Future Business Leaders of America (FBLA) Business Management Practice Test

False advertising is prohibited by which act?

1. Wheeler-Lea

2. Sherman

3. Clayton

4. Food, Drug, and Cosmetic

The correct answer is: Wheeler-Lea

The Wheeler-Lea Act is the correct answer because it specifically addresses false advertising and unfair or deceptive acts or practices in commerce. Enacted in 1938 as an amendment to the Federal Trade Commission Act, this legislation empowers the Federal Trade Commission (FTC) to take action against misleading advertisements that could harm consumers and competition. This act recognizes that false representations can lead consumers to make uninformed decisions, thus promoting fair competition and protecting consumer interests. The Sherman Act primarily focuses on antitrust issues, prohibiting monopolistic behaviors and strategies that restrict trade. It does not address false advertising directly. The Clayton Act, meanwhile, deals with specific practices like price discrimination, exclusive dealings, and mergers that may lessen competition, but it does not encompass false advertising directly either. The Food, Drug, and Cosmetic Act regulates the safety and labeling of food, drugs, and cosmetics, ensuring that they are safe for consumer use, but it also does not specifically cover the broader spectrum of false advertising alone.