Magnetic Therapy Devices, Cancer Cures, Bogus Health Claims

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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 June 1999.

"OPERATION CURE.ALL" TARGETS MAGNETIC THERAPY DEVICES, CANCER "CURES" AND OTHER ALLEGEDLY BOGUS INTERNET HEALTH CLAIMS

FTC launched "Operation Cure.All," a comprehensive law enforcement and consumer education campaign to combat allegedly deceptive health claims on the Internet at a press conference on Thursday, June 24, 1999. "Operation Cure.All," targets companies advertising "bogus" cancer cures and making unsubstantiated health claims, such as "magnetic therapy devices" can alleviate arthritis and high blood pressure.

(FTC Release, June 24, 1999.)

DRYCLEANERS TO SETTLE FEDERAL CHARGES OF DECEPTIVE CARE LABELS

Continental Gown Cleaning Service, Inc., four related drycleaning firms, and the two individuals who controlled them, agreed to settle FTC charges that they violated the FTC Act by providing improper care labels to wedding gown manufacturers who attached the improper labels to the gowns they made and sold. FTC's complaint charged that these care labels violate FTC's Care Labeling Rule as they recommend drycleaning but don't--

(1) name a drycleaning solvent that can be used without damaging the gowns, and
(2) warn that certain modifications must be made to the normal drycleaning process for delicate gowns such as wedding gowns.

FTC alleged that the care labels distributed by Continental misled consumers by making the unsubstantiated claim that gowns with those labels could only be cleaned by the Zurcion Method. The complaint also alleged that Continental made false and unsubstantiated ad claims that the Zurcion Method was patented, that these gowns could only be cleaned by the Zurcion Method, and that it was the only cleaner who could clean these gowns safely and effectively.

Also, FTC alleged that Continental didn't disclose to consumers the material limitations and conditions of its guarantee of the wedding gowns it cleaned and preserved.

The proposed settlement would bar Continental and the other respondents from--

(1) providing apparel companies and stores with the means and instrumentalities to violate the FTC Act and the Care Labeling Rule, and
(2) disseminating labels that fail to provide specific information required by the Care Labeling Rule.

It would require respondents to obtain a written statement from an apparel manufacturer or importer stating the company's reasonable basis for any care instructions that appear on labels or tags disseminated by respondents.

Also, the proposed order prohibits the respondents from making claims about the comparative or absolute safety or efficacy of any cleaning or preservation method, service, company, or product, unless the claim is true and they have competent and reliable supporting evidence, which, where necessary, must be scientific evidence.

The proposed settlement also would require respondents to:

provide garment manufacturers or importers who did business with them with a copy of the consent order and notify them that they should stop using the Zurcion labels;
disclose to persons, other than apparel companies, who contact them regarding the cleaning or preservation of garments bearing Zurcion labels, that other cleaning methods may be used safely and effectively to clean the garments and refer these persons to the manufacturer or importer of their garment to get cleaning instructions.

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. (Continental Gown Cleaning Service, Inc., et al., FTC Docket No. 9287, June 23, 1999.)

$39 MILLION FOR CONSUMER REDRESS IN "CRAMMING" SETTLEMENT

In a deal that would provide over $39 million in redress for U.S. consumers, American TelNet (ATN), one of the largest providers of "audiotext" services--audio entertainment services offered over the telephone--agreed to settle FTC charges that ATN tried to collect charges for 900-number audiotext services from thousands of consumers, even though the services had not been accessed from the consumers' phones. Among other things, FTC alleged that ATN violated FTC's Pay-Per-Call Rule by failing to adequately disclose price information in advertising 900-number services. The settlement would bar the illegal practices, require that $37.4 million in unpaid disputed charges be written off and would require $2 million in redress for consumers who disputed charges, but ultimately paid them.

This is FTC's fifth case since March 1998 involving "cramming"--placing unauthorized charges on consumers' telephone bills--and related alleged abuses of the telephone billing system. It's the first such case involving unauthorized charges that apparently resulted from crossed wires or alleged fraudulent action by third parties either clipping on to telephone lines outside consumers' homes or hacking into telephone system computers. One FTC cramming case, against Interactive Audiotext Services, Inc., resulted in $13 million in consumer redress, and the three other cramming cases filed to date are still in litigation.

The proposed stipulated final judgment and order was submitted on June 10, 1999 to the Honorable James Lawrence King, U. S. District Court Judge for the Southern District of Florida, in Miami. It is subject to court approval.

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

(American TelNet, June 10, 1999.)

FTC CITES ADVERTISING EXPERTISE AS RATIONALE FOR LAUNCHING STUDY OF VIOLENCE IN ENTERTAINMENT INDUSTRY

Ever-vigilant in expanding its considerable power into new areas, FTC announced that it will conduct a study of whether the entertainment industry markets violent material. It's going to conduct the study "in a joint effort with the Department of Justice."

Commenting on the study, FTC Chairman Robert Pitofsky said, "Recent events have dramatically highlighted that all of us need to do more to address these concerns." The expansive focus of this study is to delve into movies, recordings and video games and other areas protected by the First Amendment.

As FTC virtually always does when it seeks to expand its power into a new area, the FTC Chairman paid lip-service to "voluntary self-regulatory steps" taken by "the motion picture, video game and recording industries." Of course, the Chairman then warned that, "The study will look at whether more should be done."

As some type of rationale as to why FTC might be the appropriate body to conduct such an obviously sensitive study with profound First Amendment implications, the agency cited its "considerable knowledge of advertising and marketing practices and a long history of studying and reporting on a broad range of advertising and marketing issues."

(FTC Release, June 1, 1999.)

FTC SEEKS COMMENT ON GUIDES FOR THE JEWELRY, PRECIOUS METALS AND PEWTER INDUSTRIES

FTC is seeking public comments on proposed revisions to the Guides for the Jewelry, Precious Metals and Pewter Industries to provide for the disclosure of laser-drilling of diamonds to consumers. The Commission seeks public comment on the proposed changes to the Guides and also requests comment on a number of specific questions about the Guides. Comments will be accepted until July 8, 1999.

Comments about these proposed changes should be identified as: "Guides for the Jewelry, Precious Metals and Pewter Industries -- 16 CFR Part 23 -- Comment" and should be directed to: Secretary, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Room -159, Washington, DC 20580. e-mail comments to: .

(FTC File No. G711001, June 10, 1999.)

FTC RESCINDS WATCH GUIDES

FTC voted to rescind its Guides for the Watch Industry. The Commission concluded that the Guides, which are significantly outdated, are no longer needed to resolve uncertainty among businesses over what claims are likely to be considered deceptive. FTC found that, in most instances, international standards, developed by the International Organization for Standardization, provide substantial guidance to industry regarding watch markings and claims. "For those topics not addressed by international standards, principles of law articulated in FTC policy statements and pertinent Commission and court decisions on deception provide guidance regarding watch sellers' obligations o refrain from unfair or deceptive acts or practices under section 5 of the FTC Act," said FTC.

(FTC Release, June 10, 1999.)

INTERNET MATERIALS: Materials relating to these FTC matters are available on the Internet at FTC's World Wide Web site at: http://www.ftc.gov.

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