Chapter 6 Flashcards
(26 cards)
Ambiguity (in advertising)
understood in two or more ways. Can be deceiving.
Caveat Emptor
Let the buyer beware (old); associated with the era of patent medicines and outrageously false product claims. (new).
Concealment of Facts
suppressed information that is unflattering to their products. Neglect to mention or distract consumers’ away from information, knowledge of which would make product less desirable.
Consumer product safety commission
protects the public against unreasonable risks of injury associated with consumer products.
Consumer sovereignty
consumers should and do control the market through their purchases.
Dependence effect (Galbraith)
As society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied. (The same process that produces products also produces the demand for those products).
Due care
The idea that consumers and sellers do not meet as equals and the consumer’s interests are particularly vulnerable to being harmed by the manufacturer, who has knowledge and expertise the consumer does not have.
Exaggeration (in advertising)
making claims unsupported by evidence.
Express Warranties
claims that sellers explicitly state. (Shrinkproof or req. no maintenance for 2 yrs.)
Federal trade commission
originally created as antitrust weapon, but mandate was expanded to include protecting consumers against deceptive advertising and fraudulent commercial practices.
FTC v. standard education
moved the law away from reasonable person standard in matters of advertising sales and marketing.
Gullible consumer standard
FTC prohibits advertisements that might mislead someone who is ill informed and naïve. Advertising would be greatly restricted.
Implied Warranties
include the claim, implicit in any sale, that a product is fit for its ordinary, intended use.
Legal paternalism
idea that law may justifiably be used to restrict the freedom of indviduals for their own good.
Macpherson v buick motor car case
expanded the liability of manufacturers for injuries caused by defective products.
Merchantability
Not a promise that product will be perfect, but a guarantee that it will be a passable quality or suitable for the ordinary purpose for which it is used. The law call this the implied warranty of merchantability.
Horizontal Price Fixing
occurs when competitors agree to adhere to a set price schedule, not to cut prices below a certain minimum, or restrict price advertising or the terms of sales, discounts or rebates.
Vertical Price Fixing
occurs when manufacturers and retailers (as opposed to direct competitors) agree to set prices. Ex: Toys R US kept prices high forcing Mattel, Hasbro and others to not sell toys to warehouse clubs like Sam’s and Costco. Sometimes it’s the manuf., not the retailer that engages in this.
Price gouging
seller’s exploiting a short term situation in which buyers have few purchase options for a much needed product by raising prices substantially.
Psychological appeal
persuasive effort aimed primarily at emotion, not reason. Technique of greatest moral concern.
Puffery
supposedly harmless use of superlatives and subjective praise in advertisements. (Best, finest, most, king of beers)
Quantity surcharges
when retailers are able to sell economy size items for a higher per unit price than their smaller counterparts.
Reasonable consumer standard
FTC will prohibit only advertising claims that would deceive reasonable people. Ppl taken in because they are more gullible or less bright than average are unprotected.
Strict product liability
the manufacturer of a product has legal responsibilities to compensate the user of that product for injuries suffered because the product’s defective condition made it unreasonably dangerous, even though the manufacturer has not been negligent in permitting that defect to occur.
