YOU FACE $11,000 PENALTY PER VIOLATION FOR UNSUBSTANTIATED WEB SITE AD CLAIMS: FTC CASE
Many Internet advertisers probably don't realize that their ads on the Net face civil penalties of $11,000 per violation for false claims. One webvertiser recently learned that lesson: It entered a consent agreement with the Federal Trade Commission (FTC) that contains the standard FTC "warning" about what could occur in the future:
"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."
[For a look at some of FTC's past penalties, click here.]
Ads for the "Koolatron" appeared on the Internet's World Wide Web. Ads
for the product were also disseminated by direct mail and through print
ads in newspapers and magazines. These ads contained the following
allegedly false and unsubstantiated claims:
"Imagine the versatility and convenience of a cooler that
worked like a refrigerator. You could have ice-cold drinks at
softball games, enjoy a picnic without soggy or spoiled food,
even store insulin or other medicine that needs to be
refrigerated. Now, imagine that this cooler that worked like a
refrigerator could also heat food. In fact, according to the
complaint, the Koolatron's cold storage temperature is highly
dependent on outside air or room temperatures, and in many
circumstances it will not maintain cold storage temperatures
comparable to a home refrigerator. Further, the Koolatron is
primarily designed to maintain the cool or warm temperatures of
items that were already cool or warm before being placed in the
device, and its ability to cool down warm food or heat up cold
food is limited. It may take up to twelve hours or more for the
Koolatron to cool down a warm item or heat up a cold item. Just
plug it in. Koolatron plugs directly into your vehicle's
cigarette lighter and uses less power than a taillight. If you
leave it plugged in while the vehicle is off, it will consume
only three amps of power. Unplugged, Koolatron will hold its
cooling capacity for up to 24 hours."
But FTC's complaint charged that, in most instances, once unplugged
from a power source, the Koolatron won't hold its cooling capacity for
24 hours, and operating the Koolatron off a car battery when the car is
not running may drain the car battery of all power in as little as
three hours. FTC's complaint also charged that the advertiser
deceptively failed to disclose that use of the Koolatron to cool or
warm perishable food may, in certain circumstances, pose a risk of
buildup of harmful or unsafe bacteria on the food, since in its cooling
mode the device may not always hold food at proper refrigeration
temperatures, and in its warming mode the device does not reach a high
enough holding temperature to kill or prevent the growth of bacteria on
food.
The proposed settlement would bar the advertiser from misrepresenting
"the comparative or absolute ability of such product to refrigerate or
cool food items or medicines or to maintain proper cold storage
temperatures; the comparative or absolute ability of such product to
heat or warm food items; the comparative or absolute ability of such
product to hold its cooling capacity after being unplugged from a power
source; or the effect of operating such product off a car battery when
the car is not running."
The advertiser would also be barred from making claims "about safety or
efficacy, unless, at the time the claim is made, it has competent and
reliable evidence that substantiates the claim." Also, the advertiser
would be barred from making "any claim about the effectiveness or
usefulness of Koolatron or any substantially similar product for use in
cooling or warming food unless it also discloses the potential food
safety risks associated with use of the product."
[The next issue of Advertising Compliance Service also contains an extended examination of a similar FTC case, which also involved TV and direct mail ads.]
(Comtrad, FTC File No. 952-3047, December 9, 1996; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)
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December 1996 Advertising Law News...
From: Advertising Compliance Service.
NOTE: The following news brief appeared in an issue of the Reference Service, Advertising Compliance Service and examined an advertising law-related action during the month of December 1996.