FTC GIVES FINAL OK TO AGREEMENT WITH TV SHOPPING NETWORK
Home Shopping Network, Inc., and two of its subsidiaries, settled charges that they deceptively advertised four mouth sprays--three vitamin sprays and a stop-smoking spray--which were promoted on the Home Shopping Club program "Spotlight on Ruta Lee." FTC's final consent order requires them to have scientific evidence to support any claims (1) that a food, food or dietary supplement, or drug cures, treats or prevents any disease or has any effect on the structure or function of the human body; and (2) about the performance, benefits or efficacy of any smoking-cessation program, product or service.
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.
(Home Shopping Network, Inc., et al., FTC Dkt. No. D09272, October 1, 1996; see also Advertising Compliance Service, Tab #15, New Media, Article #23; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC CHARGES FIRM MISREPRESENTED "MONEY-MAKING" REAL ESTATE PROGRAM
Del Dotto Enterprises, Inc. (DDE), NFN Inc. and David P. Del Dotto agreed
to settle FTC charges that Del Dotto and his firms made allegedly deceptive
claims in marketing books and audio tapes about buying real estate and obtaining
credit--known as the "Cash Flow System,"--including claims that it has helped
hundreds of thousands of consumers make substantial sums of money buying
and selling real estate. Under the proposed settlement, defendants would
be barred from, among other things, misrepresenting the availability of
government grants, loans, or credit, or the scope of any product or
service concerning investments, real estate or other business opportunities.
Also, Del Dotto agreed to pay a judgment of $200,000.
In February 1995, in a complaint filed in federal court, FTC alleged that
Del Dotto and DDE made false and unsubstantiated claims that consumers trying to
use the Cash Flow System typically profit from investments in real estate and
that hundreds of thousands of customers have made substantial sums of money through
the system. FTC's complaint also alleged that Del Dotto, DDE and NFN Inc. misrepresented
and failed to deliver other goods and services sold at NFN Inc.-sponsored seminars.
The complaint also alleged that David Del Dotto and NFN Inc. misrepresented the guarantee accompanying a home business package sold at the seminars by failing to inform purchasers that there were conditions to receiving a refund. FTC also challenged as deceptive Del Dotto's and DDE's alleged failure to disclose adequately a restocking fee, amounting to 10% of the purchase price, charged on refunds.
The proposed settlement would permanently bar Del Dotto Enterprises, NFN,
Inc., and David Del Dotto from making the types of misrepresentations
alleged in FTC's complaint. Also, defendants would be specifically barred
from making any representation about the performance, benefits, efficacy or
success rate of any product or service, the profitability of using any product
or service, or the profitability of any business opportunity or direct
marketing activity, unless the representation is true and the defendants
can substantiate the representation. Also, defendants would be barred from
representing that any endorsement of a product or service represents the
typical or ordinary experience of those who use the product or service unless
it's true. Moreover, defendants would be barred from using such terms as
"Satisfaction Guarantee," "Money Back Guarantee," "Free Trial Offer," or
similar representations in advertising unless they refund the full purchase
price of the advertised product or service at the purchaser's request.
Defendants also would be barred from failing prominently to disclose material
limitations on guarantees, warranties and refund policies, and from failing to
refund money in accordance with guarantees warranties, and refund policies
within a reasonable period as prescribed by the settlement.
FTC filed the stipulated final judgment and order for permanent injunction
in U.S. District Court for the Northern District of California, in San Francisco,
on September 25, 1996.
NOTE: The stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.
(Del Dotto Enterprises, Inc., NFN Inc. and David P. Del Dotto, Civil Action No. C-95-0425-FMS) (FTC File No. 942-3229, October 2, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC SETTLEMENT INCLUDES $10,000 FOR REDRESS, $250,000 BOND REQUIREMENT
Patricia Esme Popp agreed to pay $10,000 to settle FTC charges that she
enticed consumers to call her nationally advertised 800 number with promises
of "guaranteed" loans. In fact, all she did was refer consumers to other firms
to which they could apply for loans, FTC alleged. The settlement resolves charges
FTC filed in June against Popp, who does business as Glendale Associates,
Crown Credit Services, and Star Financial Services. In its complaint, FTC
also had alleged that Popp charged consumers $25 for her "services," a violation
of the Telemarketing Sales Rule's ban on advance-fee loans. In addition to
a $400,000 judgment, of which all but $10,000 is waived unless Popp is found
to have misrepresented her financial condition, FTC settlement would bar Popp
from violating the Rule and from misrepresenting any credit offer or service
in the future. The settlement also would protect her future customers by requiring
her to post a $250,000 bond before engaging in any telemarketing effort and
before offering any credit services.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
(Patricia Esme Popp, FTC File No. X960084, Civil Action No. 4:96CV183, October 2, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC STAFF REPORT ON CONSUMERS' FAT CONSUMPTION CITES AD, LABEL CLAIMS
A recently issued FTC staff report examines changes in consumers' fat,
saturated fat, and cholesterol consumption from 1977 through 1990. The study
found that advertising and labeling claims "may have been an important part
of the information environment helping consumers make better dietary choices
during the late 1980's."
Jonathan Baker, Director of the FTC's Bureau of Economics, said, "This study is the latest in a long line of staff economic reports examining how seller advertising or information disclosure may help consumers to make more informed choices."
The study looked at detailed food consumption data, as well as annual food production data, from the U.S. Department of Agriculture, and consumer survey data on diet-health knowledge from the Food and Drug Administration. According to the study, these different types of independent data permitted examination of consumer knowledge and behavior from several perspectives, allowing a more comprehensive assessment of how diets changed as the policies governing diet-disease claims in advertising and labeling were relaxed in the mid-1980s.
An FTC release noted:
"Overall, the study provides substantial evidence that fat, saturated fat, and cholesterol consumption--for both men and women--fell significantly between 1977 and 1990, as information spread to consumers. Available evidence also indicates that improvements in these dietary characteristics occurred more rapidly and more consistently across food choices after 1985, when health-related claims became more explicit and more frequent in advertising and labeling. For instance, the study found that fat consumption per day fell approximately five percent between 1977 and 1985, but it fell by more than twice that amount between 1985 and 1990 for both men and women."
The study, Information and Advertising Policy: A Study of Fat and Cholesterol Consumption in the United States, 1977-1990, "reflects the views of its authors and not necessarily the views of the Commission or any individual Commissioner."
(Information and Advertising Policy: A Study of Fat and Cholesterol Consumption in the United States, 1977-1990, issued October 7, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC STREAMLINES GUIDELINES FOR LEATHER,
IMITATION LEATHER GOODS
If it looks like leather, is it really leather? Under FTC's recently revised guidelines, the answer is "yes," unless the manufacturer specifically discloses that the product is made of some other material. FTC's new guidelines generally warn manufacturers and retailers against misrepresenting the composition of a variety of products often made from leather--including footwear, luggage, handbags and belts -- and are intended to prevent misuse of terms such as waterproof, scratchproof and the like. The new "Guides for Select Leather and Imitation Leather Products" are effective December 2, 1996.
Under the new guidelines, if your products appear to be made of leather but they aren't, you should include a disclosure saying either that the product is not made of leather or the actual type of material from which it is made. If leather is embossed or processed to simulate a different type of leather, you should disclose the leather's true type. Also, you should disclose the composition of backing material in certain situations. The guidelines caution against misrepresentations about the leather content in products containing ground, reconstituted, or bonded leather, and state that such products, when they appear to be made of leather, should be accompanied by a disclosure as to the percentage of leather or other fiber content. The guidelines also say that these disclosures should be included in any product advertising that might otherwise mislead consumers as to the product's composition.
The new guidelines define the terms waterproof, dustproof, warpproof, scuffproof, scratchproof, scuff resistant and scratch resistant to "prevent misuse and misunderstandings."
Guidelines lack the force of law but are meant to encourage voluntary compliance with the Federal Trade Commission Act.
("Guides for Select Leather and Imitation Leather Products", FTC File No. P958011, October 3, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
FTC GRANTS PETITION INVOLVING COOPERATIVE ADVERTISING
FTC has granted in part the petition of Pendleton Woolen Mills, Inc. to reopen and modify a 1979 order, thus allowing Pendleton to engage in lawful, price restrictive, cooperative advertising and to unilaterally terminate a reseller of its products for failing to adhere to Pendleton's announced resale prices or sale periods. FTC denied Pendleton's request for one modification in the order on grounds that the change could be construed to allow agreements on advertised prices that go beyond cooperative advertising programs.
(Pendleton Woolen Mills, Inc., FTC Dkt. No. C-2985, October 1, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
October 1996 Advertising Law News...
From: Advertising Compliance Service.
NOTE: The following news brief appeared in an issue of the Reference Service, Advertising Compliance Service and examined an advertising law-related action during the month of October 1996.
