Advertising and Brand

Management
Report on
Ethical Issues in Advertising

Submitted by:
Aman Mittal
(017)
Gray area between Laws and Norms

1. Laws define those acts that, if committed, are deemed so unacceptable in a society that they
warrant an altered status - "criminal." They are enforced by the Criminal Justice System with
reduced citizenship rights and freedoms, up to and including the ending of one's life.

2. Norms define the boundaries of those acts that are unacceptable or disapproved of by society,
but which are not severe enough to warrant the changed citizenship status of criminality. They
are enforced by informal sanctions: - disapproval, disrespect, shunning, ostracizing, berating,
exclusion, derision, denial of social amenities, etc.

3. Ethics concern those acts that are in the area where Norms end and Laws begin. They are acts
that are very unacceptable to large segments of society, but not sufficiently so to justify enacting
laws and revoking citizenship rights over them. They are enforced by Professional Codes of
Ethics and other self-policing organizational actions, but increasingly, we see the Civil Court
system employing Civil Tort actions and RICO (Racketeering and Corrupt Practices Act)
provisions to provide stronger societal muscle to their enforcement.

Two Fundamental Bases for Judging Ethical Issues

1. Moral Idealism - or Absolute Standards. This view believes all human acts can be judged by
an absolute standard of right and wrong regardless of the circumstances, motivations, or
outcomes involved. If the act violates the standard, it is unethical, period! This is the Means must
justify themselves view.

2. Utilitarianism - or Relative Standards. This view believes that all human acts can be judged by
their outcomes or effects on the human condition. The greatest good for the greatest number is
the standard. If an act produces both good and bad outcomes(and most ethical issues do), if the
bad "outweighs" the good, it is unethical. This is the Ends justify the Means view.

Advertising and the F.T.C

A. Regulatory Standards - For the F.T.C. to act against an advertiser, three conditions must be
met.

1. The advertisement must be deceptive. The F.T.C. considers a deception to be "a

representation, omission or practice that is likely to mislead . . . "

2. The advertisement must deceive on a fact or information material to the consumer. To be

material, the fact or information must be likely to influence purchase behavior.
3. Acting against the advertiser must be in the "public interest."

a. The F.T.C. considers the public interest to be served if the advertisement deceives "a
consumer acting reasonably."

b. The F.T.C. will not hold an advertiser responsible for the "misconceptions of the foolish or
feeble-minded."

B. Legal Considerations for Advertisers

1. Who is the target?

a. The reasonable person standard applies to most ads aimed at average adults.

b. When ads are targeted to "vulnerable groups," the F.T.C. judges the complaint from the
perspective of an average member of that group. This is a stricter standard of deception.

2. Determining the truth/falsity of an advertising claim. There are five types of claims recognized
by the F.T.C.

a. Objective Claims (claims of fact)

(1) usually most straightforward to evaluate

(2) few complaints filed about objective claims

b. Subjective Claims (claims of opinion)

(1) difficult to prove false because they may fall under the domain of "advertising puffery."

(2) puffery - "advertising (or other sales presentations) that praise an item to be sold with
subjective opinions, superlatives or exaggerations, vaguely and generally, stating no facts"

(3) Courts and the F.T.C. have ruled puffery is so common that consumers expect it, and
therefore no person acting reasonably would rely on it.

c. Implied Claims (claims of inference) - The F.T.C. must look at the impression that is likely to
be created by innuendo or the clever use of certain words or phrases.d. Claims with False Proof

(1) This category arose from television's unique ability to demonstrate products.

(2) If a demonstration (proof) is falsified so that it supports a material claim, the ad is deceptive.

(3) May apply to "mock ups" - devices made to simulate real objects.e. Claims with two
meanings - When a claim carries two meanings, and one is false, the advertiser is liable for the
misleading information.
C. Programs to Battle Deceptive Advertising

1. Affirmative Disclosure -The F.T.C. may require the advertiser to "affirmatively disclose"
certain information in their advertising to make consumers aware of consequences, conditions or
limitations associated with a product.

2. Claim Substantiation (difference with affirmative disclosure can be subtle)

a. The basic requirement is that advertisers must have supporting documentation to prove its
advertising claims are true.

b. Substantiation is required of all claims regarding product safety, performance, efficacy or

price comparison.

c. Claim substantiation shifted the burden of proof from the F.T.C. (to prove a claim false) to
advertisers (to prove a claim true).

3. Corrective Advertising - An advertiser found to have run deceptive advertising may be

required to run additional advertising designed to remedy the misinformation carried in the
deceptive ads.