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Chapter 20 Test Bank Student: ___________________________________________________________________________ 1. Regulatory concerns never play a major role in the advertising decision-making process. True False

2. Legislation is being considered that would either ban or impose major restrictions on direct-to-consumer advertising of drugs. True False

3. Self-regulation and control of advertising emanate from individual advertisers and their agencies. True False

4. Self-regulation begins with the interaction of client and agency when creative ideas are generated and submitted for consideration. True False

5. Policies and procedures for industry self-regulation are established by the Advertising Self-Regulatory Council. True False

6. Federal law requires that advertisers possess substantiation for their advertising claims before the claims are published. True False

7. Network standards regarding acceptable advertising typically remain constant. True False

8. Self-regulation of advertising has been ineffective in the development of stringent practices and standards. True False

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9. The U.S. Postal Service has regulations that affect advertising. True False

10. The Second Amendment protection has been extended to commercial speech. True False

11. The Central Hudson Test is a two-part test established by the American Marketing Association. True False

12. In 2016, Facebook imposed a global ban on private gun sales on Facebook and Instagram, which is an example of self-regulation. True False

13. The Wheeler-Lea Amendment gave the Federal Trade Commission (FTC) the power to issue cease-and-desist orders and levy fines on violators. True False

14. The Federal Trade Commission (FTC) is responsible for protecting businesses, but not consumers, from anticompetitive behavior and unfair and deceptive practices. True False

15. The Division of Advertising Practices protects consumers from deceptive and unsubstantiated advertising and enforces the provisions of the FTC Act that forbid misrepresentation, unfairness, and deception in general advertising at the national and regional level. True False

16. The Wheeler-Lea Act withdrew the Federal Trade Commission's (FTC's) power to regulate advertising. True False

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17. Advertising practices considered unfair include claims that might exploit such vulnerable groups as children and older adults. True False

18. Puffery is as an illegal, deceptive practice. True False

19. Trade-oriented promotions are not subject to regulations by various agencies. True False

20. A promotion is not considered a lottery if a prize is offered. True False

21. Spamming is the sending of unsolicited multiple commercial electronic messages. True False

22. Which of the following is a federal agency that controls advertising? A. the National Advertising Review Board B. the Better Business Bureau C. the National Advertising Review Council D. the Food and Drug Administration E. the National Association of Attorneys General

23. In the Supreme Court's 1996 decision in , the court ruled that A. advertising alcoholic beverage prices is okay because commercial speech is protected under the First Amendment. B. advertising the prices of prescription drugs is okay because commercial speech is protected under the First Amendment. C. misleading or deceptive commercial speech is protected. D. political speech guidelines are stricter than commercial speech guidelines. E. the free flow of information depends on self-regulation.

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24. Advertisers are often supportive of voluntary self-regulation because A. self-regulation is viewed as a way of limiting government interference in advertising. B. all clients and agencies are affected by voluntary self-regulation. C. self-regulation does not require interaction between an agency and a client. D. self-regulation results in even more stringent regulations than what state and federal agencies want. E. it is simple and less time consuming.

25. Self-regulation begins with the interaction of client and agency when A. a consent order is signed. B. a company is charged with a lawsuit for deceptive advertising. C. there has been an omission of advertising substantiation. D. creative ideas are generated and submitted for consideration. E. ads are aired in foreign nations.

26. In 1977, the _____ held that state bar associations' restrictions on advertising are unconstitutional and that attorneys have First Amendment freedom of speech rights to advertise. A. Federal Trade Commission B. American Bar Association C. U.S. Supreme Court D. Better Business Bureau E. American Marketing Association

27. Which of the following statements is true of advertising by members of professional associations? A. Both government regulatory agencies and consumer groups are against advertising by members of professional associations. B. Professional associations have always authorized advertising by their members on the basis that such promotional activities heighten members' professional status. C. Research has shown that consumers generally disfavor the use of professional advertising. D. The Supreme Court has ruled that professionals, such as dentists and physicians, have the right to advertise. E. Professional advertising is typically considered unethical and fraudulent.

28. Which of the following statements concerning advertising by attorneys is true? A. The right for attorneys to advertise is protected under the First Amendment. B. The U.S. Supreme Court does not permit lawyers to advertise if they earn more than $100,000 per year. C. Ads soliciting personal injury victims help in enhancing the public's perception of attorneys. D. The American Bar Association recently removed all restrictions on the type of advertising attorneys can use. E. Typically, traditional law firms are in favor of using advertising, particularly on TV, because they believe that it might boost a profession's image.

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29. A number of self-regulatory mechanisms have been established by the business community in an effort to control advertising practices, and among them, the largest and best known is the A. Federal Trade Commission. B. Federal Communications Commission. C. Better Business Bureau. D. World Trade Organization. E. Chamber of Deputies.

30. The BBB is the largest and best known self-regulatory mechanism in the United States that has been established by the business community in an effort to control advertising practices. BBB stands for A. Board for Business Broadcasting. B. Board of the Best Businessmen. C. Board for Betterment of Broadcasting. D. Better Business Bureau. E. Best Business Bureau.

31. Which of the following sentences is true of the Better Business Bureau (BBB)? A. The BBB is a federal regulatory agency that controls advertising. B. The BBB promotes fair advertising and selling practices across all industries. C. The BBB was established to handle client complaints about regional business practices. D. The BBB is regulated by the American Marketing Association. E. Local BBBs are located in only two cities across America.

32. Local Better Business Bureaus (BBBs) A. receive and investigate complaints from consumers regarding advertising in their area. B. are located in small cities throughout the United States with populations less than 200,000. C. are government-aided agencies. D. follow a standard operating procedure for handling complaints as implemented by the Federal Trade Commission. E. are funded by the Council of Better Business Bureaus.

33. Better Business Bureaus (BBBs) provide effective control over advertising practices at the _____ level. A. local B. national C. global D. industry-wide E. international

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34. The Council of Better Business Bureaus plays a major role in controlling advertising practices at the _____ level. A. national B. local C. manufacturer D. international E. regional

35. The _____ plays a major role at the national level as the third-party administrator of the advertising industry self-regulatory system. A. National Advertising Review Board B. Council of Better Business Bureaus C. American Marketing Association D. Federal Trade Commission E. National Advertising Review Council

36. Policies and procedures for self-regulation of the advertising industry are established by the A. National Association of Broadcasters. B. Vision Council of America. C. National Advertising Review Council. D. Independent Business Alliance. E. Association of American Publishers.

37. Which of the following is the appellate unit of the Advertising Self-Regulatory Council? A. The National Advertising Division B. The Independent Business Alliance C. The National Advertising Review Board D. The American Marketing Association E. The National Association of Broadcasters

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38. Which of the following statements is true of policies and procedures established for industry self-regulation by the Advertising Self-Regulatory Council (ASRC)? A. The Children's Advertising Review Unit (CARU) reviews advertising directed to children between the ages of 12 and 16. B. The National Advertising Division of the Council of Better Business Bureaus (NAD) examines advertising claims in directresponse advertising. C. The Electronic Retailing Self-Regulation Program (ERSP) examines all advertising claims excluding infomercials and home shopping channels. D. The National Advertising Division of the Council of Better Business Bureaus (NAD) is staffed primarily by attorneys. E. The Electronic Retailing Self-Regulation Program (ERSP) reviews advertising claims that are local in scope.

39. The _____ was formed by three advertising associations and the Council of Better Business Bureaus to sustain high standards of truth and accuracy in national advertising. A. National Advertising Board B. National Advertising Review Council C. American Association of Advertisers D. Ad Council E. Board of Advertising Ombudsmen

40. The _____ of the Council of Better Business Bureaus focuses on areas that include product performance claims, superiority claims against competitive products, and all kinds of scientific and technical claims made in countrywide advertising. A. National Advertising Division B. National Review Board C. National Association of Attorneys General D. American Marketing Association E. Federal Trade Commission

41. The _____ examines advertising claims in direct-response advertising, including infomercials and home shopping channels. A. Children's Advertising Review Unit B. Vision Council of America C. National Association of Broadcasters D. Electronic Retailing Self-Regulation Program E. Independent Business Alliance

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42. Which of the following statements is true of the National Advertising Division (NAD)? A. The NAD's advertising monitoring program only reviews complaints from local Better Business Bureaus. B. Advertisers that disagree with the NAD's findings have an automatic right to appeal the NAD's decision to the National Advertising Review Board. C. The NAD has no authority to direct an advertiser to stop running an ad in case the required substantiating evidence does not support the advertiser's claim. D. Lawyers at the NAD usually seek help from local advertising agencies to find misleading advertisements. E. The NAD does not deal with complaints that come from marketers who are threatened by comparative advertising.

43. If an advertiser refuses to comply with rulings made by the National Advertising Review Board (NARB), the NARB is most likely to A. order the advertiser to stop running the ad. B. refer the case to an industry trade association. C. refer the matter to an appropriate federal agency. D. impose a fine. E. lodge a class action suit for customers who have been in some way negatively affected by the ad.

44. Which of the following statements is true of the Electronic Retailing Self-Regulation Program (ERSP)? A. The mission of the ERSP is to discourage advertising and marketing in the electronic retailing industry that contains comparative advertising. B. The majority of claims reviewed under the ERSP program are for online advertising, including search media optimization and social media marketing. C. The ERSP works under the scope of the Electronic Retailing Association (ERA) to create a predisposed self-regulatory system. D. Spam e-mails along with Internet pop-up ads that lead to further e-commerce are in the ERSP's purview as well as advertising on TV shopping channels. E. The ERSP is an initiative of the Federal Trade Commission (FTC) to work toward the self-regulation of electronic retailing.

45. The _____ is a self-regulatory program implemented by the Advertising Self-Regulatory Council (ASRC) that regulates online behavioral advertising (OBA) across the Internet. A. Internet Advertising Review Board B. Internet Retailing Self-Regulation Program C. Council of Better Business Bureaus D. Internet-Based Advertising Accountability Program E. Information Technology Act

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46. Which of the following statements is true of online behavioral advertising (OBA)? A. OBA permits only those advertisements that provide detailed information about an advertiser's products and services. B. Companies engaged in OBA are monitored by the Federal Trade Commission (FTC). C. OBA is based on the seven Self-Regulatory Principles for Electronic Retailing. D. OBA uses information collected across multiple unaffiliated websites to predict a user's preferences. E. OBA is regulated by the Electronic Retailing Self-Regulation Program (ERSP).

47. Which of the following statements is true of the National Advertising Review Council (NARC)? A. Cases brought to NARC are subject to extensive publicity as compared to the cases brought to court. B. It is very expensive to get a case solved through NARC. C. The NARC takes longer to solve a case when compared to the Federal Trade Commission (FTC). D. The NARC can handle cases at a lower cost as compared to a court. E. The NARC is a government agency regulating advertising agencies.

48. The _____ is a major trade association of the advertising business in the United States and has established standards of practice and its own creative code. A. Vision Council of America B. Independent Business Alliance C. American Association of Advertising Agencies D. Federal Trade Commission E. National Association of Broadcasters

49. Which of the following statements describes the media's role in the self-regulation of advertising? A. The media must accept all the advertising campaigns they receive because of the First Amendment that guarantees the freedom of speech. B. The media cannot refuse to accept advertising for an entire product class such as hard liquor. C. The media can refuse to accept individual ads they find offensive or objectionable. D. The media is expected to reject ads that are targeted toward children and older adults. E. The broadcast is required by law to reject political ads.

50. Certain magazines regularly test the products they advertise and offer a "seal of approval" and refunds if the products are later found to be defective. They do so in order to A. enhance the credibility of the publication. B. encourage advertisers to buy more media space. C. eliminate puffery in their ads. D. discourage comparative advertising. E. avoid questionable advocacy advertising.

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51. Advertising on television and radio was initially regulated through codes developed by the _____ until the courts found that portions of its regulations were in restraint of trade. A. National Advertising Review Board B. Federal Trade Commission C. Federal Communications Commission D. National Association of Broadcasters E. Standards and Practices Division

52. Which of the following media has the most stringent review and approval process for advertising? A. community radio B. business magazines C. newspaper and trade publications D. the Internet E. the four major television networks

53. Television advertising is A. typically not used for hard liquor advertising. B. regulated through codes developed and enforced by the Federal Trade Commission. C. regulated by affiliate networks. D. more stringently self-regulated than any other medium. E. considered a declining advertising medium.

54. A very frustrating, and often expensive, scenario for both an agency and its client occurs when A. a commercial is rejected at the storyboard stage. B. a commercial that was rejected at the storyboard stage is accepted at the final stage. C. a commercial is rejected for reasons such as sex, politics, and religion. D. a commercial is approved at the storyboard stage but then is rejected after it is produced. E. a commercial is rejected at the idea-generation stage.

55. Which of the following statements about self-regulation by media is true? A. Most commercials once rejected cannot be rerun. B. Network standards regarding acceptable advertising have remained constant over the past 30 to 40 years. C. Advertising for contraceptives is completely banned on all networks since 1995. D. Television is probably the most carefully scrutinized of all forms of advertising. E. Network standards have become more stringent in response to competition from independent and cable stations.

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56. The three major participants in the advertising process that work individually and collectively to encourage truthful, ethical, and responsible advertising are A. advertisers, advertising review boards, and the cable operators. B. creative boutiques, copywriters, and consumer panels. C. consumer panels, advertisers, and agencies. D. advertisers, advertising agencies, and the media. E. advertisers, the government, and the television networks.

57. Which of the following statements is true of self-regulation of advertising? A. Self-regulation of advertising is typically restricted to liquor and tobacco advertisements. B. Self-regulation was initially introduced to eliminate the problem of puffery. C. Self-regulation of advertising has led to the development of more lenient standards and practices than those imposed by the legislation. D. The advertising industry views self-re...