Advertising Law News Briefs

FTC FINAL ORDERS INVOLVE ALLERGY RELIEF CLAIMS

Consent orders with AAF-McQuay, Inc., and Filtration Manufacturing, Inc., settle charges that these firms made misleading advertising claims as to the allergy relief, airborne particle removal, and cost savings benefits of using their replacement filters instead of standard forced-air system filters in the home. FTC had charged, among other things, that the companies misrepresented the meaning of standard industry tests in making the challenged claims. The final orders require both companies to have substantiation for all performance claims, health or other benefits claims, and efficacy claims they make for any air cleaning product. Also, the order with AAF bars that firm from misrepresenting that any air filter is a "High Efficiency Particulate Air" filter, a type of filter that scores over 99% in industry "dust spot" efficiency testing. The order with FMI, which also applies to individual respondents, includes an added provision barring that company from using "Allergy 2000" or any other trade name claiming the product will relieve allergy symptoms without scientific substantiation that it does, in fact, do so.

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.

(AAF-McQuay, Inc., FTC Dkt. #C-3703, January 6, 1997; Filtration Manufacturing, Inc., FTC Dkt. #C-3702, January 6, 1997; materials relating to this FTC matter are available on the Internet at FTC's World Wide Website at: http://www.ftc.gov.)

FTC SETTLEMENT WITH MAILING HOUSE INVOLVES ALLEGEDLY FRAUDULENT PROMOTIONS

Marketing Response Group, Inc., a mailing house, and related defendants named in a January 1996 FTC case for allegedly assisting fraudulent telemarketers, agreed to settle FTC charges under a broad order that would bar them from sending out misleading promotional materials on behalf of telemarketers in the future. The order also would require defendants to monitor future telemarketing clients' business activities for deception. FTC had alleged that the defendants acted on behalf of many telemarketers, sending out mail promotions that falsely promised quick land sales, guaranteed awards and free vacations. The defendants all signed the settlement order without admitting that they violated the law.

If approved by the court, the order specifically would bar them from designing, printing, mailing or otherwise distributing or helping a client distribute promotional materials which misrepresent that a:

• consumer will receive a premium, gift or prize;
• consumer has no obligation to purchase something in order to receive a promoted premium, prize or gift;
• consumer will receive a travel-related product or service without any obligation to purchase something; or
• telemarketer client is authorized to conduct real estate transactions, is interested in purchasing property such as that owned by consumers, or will sell the consumer's property.

The order also would bar all of the defendants from violating or assisting others in violating FTC's Telemarketing Sales Rule, which requires telemarketers to give consumers--before they pay--key information about the cost of the offered products or services, any material restrictions or limitations on their use, and any refund or cancellation policy or the fact that the marketer does not offer one. Telemarketers offering prize promotions also must state the odds of receiving any prize, the fact that no purchase is necessary to enter, instructions on a cost-free method of entering, and all material conditions of receiving the prize. The rule also bars telemarketers from making a variety of misrepresentations about their goods or services. The order was filed on January 15, 1997 in U.S. District Court for the Middle District of Florida, Tampa Division.

NOTE: A consent judgment is for settlement purposes only and does not constitute an admission by the defendants of law violations. Consent judgments have the force of law when signed by the judge.

(Marketing Response Group, Inc., Order, U.S. District Court for the Middle District of Florida, Tampa Division, January 15, 1997; materials relating to this FTC matter are available on the Internet at FTC's World Wide Website at: http://www.ftc.gov.)

FTC FINALIZES CONSENT ORDER IN DIET SUPPLEMENT CASE

Recently finalized consent orders with Victoria Bie, doing business as Body Gold, and Universal Merchants, Inc., and its president Steven Oscherowitz, settle FTC charges that these respondents made unsubstantiated claims about the weight loss and health benefits of chromium picolinate, a dietary supplement. FTC's consent orders bar respondents from claiming without competent and reliable scientific substantiation that any food, dietary supplement or drug, among other things, reduces body fat, causes weight loss, increases lean body mass or builds muscle, or controls appetite or craving for sugar. The orders also require respondents to have scientific substantiation for any claims they make about the performance, benefits or safety of any food, dietary supplement or drug, and bar them from misrepresenting the results of any test or study. Also, they would be barred from representing that any testimonial or endorsement represents the typical or ordinary experience of users, unless that can be substantiated or the respondents clearly and prominently disclose either the generally expected experience or the fact that consumers may not experience similar results.

(Bie, FTC Dkt. No. C-3708, January 28, 1997; Universal, FTC Dkt. No. C-3707, January 28, 1997; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)

FTC FINALIZES CONSENT ORDER IN MARGARINE CASE

The recently finalized consent order with Conopco, Inc., doing business as Van Den Bergh Foods Company, a subsidiary of Unilever United States, Inc., settles charges that a national ad campaign for Promise margarine included unsubstantiated claims that eating Promise margarines and spreads helps reduce the risk of heart disease, as well as false low-fat and low-saturated fat claims.

The consent order requires Conopco to have adequate scientific substantiation for claims that any margarine or spread reduces the risk of heart disease, or causes or contributes to a risk factor for any disease or health-related condition. The order also bars the firm from misrepresenting the amount of fat, saturated fat, cholesterol or calories in any spread or margarine. When making nutrient-content claims such as "low fat," the order requires Conopco to follow the Food and Drug Administration (FDA) labeling regulations for the qualifying amount of the nutrient for such claims. Also, the order requires Conopco to disclose clearly and prominently the total grams of fat per serving whenever it makes a claim about the amount of cholesterol in any mar garine or spread that contains a significant amount of fat (as specified in FDA labeling regulations). For three years, ads for Promise margarines or spreads that must include the total fat disclosure also must disclose either the percentage of calories derived from fat or the fact that the product is not low in fat.>/p>

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.

(Conopco, Inc., FTC Dkt. No. C-3706, January 28, 1997; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)

AD AGENCY, PROMOTER TO SETTLE FTC CHARGES OVER INFOMERCIAL

Hawthorne Communications, Inc., an advertising agency, agreed to pay a $25,000 civil penalty for allegedly violating a 1994 FTC order requiring it to have substantiation for ad claims, including those made by endorsers. According to FTC, Hawthorne violated the 1994 order when it placed an infomercial that it had produced containing unsubstantiated earnings claims for the Mellinger World Trade Mail Order Plan, a "step by step" course in starting and operating a work-at-home import/mail order business. The "Mellinger Plan's" promoter--Mellinger Company--agreed to settle charges stemming from the same infomercial.

The 1994 order was issued when Hawthorne settled previous FTC charges that an infomercial they had produced for another work-at-home promoter was deceptive and misleading. Under the FTC order issued in that settlement, Hawthorne is barred from misrepresenting the success of work-at-home businesses. Also, the 1994 order requires that any claims about the performance or success rate of any product or service must be based on competent and reliable evidence. It also bars the use of testimonials and endorsements unless they reflect the honest opinions or experiences of the endorsers, contain no deceptive or unsubstantiated representations, and reflect the typical or ordinary experience of consumers who use the product, if it represents the claims as typical. According to the Commission's district court and administrative complaints detailing the charges against Hawthorne and Mellinger respectively, Mellinger's advertising--including the infomercial prepared and placed by Hawthorne--promoted Mellinger's work at home course with claims such as:

• "How would you like to earn substantial income right from the comfort of your own home?. . . Living a luxurious life-style with long-term security for you and your family."
• "On my first customer my first day with the World Traders I made twelve thousand dollar[s] profit."
• "I started off with $250 that my husband gave me, and last year I earned over $35,000, and I did it all with the help of the Mellinger Company"; and
• "Kirk may not be a rocket scientist, but with the help of the Mellinger World Trade Plan, he has launched a company with sky-rocketing profits."

FTC alleged that, through the use of such claims, the infomercial represented that consumers who purchase the Mellinger Plan typically succeed in starting and operating profitable businesses; that consumers who use the plan typically earn substantial income; and that endorsements used in the infomercial represent the typical or ordinary experience of consumers who have used the Mellinger Plan. In fact, according to the complaints, when the infomercial aired, neither Hawthorne nor Mellinger possessed or relied upon a reasonable basis to substantiate the claims. Thus the claims were deceptive and misleading.

To settle the FTC charges against Mellinger, 1554 Corporation and its president Brainerd L. Mellinger III would be barred from making unsubstantiated earnings claims and using deceptive testimonials. "Mellinger Company" is a trade name used by 1554 Corporation. In addition to the $25,000 civil penalty, Hawthorne Communications would be barred from producing or distributing infomercials that contain deceptive earnings claims or testimonials.

The proposed consent decree with Hawthorne Communications was filed by the Department of Justice at FTC's request.

NOTE: Consent agreements and decrees are for settlement purposes only and do 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. Consent decrees filed in court also have the force of law when signed by a judge.

(Hawthorne Communications, Inc., FTC File No. 952-3401, FTC Dkt. No. D 9264, January 27, 1997; 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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