Legal Developments in Marketing

Consumer Evaluations of Price and Promotional Restrictions—A Public Policy Perspective

“…The key goal, therefore, is to specify the requirements to avail of the advertised offers and facilitate the decision-making process of consumers (FTC Staff Report 1979). The 1990s have been called the "decade of disclosure" (Hoy and Stankey 1993) because the FTC and other regulatory agencies have applied a closer scrutiny to ensure that the fine print supplied by marketers meets the "clear and conspicuous" standard for disclosure (in effect since 1971) and have come down heavily on cases of insufficient or misleading disclosure (Werner 1992). The much publicized lawsuit against American Family Publishers, which conducts the annual Publishers' Clearinghouse Sweepstakes, filed by the State of Florida also has brought attention to the restrictive stipulations of many sweepstakes (Sharp 1998).…”

“…Muehling and Kolbe (1997) report, from a survey of advertising executives, that practitioners viewed government regulations as the overwhelming reason for including fine-print disclaimers in advertisements. According to the Federal Trade Commission Act, it is illegal to make unsubstantiated claims in an advertisement regarding such issues as a product's safety, performance, quality, and/or comparative price (see Werner 1992). To retaliate against firms engaging in deceptive advertising, the FTC may institute such actions as cease and desist orders, affirmative disclosure, corrective advertising, and/or redressal of consumer injury.…”