to the statement
Tell the truth
Omission would mislead the public
Car commercial example (great car, wheels fall off during sharp turns)
Medicine commercials (side effects)
Substantiation
Advertising claims shall be substantiated by evidence in possession of the advertiser and advertising agency, prior to making such claims.
Substantiation is the validation of advertising claims with objective data from independent research.
Burden of responsibility is on the advertiser to be able to prove that all claims are true.
Ex. Headache medicine says it relieves twice as much pain in half the time. Is that true?

7. Ethical Standard Comparisons Bait advertising
Advertising shall refrain from making false, misleading, or unsubstantiated statements or claims about a competitor or his/her products or services
Making false claims and comparisons about competitors is unprofessional and unethical, but also illegal.
Can be sued for libel.
Bait advertising
Advertising shall not offer products or services for sale unless such offer constitutes a bona fide effort to sell the advertising products or services and is not a device to switch consumers to other goods or services, usually higher priced.
Refers to bait and switch

8. Ethical Standard Guarantees and Warranties Price Claims
Advertising of guarantees and warranties shall be explicit, with sufficient information to apprise consumers of their principal terms and limitations or, when space or time restrictions preclude such disclosers, the advertisement should clearly reveal where the full text of the guarantee or warranty can be examined before purchase.
Guarantee- an assurance attesting to the durability or quality of a service or product
Warranty- a written promise to repair or replace a product if it breaks or becomes defective within a specified period of time.
Both are often explained in complex terms that are hidden in small print
Price Claims
Advertising shall avoid price claims which are false or misleading, or saving claims which do not offer provable savings
Fairness and honesty in price claims are required, violations can be hard to prove
May contain disclaimers
Jewelry example

9. Ethical Standard Testimonials Taste and decency
Advertising containing testimonials shall be limited to those of competent witnesses who are reflecting a real and honest opinion or experience
Testimonial- an endorsement of a product by someone claiming to have benefited from its use.
Often celebrities and experts
Very effective sales technique
“What constitutes competent witnesses?” Anyone is capable of a “real and honest opinion or experience” right?
Taste and decency
Advertising shall be free of statements, illustrations or implications which are offensive to good taste or public decency
Special groups closely monitor ads in publications and broadcasts aimed at children and minors
Groups may try to embarrass sponsors into retracting the ads and replacing them with more appropriate content.

10. Ethical Standard Limitations of the Advertising Code of Ethics
For any code to be effective, it must be enforceable and actually enforced
Lack of enforcement of the advertising code represents a problem
Membership in groups such as the AAF is voluntary
Don’t need a license to make a living as an advertiser
AAF has no authority to revoke someone’s license to advertise for violating the code.
Conformity is voluntary.