Bait Advertising

1. True or false: Both the FTC and the Vermont AG have authority to issue rules


2. True or false: Both the FTC and the Vermont AG have authority to issue guides


3. The advantage of issuing a rule is that
a. it puts businesses on notice of what practices are illegal      [recall that 'deception' is not defined]
b. the AG doesn't have to prove that a practice is "deceptive" (as defined in the FTC Policy Statement); only that it violates a rule
c. both of the above are true
d. none of the above are true


4. The advantage of issuing a guide is that
a. it puts businesses on notice of what practices are considered illegal by the FTC and/or AG staff
b. the AG doesn't have to prove that a practice is "deceptive" (as defined in the FTC Policy Statement); only that it violates a guide
c. both of the above are true
d. none of the above are true


5. Vermont's Rule CF 103 regulates
a. bait & switch tactics
b. the availability of advertised offers
c. limitations on advertised offers
d. all of the above 

    --as we'll see, b and c are indicators of bait advertising
    --they are also separate violations, even if there is no allegation of bait advertising


6. Read the definition of bait advertising in the FTC Guide.     [In the lecture notes]
What does the FTC or AG need to prove--similar to a common law element--that is very difficult to prove?

    --"...Intend or want to sell."
    --How do you prove intent? 
    --By actions? Patterns of behavior?
    --Circumstantial evidence?



7. The following questions relate to the case of State v. American TV & Appliance:

a. What were the facts of the case?  (In other words, what did American do to cause the Attorney General of Wisconsin to sue?)

     ----bait advertising of washer/dryer sets
    ----deception in use of terms "finest" and "best"
    ---deception in use of terms "clearance" and "closeout"


b. What facts were alleged by the State to support its claim of bait advertising?

    ----see * p. 1 of case

c. How does Wisconsin law define bait advertising?

    ----see * p. 2 of case ("plan or scheme the purpose or effect of which is not tosell...as advertised")


d. What are the three elements that have to be proven by plaintiff under this law?

     ----see * p. 4 of case


e. Did the court find the State had proven all the elements? What was missing

     ----plan or scheme


f.  What did the state need to prove that it did not prove?

    ----any overt act on defendant's part--such as disparagement
    ----see ** p. 4


g. Was there any evidence of "disparagement" here?

    ----state alleged "self-disparagement"--by being placed next to appliances with many more features
    ----court said that wasn't good enough, unless they were defective or poor quality
    ----differentiated "selling up" as a standard retail practice
             ----how do you distinguish bait advertising from selling up? Disparagement!

   
h. Did the court find that any section of the FTC Guides had been violated?

    ----section (f) only--use of a sales plan or method of compensation


i. Do you agree with the majority or the dissenting opinion as to whether use of the terms "best" and "finest" are puffing in this context?

    ----remember that context is important; look at the whole ad, don't just think of the words in a vacuum


j. Do you think it was deceptive for American to claim it was having a "closeout" or "clearance" sale when it was bringing in new merchandise for the sale?



8. You own a golf equipment store.  Every year you advertise a week-long, 50% off sale on golf balls in early April. You usually sell about 250 boxes, so that’s the number you order again this year.  But this year spring comes early, and golf courses are open by the time your sale begins. You sell out on the first day. Have you violated CF 103?

    ----no; you had sufficient quantity
    ----103.01 (c) linked from lecture notes
    ----note that this is a separate violation as well as an indicator of bait advertising



9. Same facts as #8. Do you have to give rain checks to customers who want to buy the advertised balls during the sale period?

    ----yes
    ----103.01 (d)
    ----what's a "rain check"?



10. Same facts as #8, but assume that midway through the first day you realize you're selling out and put up a sign in the window and at the register limiting customers to one box per person. Does that get you off the hook?

    ----no
    ----103.03 (b)
    ---this is the section on limitations on offers
    ----note all the sections of 103.03


11. Same facts again. Could you have avoided any CF 103 problems simply by adding "quantities limited" in your ad?

    ----No!!!
    ----OK under the FTC Guides
    ----Under CF 103 must specify quantity
    ----103.01 (c) and (d)



Go over 103.01 (a) and (b)


Cases

People v. Glubo (disparagement)


Local Cases (Bait & Switch)

House of Sewing 103.01 (b)

Meat Masters


Local Cases (Limitations on advertised offers)

Burlington Hyundai

Guiduli--$40 for eye exam; must pay if keep lenses more than 4 months

Shearer Chevrolet

Staples