Advertising and Sales Promotion
Chapter
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CHAPTER 13
Advertising and Sales Promotion
Legal and Ethical Issues Affecting
Advertising
13.1 Government Regulation
13.2 Self-Regulation
13.3 Ethics in Advertising
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CHAPTER 13
Advertising and Sales Promotion
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)
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
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)
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
Advertising Industry Accountability
National Advertising Review Board (NARB)
Better Business Bureau (BBB)
Advertising agencies
Media organizations
Competition
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CHAPTER 13
Advertising and Sales Promotion
Consumer Awareness
National Consumers League (NCL)
Consumer Federation of America (CFA)
Federal Citizen Information Center (FCIC)
Consumers Union
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CHAPTER 13
Advertising and Sales Promotion
13.3 Ethics in Advertising
Goals
Identify the ethical aspects of advertising.
Explain how the FTC assures truth in advertising.
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CHAPTER 13
Advertising and Sales Promotion
13.3 Ethics in Advertising
 Terms
 ethics
 deception
 puffery
 defamation
 subliminal message
 cease-and-desist order
 corrective ad
 affirmative disclosure
 disclaimer
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CHAPTER 13
Advertising and Sales Promotion
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
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CHAPTER 13
Advertising and Sales Promotion
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
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