| Course | BUS 225 Legal Environment of Business |
|---|---|
| Module | Module 8 |
| Paper type | Regulatory review paper |
| Length | About 1,027 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | Business Administration |
| Updated | September 2026 |
Free sample paper for BUS 225 Module 8
Selling the Switchback Line and Raising $900,000: Advertising and Securities Rules for a Growing Retailer
Student Name
Business Administration Program, Aspen University
BUS 225: Legal Environment of Business
Instructor Name
Month Day, Year
Selling the Switchback Line and Raising $900,000: Advertising and Securities Rules for a Growing Retailer
Pinecrest's owners have a two-part plan for the coming year. First, they want to promote the Switchback pack line with the slogan "Made in USA" and pay outdoor influencers to post trail photos with the packs. Second, they want to raise $900,000 to open a third store by inviting loyal customers to invest online in exchange for a share of profits. Both parts are sensible business ideas, and both are regulated. The packs are cut and sewn in a Denver workshop, but the fabric, buckles and zippers are imported. This paper reviews the plan under consumer protection and securities law and proposes changes.
Deceptive Advertising
Section 5 of the Federal Trade Commission Act prohibits unfair or deceptive acts or practices in commerce. An advertisement is deceptive if it contains a representation or omission likely to mislead a consumer acting reasonably, and the representation is material to the purchase decision. The FTC looks at the net impression of the whole ad, not isolated words, and requires advertisers to have a reasonable basis for objective claims before they make them. State consumer protection laws add parallel rules and often let consumers sue directly.
The Made in USA Claim
For an unqualified Made in USA claim, the product must be all or virtually all made in the United States, which means final assembly or processing takes place here, all significant processing takes place here, and all or virtually all ingredients or components are made and sourced here. The FTC's 2021 rule codified that standard for labels and allows civil penalties for violations (Federal Trade Commission, 2021). Fabric is the most significant component of a pack, and Pinecrest's is imported, so the unqualified claim would be deceptive. A qualified claim that is accurate, such as "Sewn in Denver from imported fabric," would be lawful and still tells customers something they value.
Influencer Posts
When a person promoting a product has a connection to the seller that the audience would not expect, such as payment or free products, the connection must be clearly and conspicuously disclosed. The FTC's 2023 revision of its endorsement guides explains that disclosures should be hard to miss, placed in the post itself rather than behind a link or in a list of hashtags, and that advertisers can be liable for endorsers' misleading claims (Federal Trade Commission, 2023). Pinecrest should give each influencer a written agreement requiring a clear disclosure such as "Paid partnership with Pinecrest" at the start of each post, forbidding claims Pinecrest cannot substantiate, and allowing Pinecrest to review and correct posts.
Is the Investment a Security?
Securities laws apply to more than stocks. An investment contract, and therefore a security, exists when a person invests money in a common enterprise with an expectation of profits from the efforts of others (SEC v. W. J. Howey Co., 1946). Customers who give Pinecrest money in exchange for a share of profits from a store the owners will run meet each element. The offering is a securities offering, and it must be registered with the SEC or fit an exemption. Advertising it on Pinecrest's website to customers generally would be a public offering, so the choice of exemption matters.
Two Exemptions
Regulation Crowdfunding lets a company raise up to $5 million in twelve months from the public, including non-accredited investors, through a single registered broker-dealer or funding portal, with an offering statement filed with the SEC, limits on how much each non-accredited investor may put in, and financial statements whose required level of review rises with the amount raised; the SEC raised the limit to $5 million in 2020 as part of changes to the exempt offering framework (U.S. Securities and Exchange Commission, 2020). A private placement under Rule 506(b) of Regulation D allows an unlimited raise but forbids general solicitation and limits sales to non-accredited investors. For a loyal customer base, crowdfunding fits the owners' goal; a private placement would suit a few wealthy investors.
Risks and Fixes
The table summarizes each part of the plan.
| Plan element | Legal issue | Risk as proposed | Fix |
|---|---|---|---|
| "Made in USA" slogan | FTC Act; Made in USA rule | High: imported fabric | Qualified claim naming imported fabric |
| Paid influencer posts | Endorsement guides | Moderate without disclosure | Written agreement; clear disclosure |
| Profit share for customers | Securities law | High if offered directly | Regulation Crowdfunding through a portal |
| Website invitation to invest | General solicitation | High outside an exemption | Limited notices allowed by the exemption |
A Compliant Plan
Pinecrest can keep both goals. It should launch the pack line with an accurate origin claim that highlights the Denver sewing, sign influencer agreements with disclosure and substantiation terms, and keep a file of the evidence behind every performance claim. For the store, it should engage securities counsel and an accountant, choose a registered funding portal, prepare the offering statement and financial statements at the required level, and limit its own website and email to the brief notices the crowdfunding rules allow, directing investors to the portal. Investor communications should be honest about risks, including that a third store might fail.
Obligations After the Raise
Raising the money is not the end of Pinecrest's securities obligations. A company that sells securities under Regulation Crowdfunding must file an annual report with the SEC and post it on its website, generally within 120 days after its fiscal year ends, until the obligation ends under the rules. Investors generally cannot resell their interests for a year. Pinecrest should also expect questions from hundreds of small investors who are also customers, which makes clear, regular communication about the store's performance both a legal and a relationship matter. Budgeting for accounting and legal work in future years belongs in the decision to raise money this way.
Conclusion
Pinecrest's plan would violate consumer protection and securities rules as proposed, but each problem has a workable fix. A qualified origin claim and clear influencer disclosures keep the marketing truthful, and a crowdfunding offering through a registered portal lets loyal customers invest lawfully. Treating these rules as part of the plan from the start will cost less than correcting violations later.
References
Federal Trade Commission. (2021). Made in USA Labeling Rule, 16 C.F.R. Part 323. https://www.ecfr.gov/current/title-16/part-323
Federal Trade Commission. (2023). Guides concerning the use of endorsements and testimonials in advertising, 16 C.F.R. Part 255. https://www.ecfr.gov/current/title-16/part-255
SEC v. W. J. Howey Co., 328 U.S. 293 (1946).
U.S. Securities and Exchange Commission. (2020, November 2). SEC harmonizes and improves "patchwork" exempt offering framework [Press release]. https://www.sec.gov/news/press-release/2020-273
BUS 225 Module 8 instructions, in plain terms
Consumer protection and securities regulation appear in Aspen's description of BUS 225, and the closing module typically has students apply them to a business decision. The exact Module 8 assignment comes through the course, so this example reviews one growth plan. State the legal test for deceptive advertising before applying it. Use the specific federal standard for origin claims and for endorsements, not general impressions. Decide whether an investment arrangement is a security using the Supreme Court's test. Compare at least two exemptions from registration and fit the choice to the company's goals. Summarize risks and fixes in one place. Propose a plan that keeps the business goals while complying, including obligations after the money is raised.
How this BUS 225 Module 8 example is built
The paper opens with the slogan, the influencer program and the $900,000 raise. It sets out the FTC deception standard, including net impression and substantiation. The origin section applies the all or virtually all standard and proposes \"Sewn in Denver from imported fabric.\" The endorsement section explains clear, in-post disclosure and advertiser responsibility for influencers' claims. The securities section applies the Howey test to a customer profit share. A comparison of Regulation Crowdfunding's $5 million limit, funding portal and investor caps with Rule 506(b) follows. A four-row table lists risks and fixes. A compliant plan and a section on annual reports and resale limits after the raise precede the conclusion.
Where the marks sit in the BUS 225 Module 8 rubric
Regulatory review papers are graded on stating legal tests correctly, applying current rules, fitting solutions to business goals and completeness. This example applies the FTC's labeling and endorsement standards to specific facts and treats the investment question with the Supreme Court's test. The APA references are SEC v. W. J. Howey Co., the FTC's 2021 Made in USA rule and 2023 endorsement guide revisions in the Federal Register, and the SEC's 2020 announcement raising the crowdfunding limit. Offering a lawful alternative for each problem keeps the paper useful to managers. Covering obligations after the raise shows understanding that compliance continues beyond the launch.
BUS 225 Module 8 help: mistakes that cost marks
A frequent weakness is treating Made in USA as true whenever final assembly is domestic. Apply the full standard, including significant components. Another is assuming that selling to friends or customers avoids securities law; apply the Howey test. Distinguish between exemptions carefully, especially rules on general solicitation. Recommend lawful alternatives rather than simply saying no. Keep dollar limits current and cite the source. Remember obligations that continue after an offering. Don't copy regulatory text at length; explain it in plain words and show how it applies to the company's specific plan, one element at a time. If the investor limits and financial statement tiers under Regulation Crowdfunding are confusing, a tutor can help you build a simple summary chart.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
More BUS 225 and Business Administration sample papers
- BUS 225 Module 1: Courts and Jurisdiction
- BUS 225 Module 2: Litigation and ADR
- BUS 225 Module 3: Contract Formation and Breach
- BUS 225 Module 4: Intellectual Property Plan
- BUS 225 Module 5: Business Crime and Liability
- BUS 225 Module 6: Agency and Employment
- BUS 225 Module 7: Discrimination and Fair Employment
- BUS 210 Module 1: Business Environment Analysis
- BUS 305 Module 7: Business Presentation
BUS 225 Module 8 questions, answered
What does BUS 225 Module 8 usually ask for?
Aspen's BUS 225 ends with consumer protection and securities regulation, so a paper applying those rules to a business plan is typical. Follow your classroom prompt.
When can a product be labeled Made in USA?
Under the FTC standard, when all or virtually all of it is made in the United States, including final assembly, all significant processing and nearly all components.
What is the Howey test?
The Supreme Court's test for an investment contract: an investment of money in a common enterprise with an expectation of profits from the efforts of others.
Where can I find a free BUS 225 Module 8 sample paper?
It is posted above in full, reviewing a retailer's Made in USA claim, influencer program and $900,000 customer investment plan, with a table of risks and fixes.
Is a profit-sharing investment from customers a security?
Usually yes; under the Howey test, money invested in a common enterprise with an expectation of profits from others' efforts is an investment contract.