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Computer Program Surreptitiously Disconnected Consumers: Charge - News Brief.
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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 1998.



FTC has OK'd as final a consent agreement with Beylen Telecom Ltd., NiteLine Media, Inc., and Ron Tan (also known as Roeun Tan), an officer of NiteLine Media, settles charges that the firms falsely advertised that using their special "viewer" would be "free." Also, FTC charged that the firms' computer program surreptitiously disconnected consumers from their local Internet service provider and reconnected their computer modems to the Internet through an international telephone call, all without their knowledge because the program also turned off their modem speakers so that they could not hear the disconnect or the dialing of the international number. FTC alleged that Beylen Telecom Ltd. provided the "viewer" software and other "means and instrumentalities" to defraud consumers. FTC also alleged that both companies caused consumers to pay inflated phone rates to Moldova when their calls actually connected to Canada. The proposed settlement includes the payment of redress funds to AT&T and MCI, which will issue credits to their customers who were billed for the calls, and to FTC, which will issue refunds to customers of other long-distance carriers who were billed for the calls.

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.

(Beylen Telecom Ltd., et al., FTC Dkt. No. 972 3128, February 6, 1998; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at:


On February 13, 1998--as part of its ongoing effort to review and revise all of its rules--FTC published in the Federal Register amendments to its Rules and Regulations under the Textile Fiber Products Identification Act, the Wool Products Labeling Act, and the Fur Products Labeling Act. In general, the products covered by the Textile Fiber Products Identification Act, the Wool Products Labeling Act, and the Fur Products Labeling Act and regulations must be labeled as to fiber or fur content; country of origin; and manufacturer or dealer identity. The changes to the Textile Fiber Products Identification Act and the Wool Products Labeling Act Rules will streamline the disclosure requirements in the following ways:

  1. Simplify the requirements for placing information on labels by replacing some of the current detailed specifications with a performance standard--that the information be clear, conspicuous, and readily accessible to the prospective purchaser;
  2. Eliminate a requirement that the front side of a label state "Fiber Content on Reverse Side" when the fiber is disclosed on the back of the label;
  3. Allow the listing of generic fiber names for fibers that have a functional significance and constitute less than five percent of the total fiber weight of the product, without requiring disclosure of the functional significance of such fibers;
  4. Incorporate by reference the generic fiber names and definitions for manufactured fibers recognized by the International Organization for Standardization (ISO). For example, in the future labels may bear the name "Viscose" for some forms of rayon or the name "Elastane" instead of "Spandex";
  5. Modify definitions of terms such as "mail order catalog," "mail order promotional material," and "invoice," to include those generated and disseminated electronically through the Internet or E-mail.

(Regulatory Reform Update, February 13, 1998; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at:


On February 12, 1998, FTC's General Counsel testified before a House Committee and presented the agency's assessment of its compliance with the Regulatory Flexibility Act (RFA), which requires agencies to consider the impact of their rules and proposed rules on small businesses and other small entities. In testimony before the House Small Business Committee, Debra A. Valentine, speaking on behalf of the Commission, said FTC has made regulatory review and reform a high priority and has adopted an aggressive, comprehensive regulatory review program that not only meets but exceeds the requirements of the RFA. "Altogether, one-third of the Commission's rules and guides in the 1992 Code of Federal Regulations have been revoked and another 25% revised," according to her testimony. Valentine noted that by the end of this fiscal year the Commission expects to have reviewed over 80% of the rules and guides existing in 1992.

According to her testimony, the Commission in 1995 "accelerated its regulatory review process and adopted streamlined procedures" in order to review rules that may have outlived their useful purpose. Valentine pointed out that as a result of the agency's regulatory reform program, the Commission has repealed 13 rules to date (more than 30 percent of those in effect in 1992). Also, 15 of FTC's 40 industry guides have been repealed as obsolete and others have been revised or consolidated, Valentine said.

(FTC Release, FTC File No. P 859 907, February 12, 1998; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at:




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