NOTE: Here is where you can find advertising law information based on news briefs that appeared in past issues of Advertising Compliance Service, "Your Single Essential Advertising Law Resource," during the month of January 2001.
FTC LAUNCHES "OPERATION DETECT PRETEXT": REVIEWS OVER 500 ADS, CONDUCTS SURVEILLANCE OF OVER 1,000 WEB SITES
FTC's Division of Financial Practices staff has launched "Operation Detect Pretext," conducting a surveillance of over 1,000 Web sites and a review of over 500 advertisements in the print media for firms that offered to conduct financial searches. FTC's mission: Find firms that obtain their customer information under false pretenses - a practice known as "pretexting."
During its surveillance and ad review, FTC staff identified some 200 firms that offered to obtain and sell asset or bank account information about consumers to third parties. The Gramm-Leach-Bliley Act (GLB) bars individuals from obtaining a customer's information from a financial institution or directly from the customer using false representations, fictitious documents or forgery.
On January 26, 2001, FTC staff sent notices to approximately 200 firms by e-mail or facsimile advising them that their practices must comply not only with GLB, but with other applicable federal laws, including the Fair Credit Reporting Act. The notice advised the firms that the FTC would continue to monitor Web sites and print media advertisements offering financial searches, and asked them to take steps to ensure that they complied with GLB and all other applicable federal laws.
The notice also warned the advertisers that they may face criminal penalties:
"Violations of Section 521 of GLB may result in civil penalties of up to $11,000 for each violation, as well as criminal penalties."
(Operation Detect Pretext, FTC Release, January 31, 2001.)
ADVERTISING AND PROMOTIONAL EXPENDITURES FOR SMOKELESS TOBACCO PRODUCTS HIT $170.2 MILLION
Advertising and promotional expenditures for smokeless tobacco products reached $170.2 million in 1999, according to a biennial FTC Report to Congress. The report shows that promotional allowances and point of sale advertising were the top expenditure categories in 1999, with coupons and public entertainment also contributing substantially to industry spending. The $170.2 million spent in 1999 represented a 13% increase over the previously reported 1997 expenditure figure of $150.4 million. With only two exceptions, advertising and promotional expenditures have increased every year since 1987, when slightly less than $68 million was spent.
The Comprehensive Smokeless Tobacco Health Education Act of 1986 requires FTC to report on smokeless tobacco products every two years. This 2001 report includes new 1998 and 1999 data on sales and advertising and promotional expenditures, and discusses trends in the smokeless tobacco market. Specifically, it shows the last year of spending before the implementation of Master Settlement Agreement (MSA) that United States Tobacco Company -- the largest domestic smokeless tobacco company -- signed with 48 state attorneys general, the District of Columbia, and several territories, as well as the first year affected by the MSA's phased-in restrictions on certain advertising and promotional practices.
The report shows that the total number of pounds of smokeless tobacco sold by manufacturers to wholesalers and retailers fell from 1997 to 1998, and then again in 1999, to 109.4 million pounds -- the lowest level ever reported by the Commission. Sales revenues received by the manufacturers rose, however, in both years: $1.89 billion in 1998 (up from $1.82 billion in 1997) and $1.94 billion in 1999. Revenues have increased each year since 1985.
Moist snuff has been the leader in smokeless tobacco revenues and marketing expenditures since the Commission began collecting these data and this trend continued in 1998 and 1999. Moist snuff revenues in those two years were $1.48 billion and $1.58 billion, respectively. Advertising and promotional expenditures for moist snuff -- $117.3 million in 1998 and $147.3 million in 1999 -- also exceeded the expenditures for all other types of smokeless tobacco combined. More pounds of moist snuff were sold in 1998 (56.2 million) and 1999 (58.4 million ) than all other types of smokeless tobacco combined. Before 1996, loose leaf/chewing tobacco had been the leading seller in terms of total pounds sold.
(FTC Report to Congress: Smokeless Tobacco 1998-1999, January 9, 2001.)
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