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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 February 2000.



FTC has OK'd the publication of a Federal Register notice amending the FTC's Appliance Labeling Rule. FTC is now granting manufacturers of residential appliances covered by the Rule a conditional exemption from the Rule's ban against the inclusion of nonrequired information on Energy Guide labels. This exemption lets appliance manufacturers put the logo of the Department of Energy (DOE) and Environmental Protection Agency's (EPA) joint "ENERGY STAR" Program on required Energy Guides on some appliances under certain conditions.

"Federal Trade Commission" must now be included on all Energy Guide labels so consumers and others will be clear as to the identity of the agency with the authority to enforce the rule requiring the Energy Guide labels.

(FTC Release, FTC File No. R611004, February 25, 2000.)


FTC wants public comment on the provisions of a plan by to issue a "seal of approval" indicating that Internet web sites that comply with its provisions meet the requirements of FTC's Children's Online Privacy Protection Rule.

In October 1999, FTC issued a rule requiring children's website operators (actually, virtually all commercial web sites) to post comprehensive privacy policies on their sites, notify parents about their information practices, and obtain parental consent before collecting any personal information from children under the age of 13. The rule takes effect April 21, 2000. It was issued in compliance with the Children's Online Privacy Protection Act, passed by Congress in 1998.

The Act also directed FTC to review and approve guidelines that would serve as "safe harbors" - industry self-regulatory guidelines that would, if adhered to, comply with the Act - within 180 days of the application. The safe harbor application is the first the FTC has received under the Rule.

NOTE: Publication of this Federal Register Notice does not indicate Commission approval of the safe harbor application. The Commission has 180 days to review proposed self-regulatory guidelines and must set forth its conclusions in writing.

(FTC - Safe Harbor, FTC File No. P00 4504, February 28, 2000.)


Telemarketers charged with sending unordered merchandise to small businesses across the U.S. and then billing them for it has agreed to settle FTC and State of Illinois charges that it was violating federal law. The settlement bars National Maintenance Supply, Inc., and its owner Jack F. Nugent, from any future telemarketing of office, cleaning or janitorial supplies and requires payment of $80,000 in consumer redress.

National Maintenance Supply was initially sued as part of "Operation Clean Sweep," a joint law enforcement operation by FTC, the Illinois and Indiana Attorneys General, and the U.S. Postal Inspection Service, aimed at allegedly fraudulent telemarketers in the Chicago area who target small businesses.

To settle FTC and Illinois charges, Nugent and National Maintenance Supply also agreed to be barred from advertising, promoting, marketing, or telemarketing office or cleaning supplies in the future.

The Stipulated Order For Permanent Injunction was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division in Chicago.

NOTE: A Stipulated Order For Permanent Injunction is for settlement purposes only and does not constitute an admission by the defendant of a law violation. The stipulated order was signed by the judge and has the force of law.

(National Maintenance Supply, Inc., FTC File No. 992 3227, Civil Action No. 99 C 1057, February 29, 2000.)


On February 10, 2000, California Attorney General Bill Lockyer, Monterey County District Attorney Dean D. Flippo and Los Angeles City Attorney James K. Hahn filed a consumer protection lawsuit against AirTouch Cellular and Tandy Corporation over an alleged conspiracy of false advertising and unfair business practices in the marketing of cellular telephone service. "Surprising customers with extended contracts and early cancellation fees is wrong," Lockyer said. "Consumers should be on the alert about the terms of a contract and any early cancellation penalties before buying cellular phones and services."

The lawsuit stems from consumer complaints about AirTouch Cellular advertising and promotion of a "No Regrets Policy" and "Calling Plan Flexibility." Customers who signed up were told they could switch pricing plans at any time without incurring an early termination fee or extending the agreement service period, according to the California Attorney General. In its news release, the California AG said--

"Consumers complained about having regrets after signing up for the cellular phone service and a lack of flexibility in their calling plans. In the lawsuit filed in San Francisco Superior Court, state and local prosecutors allege that AirTouch Cellular and Tandy Corp., which sells AirTouch Cellular service through its Radio Shack stores, engaged in false, misleading and unfair business practices."

The lawsuits seek civil penalties and an injunction against the companies to prevent the practices from continuing. California law provides civil penalties of up to $2,500 for each violation.

(California Attorney General Press Release 00-031, February 10, 2000.)


The Food and Drug Administration (FDA) recently launched "cyber" letters--letters sent electronically via the Internet--to a dozen operators of foreign-based internet sites that offer to sell online prescription drugs that may be illegal. The letters warn these website operators that they may be engaged in illegal activities, and informs them of the laws that govern prescription drug sales in the U.S. This is the first time FDA has used the Internet to reach potential violators of the Federal Food, Drug, and Cosmetic Act. It also represents a new stage in FDA's efforts to go after certain products sold through websites.

In each of these internet cases, FDA sent letters electronically to the domain holders for sites it had deemed may be engaged in illegal activity such as offering to sell prescription drugs to U.S. citizens without valid (or in some cases without any) prescriptions. FDA used "various means" whereby it "has gained the ability to identify and monitor these sites." FDA has compared these "cyber" letters to traditional "warning" or "untitled" letters, which FDA sends to organizations or individuals it believes are engaged in violative activities. These letters usually outline the nature of the alleged violation and request a formal response.

The "cyber" letters also provided these foreign operators with an explanation of the statutory provisions that govern interstate commerce of drugs in the U.S., as well as a warning that future shipments of their products to this country may be automatically detained and subject to refusal of entry. Hard copies of each "cyber" letter are sent to the website operator, the U.S. Customs Service and to regulatory officials in the country in which the operator is based.

So far, FDA has already received one response from a "cyber" letter recipient indicating that it will cease its illegal activities. FDA hinted that it would expand this tactic in the future to domestic websites that allegedly sell illegal prescription drugs.

(FDA Talk Paper, February 2, 2000.)




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