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Note:This website is where you can find advertising law information based on archived news briefs from past issues of Advertising Compliance Service. These archived advertising law-related news briefs were published in Advertising Compliance Service in February 2003.





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Mrs. Fields Cookies and Hershey Foods Corporation have each agreed to settle FTC charges that their websites violated the Children's Online Privacy Protection Act (COPPA) Rule by collecting personal information from children without first getting the proper parental consent. Mrs. Fields agreed to pay civil penalties of $100,000 and Hershey will pay civil penalties of $85,000. Under the separate settlements, both companies agreed not to violate the Rule in the future. These civil penalties represent the biggest COPPA penalties awarded to date.

The COPPA Rule applies to operators of commercial Web sites and online services directed to children under the age of 13 and to general audience Web sites and online services that knowingly collect personal information from children under 13. Among other things, the Rule requires that Web site operators obtain verifiable consent from a parent or guardian before they collect personal information from children.

According to FTC's complaints, the Mrs. Fields and Hershey sites each violated the COPPA Rule when they didn't get verifiable parental consent before collecting personal information from children under 13. Also, FTC claimed that the sites didn't post adequate privacy policies, provide direct notice to parents about the information they were collecting and how it would be used, and provide a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use.

FTC's vote to approve the complaints and consent decrees was 5-0. The U.S. Department of Justice filed the Hershey Foods complaint and consent decree in the U.S. District Court for the Middle District of Pennsylvania in Harrisburg, and the Mrs. Fields complaint and consent decree were filed in the U.S. District Court for the District of Utah, Central Division on February 26, 2003 at FTC's request.

NOTE: A consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

(Hershey Foods Corporation, Civil Action No. 4:CV03-350, February 27, 2003; Mrs. Fields Cookies, Civil Action No. 2:03 CV205 JTG, February 27, 2003.)


FTC Chairman, Timothy J. Muris, issued the following statement in reference to the Do Not Call Registry:

"The President has signed the Omnibus appropriations bill into law, providing funding to allow the Federal Trade Commission to begin to develop a national Do Not Call registry. Additional authorizing legislation for the registry is expected to be signed shortly. I am delighted that the FTC can now respond to consumers' pleas to end unwanted telephone intrusions into their homes, and I appreciate the support and confidence of the Congress and the President and the efforts of my fellow Commissioners to make the Do Not Call registry a reality.

During the next few days, the Commission will start building the Do Not Call registry. Consumers will have the opportunity to sign up for the registry sometime this summer, and the registry should be fully functional and available to telemarketers by September. By fall, consumers should begin to notice fewer unwanted telemarketing calls.

Additional details about how consumers can sign up for the registry and how telemarketers can access the registry will be announced later this spring. General information about the Do Not Call registry is available at"

(Timothy J. Muris Statement Regarding the Do Not Call Registry, February 21, 2003.)


FTC filed a complaint in federal district court, charging Preferred Alliance, Inc. and its principal Bruno Faillace, with a range of illegal activities concerning the company's sale of buying club memberships through third-party telemarketers. According to FTC's complaint, defendants' telemarketers didn't tell consumers that a supposedly "free" no obligation trial offer was actually a "negative option" plan, under which defendants would automatically charge purchasers a $99.95 annual fee if they didn't cancel by the end of the trial period and in a prescribed manner.

Variety of Advertised Products

FTC's complaint charged that Preferred Alliance solicited prospective customers using deceptive telemarketing, followed-up by misleading direct mail. Defendants allegedly used third-party telemarketers whom consumers had contacted directly to purchase a variety of advertised products, including vitamins and diet aids.

According to FTC's complaint, defendants violated Section 5 of the FTC Act, the Telemarketing Sales Rule, Truth in Lending Act, and Regulation Z in the following ways:

(1) Either directly or through third-partly telemarketers, defendants allegedly failed to disclose material information to consumers, including the negative-option aspects of the upsell.

(2) They allegedly unfairly billed consumers without their knowledge or authorization.

(3) They allegedly failed to promptly credit consumers for money they were owed.

FTC's vote authorizing the staff to file the complaint in federal district court was 5-0. It was filed in the U.S. District Court for the Northern District of Georgia, Atlanta Division on February 12, 2003.

NOTE: The Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant actually has violated the law. The case will be decided by the court.

(Preferred Alliance, Inc., et al., FTC File No.: 022-3072, Civil Action No.: 03-CV-0405, February 14, 2003.)


The lawsuit involving pop-up ads on the Internet brought by several large media companies--including the Washington Post Co., The New York Times Co. and Dow Jones & Co.--has been settled. These large news publishers had sued The Gator Corp. for trademark and copyright infringement--among other causes of action--over Gator's pop-up ads. Deatails of the settlement were not made public.

(See: Washingtonpost.Newsweek Interactive Company, LLC, et al. v. The Gator Corporation, U.S. District Court for the Eastern District of Virginia, Alexandria Division, Civil Action No. 02-909-A, Filed June 25, 2002.)


FTC Chairman Timothy J. Muris has appointed Stephen J. McGuire to serve as FTC's Chief Administrative Law Judge (ALJ). McGuire replaces James P. Timony, who retired in late January 2003 after 27 years as an FTC ALJ. McGuire currently serves as an Administrative Law Judge with the Environmental Protection Agency (EPA), as well as Alternative Dispute Resolution (ADR) Neutral in EPA's office of Administrative Law Judges. He will assume his new post on March 3, 2003.

(FTC Release, February 13, 2003.)


On February 14, 1903, Congress created the Bureau of Corporations (BC), FTC's predecessor. The Bureau was created as an investigatory agency within the Department of Commerce and Labor, also created on February 14, 1903. On February 14, 2003, FTC commemorated BC's 100th Anniversary.

(FTC Release, February 14, 2003.)
















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