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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 November 1999.



For the first time, FCC and FTC are joining forces to zero in on the advertising practices of telecommunications companies.

William Kennard, FCC Chairman, and Robert Pitofsky, FTC Chairman, met on November 4, 1999 at FCC in a Joint Forum with Industry, Government and Consumer Groups. Their stated purpose for the meeting:

"Consumers have reported being confused and often misled by the claims made by companies marketing long distance services. New services, including `10-10' numbers and discount calling plans, are heavily promoted in prime time TV commercials, in national newspaper and magazine campaigns, and through major direct mail promotions. The Truth-in-Advertising Joint Forum will provide an opportunity to discuss how these long distance services are advertised and marketed."

The FCC "Fact Sheet" details some of the key background information involving this area:

  • Number of marketing/advertising-related complaints the FCC has received between:
  • January 1, 1999 - June 30, 1999: 989
  • January 1, 1998 - June 30, 1999: 2919
  • 20% of U.S. households have used a dial-around service in the past year.
  • The dial-around service market represents 7.5% of the long distance market.
  • Revenue of the dial-around service market:
  • 1993 - $96 million
  • 1999 - $3 billion

In his remarks at this Forum, FCC Chairman Kennard noted that,

"Consumers now have more choices than ever and long-distance calling rates that are the lowest in history. Today, virtually every American can find a calling plan, calling card, or 10-10 dial-around number that saves money -- no matter where they live, how many calls they make a month, or where they call."

He said FCC could help consumers further by helping "consumers find the deal that's right for them." So Kennard announced a new FCC initiative called "Market-Sense." At FCC's website, the "Market-Sense Consumer Tips," lets consumers find useful tips in choosing a calling plan and service provider that saves them money.

In addition, Kennard said that he's "particularly concerned" about ads for 10-10 dial-around plans. He noted that:

"These 10-10 services are a growing and increasingly lucrative part of the long-distance market. According to one telecommunications research firm, approximately 20 percent of U.S. households used a dial-around service at least once in the past year. In 1993 dial-around plans made up about $96 million of the long-distance market; today such plans make up nearly $3 billion of the market, roughly 7.5% of the $40 billion long-distance industry."

. . .

But dial-around can be confusing. I have seen these ads. And, although I consider myself a sophisticated telecommunications consumer, I find some of these ads confusing, and I know that consumers are confused.

They are filing complaints with their elected representatives and they are writing to us saying they have been deceived by ads that promised them one thing and then delivered them something else. In the last six months of 1998, the FCC received 250 complaints about misleading advertisements for dial-around services, and in the first six months of this year the Commission has been deluged by over 3,000 complaints about phone advertising and marketing in general."

Kennard warned that, "Under FCC precedent, misleading advertisements by carriers are unjust and unreasonable practices and thus violate the Communications Act. And we will not hesitate to step in and take strong enforcement action where warranted."

(FCC Chairman Kennard's Remarks at FCC-FTC Truth-in-Advertising Public Forum, Washington, DC, November 4, 1999; FTC Media Advisory, November 4, 1999; FCC Fact Sheet, sent to Advertising Compliance Service(TM), November 5, 1999.)



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