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24 October, 16:18

Ralph Watkins is the president of Animal Crackers, Inc. Animal Crackers operates childrens' clothing stores. Ralph has just received notice of charges by the Federal Trade Commission (FTC) against Animal Crackers for deceptive advertising. Watkins wishes to know the company's rights. Which of the following statements is true?

A) Animal Crackers is entitled to a jury trialB) Animal Crackers could dispose of the matter through a consent decree. C) Animal Crackers is facing criminal charges. D) Animal Crackers will have a 30-day comment period.

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  1. 24 October, 17:35
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    The correct options are B) and D)

    Animal Crackers is not facing criminal charges.

    In the above question, likely, the Federal Trade Commission (acting well within the powers of the enabling Act) has reasons to believe that Ralph Watkins is engaging in unfair competition in violation of laws enforced via the FTC Act hence the notice of charges.

    What Ralph Watkins can do is to settle the charges without any admission of guilt or liability.

    It can do this by signing a consent agreement. A consent decree is a signed arrangement entered as an enforceable court order. A settlement agreement is an out-of-court resolution requiring the defendant to sign a deal, or memorandum of understanding, and results.

    If the court accepts this agreement, it proceeds to place it on record for 30 days to allow for public comment. The court may decide to place the agreement on record for more than 30 days.

    After it has been placed on record for public comment, the order is made final.

    Ralph Watkins will only be faced with Criminal charges if it consistently and continually violates the FTC Act and court orders concerning deceptive advertising.

    The role of the FTC is mostly preventive.

    Cheers!
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