Beginning in 1998 and Continuing Until Aug

question 54

Essay

Beginning in 1998 and continuing until Aug. 1, 2003, Aromatic Co. promoted the sale of its Essence of Terre Haute (ETH) brand perfume by encouraging ETH buyers to save the proof of purchase seals on ETH labels. Consumers with at least 25 proofs of purchase seals could redeem them for fabulous prizes. This promotion had caused the sales of ETH since 1998 to be well in excess of ETH sales levels from 1993 through 1998. In nationally televised announcements on Aug. 1, 2003, Aromatic stated that it was ceasing the proof of purchase program and that effective immediately, no more proof of purchase seals would be accepted for redemption. This left millions of ETH buyers with worthless proof of purchase seals, many of which came from bottles of ETH purchased within one week before Aromatic's Aug. 1 announcement. Assume that the Federal Trade Commission has brought an adjudicative proceeding against Aromatic on the theory that the Aug. 1 announcements (and the underlying decision to halt the program without giving consumers a reasonable period of time within which to redeem their seals) constituted an unfair practice in violation of Section 5 of the FTC Act. Aromatic argues, in defense, that its Aug. 1 announcements were easily understandable and contained no deceptive statements. It also argues that the elements of unfairness are not present here. Analyze and evaluate Aromatic's arguments.

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