17136C Understanging Buyers

Ch.13 Legal and ethical issues

Section A:True or False

1. The ACCC is the federal organisation whose charter is to strengthen the rights of consumers.

Answer: T page 380

2. Consumer protection laws in Australia exist only at federal level.Answer: F page 380

3. The advertising industry has adopted a system of self-regulation, which means they don’t need to pay attention to the ACCC.

Answer: F page 380

4. Voluntary industry codes of practice cover ethical areas of behaviour by marketers in their dealings with consumers.

Answer: T page 381

5. The Advertising Standards Board is responsible for making sure that advertisements reach a certain standard of excellence.

Answer: F page 381

6. Industry codes of practice are designed to enhance the image of the industry by making sure that members behave legally and ethically.

Answer: T page 381

7. Industry codes of practice, particularly those associated with advertising, are always adhered to.

Answer: F page 384

8. One of the major legislative impacts on this industry in recent years is the introduction of the National Privacy Principles.

Answer: T page 388

9. The ADMA code of conduct covers the use of SMS in direct marketing.

Answer: T page 388

10. Activities which are unethical are also illegal.Answer: F page 390

17136C Understanging Buyers

Ch.13 Legal and ethical issuesSection B: Multiple Choice

Question 1The Australian Consumer Association is:a) Independentb) Non-politicalc) Government fundedd) a and b onlyAnswer: Dpage 380

Question 2One of the most significant changes in the Australian government regul

atory environments is:a) The abolishment of the Trade Practices Actb) The establishment of the Australian Competition and Consumer Co

mmission (ACCC)c) The abolishment of the Price Surveillance Actd) All of the above are significantAnswer: Bpage 380

Question 3Industry self-regulation means the:a) State level regulates a certain industryb) Federal level regulates a certain industryc) Local municipal level regulates a certain industryd) Industry regulates itself through its own formulation of rulesAnswer: Dpage 380

Question 4In Australia, the various forms of self-regulation cover a broad range of

industries, including:a) Advertisingb) Direct marketingc) Financial services sectord) All of the aboveAnswer: Dpage 380

Question 5The ACCC has conducted enquiries into:a) Telecommunicationsb) Petrolc) Fitness productsd) All of the aboveAnswer: D page 380

Question 6In Australia, the ________________ is responsible for handling compla

ints about the content of particular advertisements in all media, and whether or not an ad has breached certain codes.

a) Media Council of Australiab) Advertising Standards Boardc) Advertising Federation of Australiad) Advertising CouncilAnswer: Bpage 381

Question 7An industry code of practice is:a) An attempt to raise the image of the industry through ethical behavio

urb) The same as the Trade Practices Act, but focused on the industryc) Something to make consumers think the industry cares about themd) Compulsory for all businesses within the industryAnswer: A page 381

Question 8The existence of an industry code of practice:a) Means consumers can trust everyone in the industryb) Means businesses that do not sign up for it will be excluded from th

e industryc) Does not provide a guarantee that all businesses within the industry

will behave ethically d) Means the industry association can force members to adhere to itAnswer: Cpage 381

Question 9The federal and state governments are considering introducing legislati

on to cover car advertising, because:a) They feel like itb) Advertisements show unsafe driving practices, despite the voluntary

code of conductc) There is too much bad language in car advertisementsd) To blame advertisers for road accidents Answer: Bpage 382

Question 10The Therapeutic Goods Act 1989 covers products such as:a) Prescription products onlyb) Products that are only sold in health food storesc) Any products that are marketed as having therapeutic or health ben

efitsd) Health products excluding prescription productsAnswer: Cpage 383

Question 11Advertisers of products targeted at children have:a) Additional ethical responsibilities, with a separate code for advertisin

g to childrenb) The same ethical responsibilities as all other advertisersc) Fewer ethical responsibilities than all other advertisersd) All of the aboveAnswer: A page 383

Question 12Health and obesity is:a) The latest thing politicians think they can gain votes by addressingb) An important issue to consumersc) A great marketing opportunity where advertisers can exaggerate clai

ms because consumers want to believe in quick fixesd) A social problem, but not one that advertisers need to give special a

ttentionAnswer: Bpage 383

Question 13The NSW alcohol abuse summit in August 2003:a) Didn’t discuss alcohol advertisingb) Threatened to impose compulsory regulations if advertisers didn’t st

art obeying the voluntary code of practicec) Seemed to think there was no real problem with alcohol advertisingd) Criticised alcohol advertising for anti-social and irresponsible behavi

ourAnswer: Dpage 384

Question 14The beer industry’s main lobby group’s ‘retailer alert’ is designed to per

suade retailers to:a) Stop beer theftb) Stop blatant in-store advertising of spiritsc) Withdraw in-store advertising of products directed at teenagers, but

continue selling the products to responsible adultsd) Withdraw products that are marketed aggressively to teenagersAnswer: D page 384

Question 15The reason Australian Associated Brewers proposed the ‘retailer alert’ i

s to:a) Protect the liquor advertising self-regulation system from interferenc

e by governmentb) Control all alcohol advertisingc) Force the industry to behave ethicallyd) Transfer the responsibility for teenage over-drinking from advertisers

to retailersAnswer: Apage 384

Question 16The National Privacy Act 1988:a) Protects the privacy rights of businessesb) Protects people from their busy-body neighboursc) Includes regulations about the collection and use of information abou

t individualsd) Includes regulations about the use of people’s pictures taken in publi

c settingsAnswer: Cpage 385

Question 17The Privacy Amendment (Private Sector) Act applies to:a) Businesses with an annual turnover of over $3 millionb) Businesses with an annual turnover of over $3 million and smaller b

usinesses in health services, direct marketing and contract servicesc) All businessesd) Businesses that keep data bases of their customers Answer: Cpage 386

Question 18What does adherence to the National Privacy Principles mean to busin

ess?a) A marketing tool that can increase sales through greater consumer

confidenceb) Another additional cost for business c) The removal of opportunities to increase salesd) Different rules for businesses that trade in a number of countriesAnswer: Apage 386

Question 19The Direct Marketing Association has developed its own code of practi

ce because:a) The normal advertising codes of practice don’t apply to itb) The industry is growing rapidlyc) The industry has distinct characteristics that require additional code

s of conductd) Consumers don’t really trust direct marketersAnswer: Cpage 388

Question 20SMS as a direct marketing tool is:a) Not happeningb) Growing among businesses such as pubs and clubsc) Going to be as big a problem as spam e-maild) Too expensive to useAnswer: Bpage 389

Question 21The ‘freedom of speech’ argument suggesting advertisers should be ab

le to say anything as long as it is legal:a) Is trueb) Is not truec) Disregards social behaviourd) Disregards social responsibilityAnswer: Dpage 393

Question 22Codes of conduct preventing advertisers making any claim as long as it

is legal:a) Prevent them making moneyb) Link social responsibility to the operation of a businessc) Are just a pretence to persuade governments that they don’t need to

interfere in the running of businessesd) Are just another step towards a totalitarian stateAnswer: Bpage 393

Question 23The Advertising Standards Bureau is seen as being _______________

______ in relation to advertisements that some members of the community feel are inappropriate, for example the Windsor Smith and Chivas Regal billboard advertisements.

a) Effectiveb) Ineffectivec) Supportive of the community complaintsd) Very strongAnswer: B page 394

Question 24The ACA is the:a) Australian Competitor’s Associationb) Australian Consumer’s Associationc) Australian Competition Authorityd) Australian Consumer’s AuthorityAnswer: B page 395

Question 25

It would be wise for all businesses to adhere to their industry codes of conduct because:

a) If they don’t, they may be regulatedb) If they don’t, consumers will regard them as unprofessionalc) Consumers will only buy from businesses that dod) It costs less

Answer: A page 396