NOTE: Here is where you can find advertising law information based on news briefs that appeared in past issues of the Reference Service, Advertising Compliance ServiceÔ during the month of September 1997.
NATIONAL CONSUMER EDUCATION AND ADVERTISING CAMPAIGN - FTC'S FINALIZED EXXON SETTLEMENT
FTC has OK'd as final a consent agreement with Exxon Corporation that has triggered the launch of a massive consumer education and advertising campaign. The campaign will tell consumers
that regular gasoline, not high octane, is the right fuel for most cars. Exxon is running 15-second TV ads carrying that message in 18 major metropolitan markets, including New York City, Orlando, Washington, D.C. and Dallas. Exxon also will distribute consumer information brochures at Exxon service stations nationwide.
In September 1996, FTC issued a complaint charging Exxon with making
unsubstantiated advertising claims about the ability of Exxon gasoline,
including Exxon 93 Supreme, to clean engines and reduce auto
maintenance costs. As part of its consent agreement with FTC, Exxon
agreed to produce a 15 second TV ad featuring an Exxon official who
will say,
"Most cars run properly on regular octane, so check your owner's manual and stop by Exxon for this helpful pamphlet."
The ad will run in two waves of several weeks each; the first wave is
running this month and the second will run in November. The ads will be
broadcast in those cities where Exxon aired the original ads: Austin,
Baltimore, Baton Rouge, Boston, Charleston-Huntington, Corpus Christi,
Dallas, Houston, Nashville, New York, Norfolk, Orlando, Philadelphia,
Pittsburgh, Richmond, San Antonio, Tampa and Washington, D.C. The
settlement requires that Exxon run the ads frequently enough to reach
75% of the adult viewing audience in each city, an average of nearly
four times per person.
The agreement also requires that Exxon produce a free consumer brochure
to be distributed to Exxon's 8,700 service stations nationwide. The
brochure, which Exxon must distribute for two years, lists questions
and answers about octane. It advises that "[o]rdinarily, your car will
not benefit from using a higher octane than is recommended in the
owner's manual," which is usually unleaded regular (87 octane). The
brochure also explains that higher octane gasoline may be needed for
cars that are designed to run on higher octane or the small percentage
of cars that experience heavy or continuous engine knock at the
recommended octane level.
In addition to the consumer education remedy,
the order bars Exxon from making claims about the engine cleaning
ability of any gasoline or the effect of any gasoline on automobile
maintenance or maintenance costs without adequate scientific evidence
to back them up.
FTC and the American Automobile Association (AAA) joined together to
issue "Facts for Consumers: The Low Down on High Octane Gasoline." It
and another FTC consumer publication--"Saving Dollars at the
Pump"--will be sent to the nation's newspaper and magazine writers that
cover automotive issues. These materials will also be sent to almost
100 local and syndicated radio talk shows that discuss automobiles.
(Exxon Corporation, FTC File No. D09281, September 17, 1997.)
FTC FINAL AGREEMENTS INVOLVE SPANISH-LANGUAGE ADS
FTC's recently finalized consent agreement with Efficient Labs, Inc., and company officer Blas Reyes-Reyes settles charges that their Spanish-language ads for Venoflash--a dietary supplement composed of vitamins and plant derivatives--included unsubstantiated claims that the product will remove dangerous clogs in the circulatory system and treat the symptoms of varicose veins and hemorrhoids. FTC's consent order requires the respondents to have scientific substantiation to back up future representations regarding the health benefits, performance, safety or efficacy of any food, drug, cosmetic or dietary supplement promoted or used to treat conditions or illnesses related to the circulatory system.
(Efficient Labs, Inc., et al., FTC Dkt. No. C-3768, September 19,
1997.)
A consent agreement with Rogerio Monteiro, and Eliana Crema, doing
business as Leeka Products, settles charges that their Spanish-language
ads for Super Formula Reductora (a purported weight-loss nutritional
supplement), Crema Sudadora Perfect Shape (promoted as a way to improve
the results of exercise) and Tratamiento para Combatir la Caida del
Cabello (a purported hair loss product) contained unsubstantiated
claims. FTC also alleged that the Super Formula Reductoria ads
contained false claims that scientific studies of chromium picolinate
demonstrate that this product will cause weight loss.
FTC's consent order requires respondents to have scientific evidence to support the challenged claims and any other claim they make about the benefits, efficacy or performance of any food, drug, cosmetic or dietary
supplement. The order also bars them from using the name Tratamiento
para Combatir la Caida del Cabello (Treatment to Fight Hair Loss) or
other names that represent that a product prevents or retards hair loss
unless they can substantiate that it does. Finally, the consent order
bars respondents from misrepresenting the existence or conclusions of
any test, study or research.
(Leeka Products, et al., FTC Dkt. No. C-3767, September 19, 1997.)
PROPOSED CONSENT ORDERS INVOLVE UNORDERED ADVERTISING
Two former managers of a publishing company agreed to settle FTC charges that they misrepresented how and where their publications are distributed and tried to collect money for unordered advertising from others.
Defendants Randy B. Lonis and Raymond Celie, under separate but
identical settlements, would be barred from making future false or
misleading claims in connection with the sale of any advertisement,
publication or program. Also, the proposed settlements would require
Celie and Lonis to each post a bond in the amount of $500,000 before
entering the business of selling advertisements.
Last April, FTC and 50 state Attorneys General, Secretaries of State
and other state charities regulators announced, "OPERATION FALSE
ALARM," an unprecedented attack against "badge-related" fund-raising
fraud. The joint federal/state law enforcement and public education
campaign targeted the deceptive activities of certain for-profit
fund-raisers who misrepresent ties with police departments, fire
fighters and other community organizations.
FTC's complaint also named the following individuals: Dean R. Thomas,
the director, president and secretary of The Dean Thomas Corporation,
The Game Club, Inc., Professional Publishers, Inc., and Thomas
Publishing Company, Inc.; and Randy B. Lonis and Ray Celie, who
operated and managed one or more of the defendant corporations. Under
the settlements, Celie and Lonis would be barred from making false or
misleading representations in connection with the sale, distribution,
marketing or sponsorship of any advertisement, publication, program or
product, and would be prohibited from misrepresenting their affiliation
with any national, state or local organization. Also, Lonis and Celie
would be barred from selling, renting or otherwise disclosing any
identifying information about any customer who bought advertisements
from them.
As part of "Operation False Alarm," FTC filed charges against Dean
Thomas and his companies, alleging that the defendants convinced small
businesses in more than 18 states to pay for "advertising" in their
publications by falsely claiming that their booklets enjoy a widespread
distribution in the businesses' local communities. Businesses who
refused the advertising appeal were later barraged with false invoices
and other collection efforts for the unordered advertising, according
to FTC.
FTC's complaint alleged that the defendants misrepresented that
advertising proceeds would support a local, civic purpose. FTC also
alleged that the defendants misrepresented that businesses had
previously authorized advertising for which they were obligated to pay,
and that businesses had ordered the advertisements billed to them and
must pay the invoices or face collection action.
FTC filed the stipulated final judgments with Lonis and Celie in the
U.S. District Court for the Northern District of Indiana, Fort Wayne
Division, on Sept. 16. The settlements are subject to approval by the
judge. Charges still are pending against the remaining defendants.
NOTE: The judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. The settlements have the force of law when signed by the judge.
(Randy B. Lonis, et al., Civil Action No. 1:97CV 0129. FTC Matter No:
x970045, September 18, 1997.)
FTC FINAL ORDERS INVOLVE EXERCISE EQUIPMENT CLAIMS
A recently finalized consent order with Icon Health and Fitness, Inc., IHF
Capital, Inc., and IHF Holdings, Inc., settles charges that they made
unsubstantiated claims about the weight-loss benefits of the "Proform
Cross Walk Treadmill." FTC's order requires respondents to have
substantiation for future claims about the weight-loss, calorie-burning
or fat-burning benefits of any exercise equipment. Also, the order
requires that testimonials in the respondents' advertising either
represent the typical experience of users, or include disclosures of
the generally expected results or some statement making clear that
consumers should not expect to experience similar results.
(Icon Health and Fitness, Inc., et al., FTC Dkt. No. C-3765, September
12, 1997.)
Separately, a finalized consent order with Life Fitness, settles
charges that it made unsubstantiated claims about the weight-loss
benefits of its Lifecycle stationary exercise cycle. The order requires
Life Fitness, and its general partner, The Life Fitness Companies L.P.,
to have substantiation for future claims about the weight-loss,
calorie-burning or fat-burning benefits of any exercise equipment. It
also bars them from misrepresenting the result of any test, study or
research relating to these types of benefits.
(Life Fitness, FTC Dkt. No. C-3766, September 12, 1997.)
INTERNET MATERIALS: Materials relating to these FTC matters are
available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
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 $11,000.
September 1997 Advertising Law News...
From: Advertising Compliance ServiceÔ.
