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COMPANY AGREES TO PAY $325,000 OVER "FABRICATED MOVIE REVIEWERS"
On March 12, 2002, Connecticut Attorney General Richard Blumenthal and Department of Consumer Protection Commissioner James T. Fleming reached a settlement with Sony Pictures Entertainment Inc. in which the company agreed to pay $325,000 to the State.
In addition to the monetary payment, Sony agreed to stop using "fabricated movie reviewers" and stop distributing ads in which Sony
employees pretend to give "person on the street interviews" praising Sony movies they had just viewed.
Connecticut had been investigating Sony for alleged violations of the Connecticut Unfair Trade Practices Act (CUTPA).
"These deceptive ads deserve two thumbs down -- and now are getting a third from Sony itself," Blumenthal said. "Sony deserves credit for
acting to prevent this type of deception. But the whole industry may need a reality check. Deceptive ads, designed to lure moviegoers, have
no legitimate place in the entertainment business. Delusion belongs on the big screen, not in the ads."
"What Sony did was like having a chef pose as a food critic and then give his own restaurant four stars." So said Consumer Protection
Commissioner James Fleming. He added:
"Consumers spend millions of dollars attending movies each year, and many consumers base their selection of a film on critics' reviews.
There was no David Manning movie critic, there were no `people on the street,' and the rave reviews were Sony's. This is why I authorized
this lawsuit: Consumers expect movie critics to be independent of the film producers. I'm pleased that my action has resulted in both civil
penalties and an injunction against Sony from continuing this deceptive practice. Consumers have a basic right to honest advertising and the movie industry is no exception."
The Attorney General's office began investigating Sony Pictures' advertising practices last summer after hearing reports that the movie
studio had been attributing favorable movie reviews to David Manning of the Ridgefield (CT) Press--no such person works for the newspaper.
(Connecticut Attorney General's Office, Press Release, March 12, 2002.)
INFORMATION BROKERS SETTLE FTC CHARGES
Information brokers who allegedly used deception to get consumers' confidential financial information agreed to settle FTC charges that their practices violated federal law. The settlements bar the operators from obtaining or hiring others to get consumers' financial information through illegal means or by hiring or contracting with others who use illegal methods to get consumers' financial information. The settlements also require that the defendants give up the money they made in the allegedly illegal scheme.
In April 2001, FTC filed suit in three U. S. District Courts to halt the operations of information brokers who allegedly used false pretenses, fraudulent statements, or impersonation to illegally obtain consumers' confidential financial information - such as bank balances - and sell it. The practice of obtaining consumers' private financial information under false pretenses is known as "pretexting." The Gramm-Leach-Bliley Act specifically outlaws pretexting and soliciting others to pretext.
FTC charged that defendants maintained Web sites where they advertised that they could get non-public, confidential, financial information -- including such things as checking and savings account numbers and balances, stock, bond and mutual fund accounts and safe deposit box
locations -- for fees ranging from $100 to $600, depending on the information sought.
In sting operations set up by FTC in cooperation with local banks, investigators established dummy bank accounts in the names of
cooperating witnesses and then called defendants posing as purchasers of the defendants' pretexting services. In the three cases, an FTC
investigator posed as a consumer seeking account balance information on her fiance's checking account. The investigator provided limited
information about her "fiance's" account to the defendants. The defendants or persons they hired called the bank, identifying
themselves by the name of the supposed "fiance," and asked to check his balance. The defendants later provided the account balance information to the FTC investigator.
FTC asked the courts to halt the allegedly illegal practices permanently, freeze the defendants' assets pending trial, and order
them to give up their "ill-gotten gains". The courts temporarily enjoined the defendants from continuing the illegal practices and
imposed partial freezes of their assets pending trial, according to FTC.
NOTE: Consent judgments are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent
judgments have the force of law when signed by the judge.
(Information Search, Inc., et al., FTC File Nos. X01 0041, X01 0042, X01 0043, March 8, 2002.)
MURIS: LET FTC TAKE ON TELECOMS FOR MISLEADING AD CLAIMS
FTC Chairman Timothy Muris wants his agency to be able to go after telephone companies that make misleading ad claims. In a recent speech to the Consumer Federation of America, Muris pointed out that the Federal Communications Commission (FCC) and state regulatory agencies
currently have regulatory authority over the telecoms. He said that no longer makes sense now that the days of AT&T's monopoly in this area
are long over and deregulation allows many telephone companies to compete. "The world of telecommunications services has undergone a sea
change. The 'common carrier' exemption can stand in the way of meaningful consumer protection. It should be changed," Muris said.
(Speech by FTC Chairman Timothy Muris to Consumer Federation of America, March 2002.)
FTC WANTS BUDGET HIKE OF $20.53 MILLION
FTC Chairman, Timothy J. Muris, testified on FTC's behalf before the Senate Appropriation Committee's Subcommittee on Commerce, Justice, State, and Judiciary on the agency's fiscal year (FY) 2003 budget request. The testimony highlighted program priorities in the FTC's two missions, including a substantial increase in the agency's efforts dedicated to privacy protection and aggressive enforcement of antitrust laws.
During FY 2003, Muris said, FTC will address significant law enforcement and policy issues throughout the economy, devoting the
major portion of its resources to those areas in which the agency can provide the greatest benefits to consumers. Consumer protection
initiatives discussed were: privacy; Internet law enforcement; health, safety, and economic injury; media violence, gambling, and children;
globalization; and consumer outreach.
Among the privacy areas Chairman Muris outlined as specific targets for law enforcement efforts were:
Enforcing privacy promises.
Enforcing the Children's Online Privacy Protection Act (COPPA). Bringing actions against fraudulent or deceptive spammers.
Challenging "pretexting."
Chairman Muris also discussed other important aspects of FTC's consumer
protection agenda, briefly highlighting accomplishments and priorities
such as:
Aggressive Internet Law Enforcement
FTC will continue aggressively to monitor the Internet to ferret out
frauds and schemes. Since 1994, the FTC has brought 222
Internet-related law enforcement actions against 688 defendants,
stopping consumer injury estimated at more than $2.1 billion.
Health, Safety and Economic Injury
FTC will continue to bring law enforcement actions in cases involving
consumers' health and safety, and in cases resulting in significant
economic injury to consumers.
Media Violence, Gambling and Children
FTC is continuing to monitor the marketing of so-called violent media
to children, and will release a third follow-up report in June 2002.
The Commission's staff also is conducting research on appropriate
consumer education messages for parents. Also, the agency is working to
respond to the language in last year's appropriations conference report
as to the marketing of online gambling sites to children.
Globalization
FTC will continue to participate in international efforts to craft
policies and self-regulatory programs to protect consumers, to build
new international partnerships to tackle cross-border fraud, and to use
its Consumer Information System, a consumer complaint database, to
identify and target the most serious consumer problems.
Training Enforcement Officials to
Bring Cases Involving New Technologies
FTC also will continue training enforcement officials on how to bring
cases involving new technologies. Since FY 2001, the FTC has educated
more than 1,750 law enforcement personnel from more than 20 countries,
38 states, 23 U.S. federal agencies, and 19 Canadian agencies on use of
the fraud database.
Consumer Outreach
FTC places great emphasis on consumer outreach targeting fraud and
deception. In FY 2001, FTC issued 77 publications, distributed more
than 5.4 million print publications, and logged more than 9.6 million
accesses of its publications on the ftc.gov Web site. The FTC also will
continue to host workshops to highlight its activities and resources
for congressional district office staff. By July 2002, FTC will have
held workshops in each of its regional offices for all congressional
district offices.
(Prepared Statement of the Federal Trade Commission, In Support of the
Commission's Fiscal Year 2003 Appropriation Request Presented By
Chairman Timothy J. Muris Before the Subcommittee on Commerce, Justice,
State, and the Judiciary of the Committee on Appropriations, United
States Senate, March 19, 2002.)
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