FTC FINALIZES CONSENT ORDERS WITH AD AGENCY
Do you advertise to children? Will your advertising reach substantial numbers of children? Then you should be aware of the rules, regulations, guidelines and decisions of a large variety of advertising monitors. Here's a partial list of such entities:
- Federal Trade Commission (FTC);
- Food and Drug Administration (FDA);
- State Legislatures;
- The Children's Advertising Review Unit (CARU) (the children's advertising review arm of the ad industry's self-regulatory system.
A recent administrative decision illustrates how just one of those entities--the Federal Trade Commission--can step in when it believes advertising directed to children runs afoul of its rules. FTC also entered into a separate consent order with the same advertising agency over low-fat ads.
FTC finalized two consent orders with Grey Advertising, Inc., of New York
City, settling charges over the role the advertising agency played in
advertising a paint-sprayer toy marketed by Hasbro, Inc., and The Dannon
Company's "Pure Indulgence" line of frozen yogurt. The order in connection
with the Hasbro toy resolves allegations that the commercial at issue used
a hidden motorized air compressor to misrepresent how easily children could
operate the sprayer. This order bars Grey from using deceptive demonstrations
or otherwise misrepresenting the performance of any toy.
The second order settles charges that the commercial at issue falsely implied
that some of the flavors in the Pure Indulgence line were low in fat and
calories, and lower in fat than ice cream. This order bars Grey from
misrepresenting the fat, saturated fat, cholesterol, or calories in any
frozen yogurt, frozen sorbet, and most ice cream products.
Grey Advertising, Inc. is the third largest advertising agency in the U.S.
(Grey Advertising, Inc., FTC File No. 952 3231, FTC Dkt. No. C-3690 (the toy ad order), November 1, 1996. You can find much more information about these cases in Advertising Compliance Service in the following article: "Advertiser to Pay $280,000 Civil Penalty in Toy Advertising Case," Tab #4, False, Unfair, Deceptive, Article #72.
Grey Advertising, Inc., FTC Dkt. No. C-3691 (the frozen yogurt order), November 1, 1996.
See, also, Advertising Compliance Service, "FTC Chair Gives Advertising's "State of the Union" Message at AAF Conference," Tab #4, False, Unfair, Deceptive, Article #69 and Advertising Compliance Service, Bulletin #366, page 2.
Materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC FINALIZES CONSENT ORDER WITH INVENTOR
The inventor of the "Rust Evader" agreed to pay $200,000 in consumer redress and abide by a ban on use of the names "Rust Evader" or "Rust Buster" for this or similar devices, as part of a now-finalized agreement he signed with FTC.
The final order also bars McCready from claiming that this or similar devices prevent or substantially reduce corrosion, and from misrepresenting the existence or results of test or studies or that any demonstration proves any material feature of any product for use in motor vehicles; requires him to have substantiation to back up performance or efficacy claims about any product for use in motor vehicles; and bars him from conditioning warranty coverage for any consumer product on the purchase by consumers of a certain brand-named or trade-named product or service.
(RustEvader Corporation, FTC Docket No. D-9274, November 1, 1996; see, also, Advertising Compliance Service, Tab #2, General Articles, Article #277 and Advertising Compliance Service, Bulletin #366, page 3; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web Site at: http://www.ftc.gov.)
FTC FOCUSES ON PRICE RESTRICTIVE COOPERATIVE AD PROGRAMS
Let's say you entered into a consent agreement with FTC many years ago that contain requirements that bind your company's actions to this day. But market or other conditions have changed significantly since the day you signed that agreement. Are you without recourse? No. You may petition FTC to modify that consent order based on those changed conditions.
In a recent illustrative case, FTC granted in part and denied in part a petition from Onkyo U.S.A. Corporation, of Ramsey, New Jersey, to modify a 1982 consent order. FTC granted Onkyo's request to modify the order to allow the company
to implement price restrictive cooperative advertising programs.
(Onkyo U.S.A. Corporation, FTC Dkt. No. C-3092, November 1, 1996; see also Advertising Compliance Service, Bulletin #366, page 3.)
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.
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