CAS Advertising Ethics & Regulations 1 — Questions and Answers
Question 1: Which federal agency has primary authority to regulate deceptive advertising practices in the United States?
- Federal Communications Commission (FCC)
- Federal Trade Commission (FTC) (Correct answer)
- Securities and Exchange Commission (SEC)
- Consumer Financial Protection Bureau (CFPB)
Correct answer: Federal Trade Commission (FTC)
The FTC enforces truth-in-advertising laws and takes action against deceptive or unfair business practices in advertising.
Question 2: Under FTC guidelines, when a celebrity endorses a product they have a financial relationship with, what is required?
- The endorsement must be in writing
- The financial relationship must be clearly disclosed (Correct answer)
- The celebrity must have used the product for at least 30 days
- The ad must be labeled 'paid promotion' only on social media
Correct answer: The financial relationship must be clearly disclosed
FTC Endorsement Guides require clear and conspicuous disclosure of material connections between endorsers and advertisers.
Question 3: What is the primary ethical concern with 'puffery' in advertising?
- It makes specific false factual claims
- It uses exaggerated subjective claims that cannot be proven (Correct answer)
- It targets vulnerable populations with misleading data
- It violates FTC comparative advertising rules
Correct answer: It uses exaggerated subjective claims that cannot be proven
Puffery involves vague, subjective boasts (e.g., 'the best pizza in the world') that are not considered deceptive because no reasonable consumer takes them as literal facts.
Question 4: Which self-regulatory body in the U.S. advertising industry reviews national advertising claims for truthfulness and accuracy?
- Advertising Standards Council (ASC)
- National Advertising Division (NAD) (Correct answer)
- Interactive Advertising Bureau (IAB)
- American Advertising Federation (AAF)
Correct answer: National Advertising Division (NAD)
The NAD, part of BBB National Programs, is the primary industry self-regulatory body that reviews national advertising for truthfulness and accuracy.
Question 5: What does the Children's Online Privacy Protection Act (COPPA) primarily restrict in advertising?
- Showing violent content before 10 PM
- Collecting personal data from children under 13 without parental consent (Correct answer)
- Advertising alcohol products near schools
- Using cartoon characters to sell sugary foods
Correct answer: Collecting personal data from children under 13 without parental consent
COPPA prohibits collecting personal information from children under 13 without verifiable parental consent, directly impacting targeted digital advertising to children.
Question 6: Which type of advertising claim requires the advertiser to have substantiation before the ad runs?
- Puffery claims
- Objective product performance claims (Correct answer)
- Brand image claims
- Lifestyle association claims
Correct answer: Objective product performance claims
FTC policy requires advertisers to have a reasonable basis—substantiation—for objective claims about product performance before the advertisement is disseminated.
Question 7: In comparative advertising, what is legally required to avoid FTC action?
- Approval from the competitor being compared
- Claims must be truthful, substantiated, and not misleading (Correct answer)
- The comparison must only reference price, not quality
- Both brands must have equal ad spend in the same campaign
Correct answer: Claims must be truthful, substantiated, and not misleading
FTC guidelines permit comparative advertising as long as comparisons are truthful, clearly substantiated, and not presented in a misleading way.
CAS Advertising Ethics & Regulations 1
Which federal agency has primary authority to regulate deceptive advertising practices in the United States?