1. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Chapter 13

2. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Legal and Ethical Issues Affecting Advertising 13.1 Government Regulation 13.2 Self-Regulation 13.3 Ethics in Advertising 2 CHAPTER 13

3. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. 13.1 Government Regulation Goals Explain the need for government regulation of advertising and the role of the Federal Trade Commission. Describe the purpose of other government regulatory agencies. Terms Federal Trade Commission (FTC) Federal Communications Commission (FCC) Food and Drug Administration (FDA) Alcohol and Tobacco Tax and Trade Bureau (TTB) 3 CHAPTER 13

4. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Legal Factors Affecting Advertising Early days of advertising Little or no legal restrictions Misrepresentations, exaggerations, and outright lies Today’s advertising Regulated at many levels Federal State Local 4 CHAPTER 13

5. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Federal Legislation Federal Trade Commission Act of 1914 Food and Drug Act of 1906 Food, Drug, and Cosmetic Act of 1938 Wheeler-Lea Act of 1938 Lanham Act of 1946 Cigarette Labeling and Advertising Act of 1965 Fair Packaging and Labeling Act of 1966 Nutrition Labeling and Education Act of 1990 5 CHAPTER 13

6. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Federal Legislation (continued) Children’s Television Act of 1990 Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 Children’s Online Privacy Protection Act of 1998 Do Not Call Registry Act of 2003 CAN-SPAM Act of 2003 Green Guides 6 CHAPTER 13

7. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. The Federal Trade Commission The nation’s consumer protection agency Government regulatory agency most directly involved in overseeing the advertising industry Bureau of Consumer Protection Protects consumers against unfair, deceptive, or fraudulent practices Develops rules to protect consumers Educates consumers and businesses about their rights and responsibilities Collects complaints about consumer fraud and identity theft Divisions Advertising Practices Division Marketing Practices Division CHAPTER 13 7

8. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Other Government Regulatory Agencies Federal Communications Commission (FCC) Food and Drug Administration (FDA) Alcohol and Tobacco Tax and Trade Bureau (TTB) United States Postal Service (USPS) States and local agencies (FCC) 8 CHAPTER 13

9. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. 13.2 Self-Regulation Goals Explain the concept of self-regulation and identify how it is applied in the advertising industry. Recognize how consumers can regulate business practices. Terms self-regulation consumerism boycott change agents 9 CHAPTER 13

10. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Advertising Industry Accountability National Advertising Review Board (NARB) Better Business Bureau (BBB) Advertising agencies Media organizations Competition 10 CHAPTER 13

11. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Consumer Awareness National Consumers League (NCL) Consumer Federation of America (CFA) Federal Citizen Information Center (FCIC) Consumers Union 11 CHAPTER 13

12. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. 13.3 Ethics in Advertising Goals Identify the ethical aspects of advertising. Explain how the FTC assures truth in advertising. 12 CHAPTER 13

13. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. 13.3 Ethics in Advertising Terms ethics deception puffery defamation subliminal message cease-and-desist order corrective ad affirmative disclosure disclaimer 13 CHAPTER 13

14. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. The Ethical Aspects of Advertising Advertising can be deceptive Advertising can create needs and promote materialism Advertising can be manipulative Advertising can be controversial Advertising can play on people’s fears and guilt Advertising often targets children 14 CHAPTER 13

15. Advertising and Sales Promotion ©2013 Cengage Learning. All Rights Reserved. Truth in Advertising FTC uses the following guidelines to determine if an ad is deceptive. Reasonable consumer Claims express claim implied claim What the ad does not say Material claims Evidence to support the claims 15 CHAPTER 13