NEWS BRIEFS: June 1997

FIRM TO PAY CIVIL PENALTY OF $360,000 TO SETTLE FTC MISLABELING CHARGES

WestPoint-Stevens Inc. agreed to settle FTC charges that it violated the Textile Fiber Products Identification Act (Textile Act) by misbranding the sheets and towels it manufactures and sells as to the amount of Pima cotton--a premium type of cotton--contained in these products. Also, FTC charged that the company furnished a false guaranty, stating that its textile products were not misbranded under the Textile Act. WestPoint-Stevens, one of the biggest U.S. textile manufacturers, agreed to pay a civil penalty of $360,000 to settle these charges. This is the largest civil penalty ever obtained in a Textile Act case. Under the Textile Act, a textile fiber product is misbranded if it's falsely or deceptively stamped, tagged, labeled, invoiced or otherwise identified as to the name or amount of the constituent fibers contained in the product.

According to FTC's complaint, WestPoint-Stevens violated the Textile Act when it manufactured, advertised, and sold sheets and towels with labels and package inserts indicating that the products were made entirely of Pima cotton, when, in fact, the products were composed of only a range of 6% to 50% Pima cotton. In addition, according to FTC, in February 1994, WestPoint-Stevens filed a continuing guaranty with FTC, stating that all products it shipped or delivered would not be misbranded or falsely or deceptively invoiced or advertised within the meaning of the Textile Act. The complaint charges that WestPoint-Stevens furnished a false guaranty when it sold towels and sheets with labels and package inserts indicating that the products were made entirely of Pima cotton, when, in fact, they were composed of only a range of 6% to 50% Pima cotton.

The proposed settlement of these charges would permanently bar WestPoint-Stevens from falsely or deceptively stamping, tagging, labeling, invoicing or otherwise identifying a textile product as to the name or amount of its constituent fibers, within the meaning of the Textile Act. Also, the company would be barred from furnishing a false guaranty that its textile fiber products were not misbranded or falsely or deceptively invoiced or advertised.

The Department of Justice filed the complaint and proposed consent decree in the U.S. District Court for the Central District of California, in Los Angeles, on FTC's behalf. The consent decree is subject to approval by the court.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

(WestPoint-Stevens Inc., FTC File No. 962 3077, June 3, 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'S GUIDES FOR ADVERTISING WATCHES UP FOR REVIEW

FTC Guidelines for how companies advertise and market the metal content, movement and performance of watches are to be updated to reflect modern manufacturing processes and, wherever reasonable, to conform to international standards. FTC proposed many changes to the guides, which FTC adopted in 1968 to prevent misrepresentations and provide consumers with helpful purchasing information. FTC seeks comments from the public regarding the changes, and whether the Watch Guides instead should be rescinded in their entirety. Review of the Watch Guides is part of FTC's ongoing regulatory reform program, designed to revise or, as necessary, rescind outdated rules and guides. To date under this program, FTC has reviewed 19 guides of which it has repealed 15; and 27 rules of which it has repealed 12.

If you'd like to comment on these Guidelines, identify your comments as "Watch Guides--16 CFR Part 245--Comment" and send them to FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580. Deadline: September 2, 1997.

(FTC: 16 CFR 245 - Watch Industry Guides, FTC Matter No. G611002, June 16, 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 SETTLEMENT IN $CHOLAR$CAM CASE NETS $340,000 IN VICTIM REDRESS

FTC negotiated a settlement agreement with Student Assistance Services, Inc. and other defendants who ran an alleged scholarship search service scam. The settlement would require the payment of approximately $340,000 into a refund pool, ban the defendants from selling scholarship-related services ever again, and require each individual defendant to post a $75,000 bond before engaging in a telemarketing business or assisting others in such a business. This case was one of seven filed by the FTC in August and September 1996 as part of "Project $cholar$cam," a law-enforcement and consumer-education campaign to protect college-bound students and their families from fraudulent scholarship search services that "guarantee" that customers will receive a minimum amount of scholarships--usually $1,000--in return for up-front fees ranging from $10 to $400. Student Assistance Services charged a fee of $179, FTC said.

FTC followed up Project $cholar$cam by joining with the New York Attorney General's office to notify 25 operators of websites offering scholarship services that they may be engaged in deceptive or unfair practices. Various law enforcers had identified the sites as containing many of the "6 Signs Your Scholarship Is Sunk" claims included on a poster created as part of the $cholar$cam consumer education campaign. FTC staff said the websites will be revisited soon and that further action may be taken thereafter if warranted.

The settlement was filed on June 16, 1997 in U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, and requires the court's approval to become binding.

NOTE: This 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.

(Student Assistance Services, Inc., FTC File No. X960120, Civil Action No. 96-6995-Civ- ROETTGER, June 16, 1997; materials relating to this FTC matter are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.)

HEALTH, CONSUMER LEADERS CALL FOR NUTRITION INFORMATION ON CANADIAN FOOD LABELS

"Nutrition labelling is an essential weapon in Canada's battle against diet-related diseases, including heart disease, cancer, dental caries, and diabetes." So said Monique Julien, professor of nutrition at the University of Montreal. "The lack of nutrition information makes it difficult for consumers to follow the advice to limit their consumption of fat, sugar, and sodium." At a press conference on June 10, 1997 in Ottawa, nutritionists and consumer leaders released a 23-page report entitled Nutrition Labelling: A Call for Reform. The report recommends that nutrition information be:

• "provided for all key nutrients on all food labels in both French and English;
• presented in a format that is easy to read and understand;
• based on standardized serving sizes so that consumers could easily compare various brands of a particular product;
• presented in a way that enables consumers to determine if a food is high or low in a particular nutrient and how a typical serving of the food fits into a healthful daily diet."

The report was written by the Centre for Science in the Public Interest (CSPI), and endorsed by FoodShare Metro Toronto, Ontario Society of Nutrition Professionals in Public Health, the Council of Canadians, National Federation of Consumers' Associations of Quebec, and the Toronto Food Policy Council. Over 100 nutrition professors, physicians, and other health professionals from British Columbia to Nova Scotia also endorsed the report.

(CSPI Press Release, June 10, 1997.)

GROUND BEEF LABELS MISLEAD SHOPPERS: CSPI

The Center for Science in the Public Interest (CSPI) wants the U.S. Department of Agriculture (USDA) to require ground beef "to comply with the same regulations that all other foods have to meet." "The Department of Agriculture, the National Cancer Institute, the Surgeon General, and most other health officials urge the public to consume 'lean' meat," said Bonnie Liebman, director of nutrition at CSPI. "But in most supermarkets around the country, that advice is impossible to follow." CSPI cited the following examples:

USDA allows no more than 10% fat by weight in most foods labeled "lean." But USDA allows ground beef that's up to 22.5% fat to be called "lean." For example: Albertson's, a supermarket chain with stores in 19 states, sells "lean" ground beef that's 20% fat.

USDA ordinarily allows claims like "85 percent lean" only on foods that are "low-fat" (no more than three grams of fat per serving). But USDA allows "percent lean" on ground beef claims no matter how fatty the meat is. Example: "At Kroger, the country's largest supermarket chain, the ground round is labeled `85 percent lean,' even though a serving contains up to 14 grams of fat."

Unlike most foods in the supermarket, ground beef labels may make nutrient claims without putting "Nutrition Facts" on the package. Example: "At supermarkets like Stop & Shop (in four states including New York), Cub Foods (in 12 states including Illinois), Lucky (in California and Nevada), Dominick's (in Illinois and Indiana), Shop Rite (in Pennsylvania), and H.E.B. (in Texas), the ground beef has labels that list the percent fat or the percent lean, but no other nutrition information."

"Without 'Nutrition Facts' labels, most people haven't a clue how much fat ground beef contains, even if the label says '20% fat' or '10% fat,'" said Liebman.

CSPI's letter to USDA urged the agency to act quickly. "For four years, the USDA has done little to ensure that consumers get complete and honest information about the fat content of ground beef," it said. "Until the Department gets rid of its double standards, consumers will get the false impression that the largest source of saturated fat in the average American's diet is a healthful food."

(CSPI Press Release, June 3, 1997.)

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