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Misrepresentation In Advertising Essay, Research Paper

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Misrepresentation 2

 

Misrepresentation and Unfairness

 

The Federal Trade Commission ( FTC ) was founded in 1914 after the passage of the Federal Trade Commission Act. The Commission is headed by five Commissioners, nominated by the President and confirmed by the Senate, each functioning a seven-year term. The President chooses one Commissioner to move as Chairman. No more than three Commissioners can be of the same political party.

 

The Federal Trade Commission enforces a assortment of federal antimonopoly and consumer protection Torahs. The Commission seeks to guarantee that the state & # 8217 ; s markets function competitively, and are vigorous, efficient, and free of undue limitations. The Commission besides works to heighten the smooth operation of the market place by extinguishing Acts of the Apostless or patterns that are unjust or delusory ( Federal Trade Commission, 1999 ) . In general, the Commission & # 8217 ; s attempts are directed toward halting actions that threaten consumers & # 8217 ; chances to exert informed pick ( Federal Trade Commission, 1999 ) . Finally, the Commission undertakes economic analysis to back up its jurisprudence enforcement attempts and to lend to the policy deliberations of the Congress, the Executive Branch, other independent bureaus, and province and local authoritiess when requested ( Federal Trade Commission, 1999 ) .

 

The primary duty of the FTC is to maintain the United States economic system free and just. Section 5 of the Federal Trade Commission Act empowers the FTC to forestall unjust methods of competition and unfair or delusory Acts of the Apostless or patterns ( Barnes, Bowers, Langvardt, Mallor, Phillips, 1988 ) .

 

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The Federal Trade Commission Act besides prohibits unjust or delusory Acts of the Apostless or patterns in commercial scenes. This enables the FTC to regulate and modulate a wide scope of activities that disadvantage clients. In modulating activities the FTC would necessitate to turn out an activity is delusory or unjust. If the FTC decides to continue against the alleged wrongdoer, they must come in a formal ailment. The instance would so be heard in a public administrative hearing called an adjudicatory proceeding. A FTC justice would preside over this proceeding. If an entreaty were desired the FTC? s five commissioners would hear the instance. After this measure would be the federal tribunal of entreaties and so the U.S. Supreme Court.

 

The Federal Trade Commission reviews delusory patterns on a individual footing ( Barnes et al, 1988 ) . The tribunal system frequently defers their judgements to the Commission & # 8217 ; s findings. Actual or proven misrepresentation is non required ; a pattern probably to misdirect a consumer is besides delusory under the FTC Act. The Commission may necessitate Sellerss to confirm their claims by demoing a sensible footing for doing such claims ( Barnes et al, 1988 ) .

 

The FTC may get down an probe in different ways. Letterss from consumers or concerns, Congressional enquiries, or articles on consumer or economic topics may trip FTC action ( Federal Trade Commission, 1999 ) . Probes are either public or nonpublic. By and large, FTC probes are nonpublic in order to protect both the probe and the company.

 

If the FTC believes a misdemeanor of the jurisprudence occurred, it might try to obtain voluntary conformity by come ining into a consent order with the company ( Federal Trade

 

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Commission, 1999 ) . A company that marks a consent order need non acknowledge that it violated the jurisprudence, but it must hold to halt the disputed patterns outlined in an attach toing ailment ( Federal Trade Commission, 1999 ) .

 

If a consent understanding can non be reached, the FTC may publish an administrative ailment. If an administrative ailment is issued, a formal proceeding that is much like

 

a tribunal test begins before an administrative jurisprudence justice: grounds is submitted, testimony is heard, and informants are examined and cross-examined ( Federal Trade Commission, 1999 ) .

 

Section 5 of the FTC Act besides prohibits unjust Acts of the Apostless or patterns. The FTC focuses on consumer hurt misdemeanors. The hurt must be significant, must non be outweighed by any countervailing consumer or competitory benefits produced by the challenged pattern, or must be one that consumers could non moderately hold avoided ( Barnes et al, 1988 ) .

 

The individual, partnership, or corporation so complained of shall hold the right to look at the topographic point and clip so fixed and show cause why an order should non be entered

 

by the Commission necessitating such individual, partnership, or corporation to discontinue and abstain from the misdemeanor of the jurisprudence so charged in said ailment. ( U.S. 15:45 ) .

 

The FTC can order a respondent to discontinue prosecuting in a delusory or unjust act ( Barnes et al, 1988 ) . The FTC can besides order a respondent to unwrap information related to the misrepresentation or unfairness ( Barnes et al, 1988 ) . The concluding redress the FTC can order is for a marketer to make disciplinary advertisement ( Barnes et al, 1988 ) . The marketer would be asked to abjure and republish the advertizement. The FTC can besides take a marketer to tribunal seeking civil punishments or consumer damages ( Barnes et al, 1988 ) .

 

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The tribunal shall hold legal power to allow such alleviation as the tribunal finds necessary to right hurt to consumers or other individuals, partnerships, and corporations ensuing from the regulation misdemeanor or the unjust or delusory act or pattern, as the instance may be ( U.S. 15:57b ) . Such alleviation may include, but shall non be limited to, recission or reformation of contracts, the refund of money or return of belongings, the payment of amendss, and public

 

presentment esteeming the regulation misdemeanor or the unjust or delusory act or pattern, as the instance may be ( U.S. 15:57b ) .

 

The Commission can besides publish Trade Regulation Rules. If the FTC staff finds grounds of unjust or delusory patterns in an full industry, it can urge that the Commission get down a rulemaking proceeding. Throughout the rulemaking proceeding, the populace will hold chances to go to hearings and file written remarks. The Commission will see these remarks along with the full rulemaking record & # 8211 ; the hearing testimony, the staff studies, and the Presiding Officer & # 8217 ; s describe & # 8212 ; before doing a concluding determination on the proposed regulation ( Federal Trade Commission, 1999 ) . A FTC regulation may be challenged in any of the U.S. Courts of Appeal. When issued, these regulations have the force of jurisprudence.

 

The instances we will reexamine all have relevant misdemeanors of the FTC ACT subdivision 5. The tribunal will make up one’s mind in single instances if the stuff is skewed in any manner, and if the consumer in an impartial circumstance is inclined to be mislead. Businesss have been identified as utilizing false or misdirecting claims such as U.S. Marketing, Inc. in the instance FTC v. Mitchell D. Gold et, Al ( Thorleifson, 1998 ) . In this instance U.S. Marketing Inc. has been runing since 1994 as professional fund-raisers. They contract with not-for-profit

 

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organisations to beg on their behalf. U.S. Marketing has been named for routinely beliing to bring on clients to donate. The counts which province the companies misdemeanors include count one, deceit of company individuality, count two deceit of local benefit, count three, deceit of plan benefit, count four, deceit that most of contribution supports peculiar plans, count

 

five, deceits about advertisement, count six, agencies and instrumentalities, count seven, failure to confirm claims, and hurt to public involvement.

 

It is non surprising that companies find misrepresentation easy to market a merchandise when since the truth about a merchandise is seldom persuasive. Too frequently concerns lose to deceitful advertisement. Ad has required ordinance by the Federal Trade Commission due to pervert patterns. There are concerns that have found the truth about their merchandise is non persuasive plenty for the consumer, so they may embroider or connote something the merchandise is non, to accomplish success ( Williams, 1998 ) .

 

The FTC has instances straight against persons as in the FTC v. Kevin Trudeau ( Damtoft, et, al 1998 ) . This instance involves an person who has been involved in several

 

concerns where he has advertised erroneous statements. The FTC has determined the suspect has made uncorroborated statements through wireless and telecasting broadcast medium.

 

He was the male monarch of informercials that contained false and deceptive statements, which constitutes delusory patterns.

 

In the instance FTC v. Screen Test USA the FTC claims that the company violated the Cooling-Off Rule, 16 C.F.R. Part 429. This regulation pertains to unfair and delusory Acts of the Apostless in connexion with door- to- door gross revenues, due to the concern being conducted outside the

 

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Sellerss concern such as hotels. In conformity with door-to-door gross revenues this suspect did non provide the purchaser with the right to call off the sale ( Davidson, 1999 ) . In Thursday

is instance Screen Test USA claimed that after subscribing the contract persons gave up their right to return or bespeak refund on merchandises and services received. This Notice of Cancellation must be included in any direct selling or door to door concern, with two transcripts given

to the purchaser. In this instance non merely were persons non given this information when they contacted the organisation they were denied the right to call off.

 

The Federal Trade Commission makes determinations on instances everyday. How this determination is reached requires non what the advertizer meant but alternatively what is implied. The FTC considers the individual presenting the statement, a normal talker of English, utilizing the words in fortunes in which they were used, so make up one’s mind if fraudulence was implied ( Posner, 1995 ) . The FTC has the quandary of reexamining advertizements, and saying what can and can non be practiced in advertisement.

 

In the instance FTC v. National Scholarship Foundation the FTC intends to procure injunctive and other just alleviation, including recission, damages and vomit,

 

against suspects for misdemeanors including delusory Acts of the Apostless and patterns. The FTC studies that National Scholarship Foundation violated Section 5 of the FTC Act by

 

beliing stuff facts in connexion with the offer and sale of their college scholarship hunt services. NSF falsely represent that consumers will be provided with a portfolio of scholarship and grant resources from which they are likely to obtain at least $ 1000 in grants and scholarships. NSF would falsely province that it would return its fee if $ 1000 in grants and scholarships were non received. The fact is that NSF does non readily

 

Misrepresentation 8

 

return its fee if the consumer does non obtain $ 1000. NSF besides encourages consumers to look into with the National Business Reporting Bureau to look into on the cogency of NSF. NSF straight or by deduction studies that NBRB is a separate entity that reports aim and dependable consequences. NSF ne’er informs the consumer NBRB is owned and controlled by the same persons that own NSF.

 

In the instance FTC v. NSF the FTC intends to turn out that the suspects have injured, and will go on to wound consumers, this is in direct misdemeanors with the FTC Act subdivision 5 ( a ) . Due to NSF delusory Acts of the Apostless or patterns consumers have lost all or portion of the fees they have paid to suspects. The FTC finds that unless these patterns are discontinued consumers will go on to endure fiscal hurt.

 

In researching these instances we have found that it would be impossible to adequately province in words precisely what an implied misrepresentation consist of. In all of these instances it is blazing that misrepresentation has occurred, now the determination must be made in halting these patterns. Unless the companies Screen Test USA, National Scholarship Foundation, and U.S. Marketing Inc. are wholly and for good cited for go againsting

 

the FTC Act will these patterns stop? If we examine the instance with Kevin Trudeau, his separate concerns were Eden? s Secret Natures Purifying Product, Sable Hair Farming

 

System, Jeanie Eller? s Action Reading, Dr. Callahan? s Addition Breaking Technique, Kevin Trudeau? s Mega Memory System and Howard Berg? s Mega Reading. If the FTC cited him in the first concern would he hold gone on to make 5 more companies utilizing the same deceptive techniques? The FTC Act is challenged on a day-to-day footing. If we can remember merely five delusory publicities or advertizements without much attempt we can merely

 

Misrepresentation 9

 

conceive of the huge figure of instances pending at this minute. This act was established in an attempt to protect consumers. The FTC enforces Section 5 of the FTC Act that prohibits delusory Acts of the Apostless or patterns in impacting commercialism. The Commission may originate federal territory tribunal proceedings to name misdemeanors of the FTC Act. The FTC besides secures such just alleviation as is appropriate in each instance.

 

The FTC ordinances of delusory and unjust advertisement may in some cases collide with the First Amendment protection of commercial address. The First Amendment is titled? Religious constitution prohibited. Freedom of Speech, of imperativeness, right to assemble and to petition? . Amendment is defined? Congress shall do no jurisprudence esteeming an constitution of faith, or forbiding the free exercising there of, or of the imperativeness ; or the right of the people pacifically to piece, and to petition the Government for a damages of grievances. ? However, the First Amendment has non been a major obstruction for the Commission because the constitutional protection given to commercial address does non widen to false and deceptive statements. Therefore, the First Amendment does non protect delusory advertisement.

 

Commission demands for Sellerss to confirm nonsubjective claims about their merchandises by demoing that they have a sensible footing for doing such claims.

 

The sensible consumer trial protects the marketer from liability and the consumer from every hideous misconception they may entertain. For case, this trial would protect marketer from liability if an American company advertised they were selling Belgium waffles, and the consumer wanted to action based on the statement that Belgium waffles can merely come from Belgium.

 

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Material information is indispensable to the consumer who will purchase merchandises harmonizing to merchandise distinction. When material information is omitted, the FTC is at that place to modulate and guarantee that the populace is non deceived. Deception normally occurs in guarantee, safety, cost and effectivity of the merchandise.

 

Another facet of the FTC Section 5 is regulating unjust Acts of the Apostless or patterns. The FTC reviews behaviours that are non precisely delusory Acts of the Apostless, but is more concerned about consumer safety. To measure up as an hurt, the FTC would hold to turn out three things. First they must turn out significant pecuniary losingss or safety hazards have occurred. Second the FTC must turn out a Sellerss failure to give the consumer proper information on the merchandise or service. This could give the marketer an inappropriate advantage over the competition. Third the FTC must turn out the consumer could non hold avoided an hurt, either from hard-hitting gross revenues tactics or turn outing the marketer did non do all information available to the consumers.

 

The FTC can ordain proceedings to protect against delusory Acts of the Apostless or unjust behaviour. Sometimes while protecting or reexamining unjust or delusory patterns, the FTC will suggest an order to discontinue prosecuting in the deceptive or unjust Acts of the Apostless. This action is called a redress. Other illustrations of redresss would be for the company to make disciplinary advertisement. The marketer? s future advertisement must rectify false feelings that were created by past advertisement. Sometimes after it has proven that a marketer has been delusory, the marketer will hold to follow for all of their merchandises including new debuts of merchandises. This would be considered an utmost instance, but non unheard of.

 

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The FTC is of import to concern because they create an even playing field. Their regulations and ordinances provide needed guidelines and promote just trade patterns among other concerns that may be viing for the same consumer dollar.

 

Our group is in understanding with the FTC ordinances. We appreciate that the FTC is interested in contending unscrupulous advertizers for our consumer protection. We find this organic structure of authorities a necessity in today? s society. The FTC helps patrol questionable and corrupt concern advertisement patterns.

 

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Mentions

 

Barnes James A. , Bowers Thomas, Langvardt Arlen W. , Mallor Jane P. , & A ;

 

Phillips Michael J. ( 1998 ) Business Law and the Regulatory Environment: Concepts and

 

Cases. United States: Irwin/McGraw-Hill.

 

Damtoft R.W. , Pagar C. B. , McGrew T. M. , & A ; Tortorice M.E ( 1998 ) Northern

 

District of Illinois Eastern Division Federal Trade Commission v. Kevin Trudeau

 

separately. Available: hypertext transfer protocol: //www.ftc.gov/os/1998/9801/trudeau.cmp.htm.

 

Davidson Virginia A. ( 1999, July 27 ) District of New Jersey Federal Trade

 

Commission v. Screen Test USA, Inc. [ Online ] . Available:

 

hypertext transfer protocol: //www.ftc.gov/os/1999/9905/scrrevd.htm.

 

Federal Trade Commission. ( 1999, August 11 ) . [ Online ] .

 

Available: hypertext transfer protocol: //www.ftc.gov.

 

Posner Richard ( 1995 ) The Problems of Jurisprudence Cambridge, MA.Harvard University Press.

 

Rucoba Laurie E. ( 1997 ) Southern District of Florida Federal Trade Commission v. National Scholarship Foundation, Inc. ; D.B.F. National Business Reporting Bureau, Inc. [ Online ] . Available: hypertext transfer protocol: //www.ftc.gov/os/1997/9711/nsfcmp.htm.

 

Thorleifson, Tracy S. ( 1998 ) . Central District of California Federal Trade Commission V. U.S. Marketing Inc. , and North American Charitable Services, Inc.

 

[ Online ] . Available: hypertext transfer protocol: //www.ftc.gov/oc/1998/9811/complai4.htm

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