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Ethics in Advertising

Chapter 5

Heath Hesse

on 21 October 2013

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Transcript of Ethics in Advertising

Ethics in Advertising
After this chapter you should be able to:
Identify & explain common ethical problems in advertising.
Describe ethical standards of the advertising profession.
False Advertising
Bait & Switch
Code of Ethics
Advertising: is the practice of attracting public attention to a product or business for the purpose of increasing sales.
You Decide
Analyze the following hypothetical advertisements. Decide whether you think each example contains an ethical problem. If you think there is an ethical problem, explain what it is. If you don't think there is an ethical problem, explain why.
1.) Television commercials for "Flying Man" action figures. The commercials, which run each Saturday morning during the "Flying Man" cartoon, show the toys flying, although small print on the screen states that they don't actually fly.
2.) An ad for plastic surgery in a popular magazine for teenage girls.
3.) An advertisement for a dance studio, in a magazine for senior citizens. The ad highlights several benefits of dance lessons, including companionship, improved health, and relief from loneliness.
4.) Beer commercials that air during prime time on a popular cable TV music video channel.
5.) Television and print commercials for a bank that issues credit cards, advertising a 0% interest rate for the first 6 months. No mention is made of what happens to the interest rates after that time.
Personal Reflection
Briefly describe a time when you were duped by a misleading advertisement and ended up with something less than the ad led you to believe. How did the experience make you feel?
Ethical Problems in Advertising
False Advertising


False Advertising: the practice of making statements about products that the advertiser knows are not true.
Listerine was the first over-the-counter mouthwash sold in the United States in 1914 and by 1921 it was already falsely marketing its product. Declaring itself a cure-all for common cold ailments like sore throats and coughs, a dandruff preventative, an anti-shave tonic, and a safe way to protect yourself from cuts, bruises, wounds, and stings, Listerine was slapped with numerous false advertisement lawsuits. In 1975, the Federal Trade Commission ordered the company to spend $10 million in corrective advertising, seeing as their product was no more effective in treating colds than gargling warm water. Even then, the mouthwash giant didn’t really learn their lesson. In 2005, the company was slapped with another lawsuit. This time because Listerine claimed it was as “effective as floss” after rigging clinical trials.
Touted as one of the world’s first successful businesswomen, Lydia Pinkham exploited her reputation as a local medicine woman to propel her herbal remedy into a commercial success, eventually grossing almost $400,000 yearly. The remedy claimed to cure all womanly ailments and weaknesses and sold for $1 a bottle. What was in the herbal remedy? Turns out, it contained less than 1% solid substance from vegetable extracts and almost 20% alcohol. If a woman took the suggested 1 tablespoon every 2-4 hours, she will have consumed 5 ounces of 13.5% or higher alcohol by the end of the day – more than enough for a healthy buzz that made life seem a bit more cheery to boozy housewives. When the Federal Trade Commission tightened its laws on claims made by medicines, Lydia Pinkham’s Vegetable Compound had to swallow the restrictions with a spoonful of sugar.
In 1996, the Amoco Oil Company agreed to settle a Federal Trade Commission charge that its “Crystal Clear Amoco Ultimate” advertised unsubstantiated claims. The premium gasoline, because of its clear color, boasted superior engine performance and environmental benefits. The fact is, at the time the country was going through a clear revolution. Pepsi had gone clear (Crystal clear, in fact!). Clearly Canadian was dominating shelves. And Amoco, which had for years made a clear colored fuel, decided to capitalize on the trend. Unfortunately, they had no factual evidence to substantiate their “better for the environment and your engine” claims, and the company was forced to curb their campaign.
Starting in 1919, Dr. William Frederick Koch bottled and marketed a cancer, infection, and allergy cure-all with the help of his brother Louis. His drug glyoxylide, which he claimed cured “practically all human ills, including . . . tuberculosis” sold for $25 (1948 price) in local drug stores. The FDA had always been suspicious of the doctor, but not until they tested the drug in 1948 and found it contained nothing more than distilled water were their suspicions confirmed. And what proved to be more appalling, they discovered that Dr. Koch had been treating cancer patients by telling them to detox with the aid of enemas and fresh fruit and vegetable juices, taking only the smallest doses of painkillers. Unfortunately, despite all of his patients dying enough evidence was never found to present a viable case against him, and Dr. Koch moved to Rio de Janeiro in the late 1940s.
“It’s the one designed by the school teacher!” Airborne, which entered the market 10 years ago first claimed to prevent colds, then claimed to boost your immune system, and is now claiming a federal lawsuit. In March of this year, Airborne settled a lawsuit in which it agreed to pay over $23 million in fines for false advertising. David Schardt, who spearheaded the lawsuit against Airborne says there is no factual evidence to back the companies claims, likening Airborne to a placebo and advising people fighting colds to simply take a Vitamin C pill.
Besides being unethical and dishonest, false advertising isn't even smart - at least in the long run. Consumers eventually figure out the truth, and the public's backlash can be severe...
Many of the tobacco companies lost millions of dollars in lawsuits filed by former customers (or families) who contracted cancer from smoking the "healthy" cigarettes. In a society where lawsuits are common, false & deceptive advertising is unwise and expensive.
Puffery: term used to describe statements that are not outright lies, but merely exaggerations.
"The best taste your mouth ever had."
"The best time you'll ever have in one day!"
The Federal Trade Commission (FTC) allows puffery, defining it as claims:

That reasonable people do not believe to be true product qualities and
that are incapable of being proven true or false.

Some consumer groups have criticized the FTC for allowing deceptive claims through this loophole of puffery.
Bait and switch: the practice of advertising a product at a low price while intentionally stocking only limited number in hopes of luring shoppers to buy more expensive items.
This practice is illegal, but can sometimes be difficult to prove. Generally, there is no legally mandated minimum number of products that must be kept in stock. However, businesses that advertise discounted prices on a product in short supply are usually required to do one of the following:
Clearly state the number of products in stock

Offer rain checks to customers who request them. Rain checks are written guarantees that customers can have the product at the discounted price when more are delivered to the store.
Children are especially vulnerable to deceptive advertising. They are generally trusting and believing what adults tell them. Children tend to be naive, often believing that claims on TV or in the newspaper are true.
In addition, children often have difficulty differentiating between fantasy and reality. If a superhero can become invisible in a cartoon, children are likely to believe that the action figure will do the same once it is in their home.
Because of children's vulnerabilities, laws have been passed to protect children from deception and manipulation...
One such law prohibits creators and producers of a children's cartoon from advertising products related to the characters of that program during the broadcast.
Telemarketing: the practice of selling directly to individuals through unsolicited phone calls, e-mails, or faxes.
What do you think now?
Personal Reflection
Imagine that you own an advertising company. Choose one of the five ethical problems in advertising and explain your company policies pertaining to that issue.
The Ethical Standard
Code of ethics: a written set of principles and rules intended to serve as a guideline for ethical behavior for individuals under the organization's authority.
The American Advertising Federation (AAF) authored Advertising Ethics and Principles in 1984. This code, defined in the following sections, sets the professional standard and provides a way to evaluate the ethics of advertisers.
The Ethical Standard
Bait Advertising
Guarantees & Warranties
Price Claims
Taste & Decency
Advertising shall tell the truth, and shall reveal significant facts, the omission of which would mislead the public.
Advertising claims shall be substantiated by evidence in possession of the advertiser and advertising agency, prior to making such claims.
Advertising shall refrain from making false, misleading, or unsubstantiated statements or claims about a competitor or his/her products or services.
Substantiation: the validation of advertising claims with objective data from independent research
Advertising shall not offer products or services for sale unless such offer constitutes a bona fide effort to sell the advertising products or services and is not a device to switch consumers to other goods or services, usually higher priced.
Advertising of guarantees and warranties shall be explicit, with sufficient information to apprise consumers of their principal terms and limitations or, when space or time restrictions reclude such disclosures, the advertisement should clearly reveal where the full text of the guarantee or warranty can be examined before purchase.
Guarantee: is an assurance attesting to the durability or quality of a service or product.
Warranty: a written promise to repair or replace a product if it breaks or becomes defective within a specified period of time.
Advertising shall avoid price claims which are false or misleading, or saving claims which do not offer provable savings.
Advertising containing testimonials shall be limited to those of competent witnesses who are reflecting a real and honest opinion or experience.
Testimonial: an endorsement of a product by someone claiming to have benefited from its use.
Advertising shall be free of statements, illustrations or implications which are offensive to good taste or public decency.
Limitations of the Advertising Code
In addition to the use of ambiguous language, the code of ethics you have been exploring has another limitation. For any code to be effective, it must be enforceable and actually enforced. And the lack of enforcement of the advertising code represents a problem. Membership in trade groups such as the AAF is voluntary. Unlike professions such as law and medicine, no one has to be licensed to be able to make a living as an advertiser. The AAF has no authority to revoke someone's license to advertise for violating a code. Conformity to the principles of the code is voluntary, as well.
What do you think now?
Personal Reflection
Briefly describe a time when you had to choose between honesty and money. In other words, you could have gotten more money for being dishonest. What did you do? Why? How do you feel about your decision now?
1.) The most important ideas that I learned from this chapter were:

2.) This chapter made me think about:

3.) I would like to find out more about:

4.) One step I could take toward being a wiser consumer of advertising is:
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