DOG AND CAT FOOD AD AND LABEL CLAIMS REVIEWED BY FTC

As part of an ongoing review of its rules and regulations, FTC will soon publish a Federal Register notice completing its review of the Guides for the Dog and Cat Food Industry, 16 C.F.R. Part 241, and rescinding the Guides. The Guides, were promulgated by FTC in 1969. They provided for claims made in the labeling and advertising of dog and cat food. They barred misrepresentations about specified product characteristics such as composition or nutritional value.

FTC concluded that the Guides were no longer needed since Model Pet Food Regulations issued by the Association of American Feed Control Officials and regulations promulgated by the U.S. Food and Drug Administration provide specific guidance to industry members about claims regarding nutrition, ingredients, and product characteristics.

(Guides for the Dog and Cat Food Industry, 16 C.F.R. Part 241, FTC File No. P994242, October 18, 1999.)

A federal district court issued a Temporary Restraining Order with Asset Freeze against a company that purportedly sold work-at-home medical billing opportunities. Data Medical Capital, Inc. and its owner Bryan D'Antonio, promised consumers that they could earn a minimum of $23,400 per year using their home computers to process medical bills for physicians with whom the defendants had established relationships, according to FTC. The Commission charged that defendants misrepresented their medical billing work-at-home opportunities by bolstering false earnings claims and misrepresenting the assistance that consumers would receive in getting medical billing work.

FTC filed its complaint in the U.S. District Court in the Central District of California against Data Medical Capital, Inc., doing business as DataMed and MedCo, and Bryan D'Antonio, also known as Brian D'Antonio. The defendants promoted and sold medical billing work-at-home opportunities via newspaper ads and an Internet web site, "www.medco.net".

According to FTC, Data Medical advertised in the "help wanted" section of various newspapers seeking medical processors. A typical ad said:

"MEDICAL BILLING Nationwide company seeking Billers. PC required. No exp. necessary. Earn $31,500 plus. Call 1-800-262-6595. The defendants' web site also encouraged consumers to call the listed toll-free number to learn more about the job opportunity. When consumers called, they were connected to telemarketers, who went into their sales pitch, emphasizing doctors' need for people to perform electronic medical billing. Consumers were told that the defendants would arrange for the consumer to receive generally between 150-250 claims per week from doctors with whom the defendants had business arrangements, and that consumers would earn from $3 to $5 per claim. Consumers were then told that in order to take advantage of the Data Medical opportunity all they would have to do is pay $299 - $399 for a software package, which would include the medical billing software, a tutorial and instruction manual, and the names of their prearranged physician clients. When consumers complained that the Data Medical opportunity had been misrepresented, the defendants would not refund the purchase price."

FTC filed the complaint in the U.S. District Court, Central District of California, Southern Division, in Santa Ana, on October 14, 1999. The judge signed the TRO with Asset Freeze on October 15.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

(Data Medical Capital, Inc., et al., FTC File No. 992 3272, Civil Action No. SACV991266 AHS, October 18, 1999.)

In a first-ever partnership between FTC, the National Association of Attorneys General (NAAG), and the YWCA of the U.S.A., the trio launched "Tune Out the Violence," a national effort "to reduce the impact of media violence on young people."

Previously, on June 1, 1999, FTC announced that it will conduct a study "in a joint effort with the Department of Justice" of whether the entertainment industry markets violent material.

Coincidentally, the FBI announced in its latest annual report that violent crime was dropping in dramatic fashion. Here are just some of the FBI's main conclusions found in its report:

• Murder and robbery rates dipped to their lowest levels in three decades in 1998.
• Serious reported crimes dropped for the seventh consecutive year.
• Overall violent crime dropped to the lowest level since 1985.
• Use of guns in homicides and robberies is decreasing.

Nevertheless, media depictions of murders and violent crimes on news and news infotainment shows has been increasing dramatically in recent years--some sources indicate increases of 100% or more. Typically, the good news about violent crime--basically that it's dropping like a stone--gets very short shrift on such shows. So FTC and the others are responding to the perception that the crime problem is getting worse and that movies, television shows and video games are the causative factor.

The latest "Tune Out the Violence" initiatives include a Media Violence Inventory which will let parents log the violent content of TV programs viewed by their children. Another element of "Tune Out the Violence" is a wallet-size card developed by FTC and the Office of Juvenile Justice and Delinquency Prevention of the U.S. Department of Justice in conjunction with NAAG and the YWCA of the U.S.A. The card contains "thorough explanations of ratings systems for films, music CDS, and video games," according to FTC.

Officials from FTC, NAAG, and the YWCA of the U.S.A., warned that these media ratings systems "should be considered a minimum set of content standards." They did not elaborate as to how FTC and the others would go about maximizing "content standards" for these First Amendment-protected media.

Both Republican and Democratic Congressional representatives voiced their concerns that the media has more impact on peoples' attitudes than do politicians. "What is on television, in the movies, and over the airwaves - the stories and songs of America - mold and shape attitudes far more than what happens (in Washington, D.C.)," said Sen. Sam Brownback (R-KS).

(FTC Release, October 19, 1999; see also: Advertising Compliance Service(TM), Bulletin #428, Page 3.)

Pledging a continuing law enforcement effort against mail fraud that costs both consumers and businesses millions of dollars a year, the U.S. Postal Inspection Service (USPIS), the Securities and Exchange Commission (SEC), the National Association of Attorneys General (NAAG) and FTC highlighted initiatives taken during the last year to "Catch the Bandit in Your Mailbox." At a news conference on October 5, 1999, in Washington, D.C., federal and state officials issued a report on law enforcement actions taken against hundreds of alleged con artists who allegedly defraud consumers using direct mail, spam and unsolicited faxes.

"Thanks to the sweepstakes industry, adult Americans have something in common. More than 90% of adults have received a postcard or letter telling them that they may have won a prize." So said Indiana Attorney General Jeff Modisett. "Unfortunately, many people are tricked by deceptive or fraudulent promotions that bilk hundreds of thousands of consumers out of tens of millions of dollars a year. State Attorneys General have been leaders in seeking to curb sweepstakes abuses, trying to focus a brighter light on the dark side of an industry many people tend to view as harmless, or at worst, an annoyance."

According to the U.S. Postal Inspection Service, fraud schemes account for billions of dollars in losses to consumers annually.

Nancy M. Smith, Director of the SEC's Office of Investor Education and Assistance, called self-protection key to fraud prevention.

At the news conference, Bernstein announced that over the past year, FTC and its partners have initiated a nationwide public service campaign using the Internet. Unveiling a new "Bandit" logo, Bernstein said that a number of major trade associations have agreed to post the "Bandit" logo on their website. This banner PSA will link a website visitor to all of the consumer and business education materials related to "Project Mailbox." "Over the next few weeks, the 'Bandit' logo will begin appearing on the associations' websites, and we are grateful to our newest contributing partners for their participation," Bernstein added.

Moreover, Bernstein noted that over the past year, there has been an increase in the sources of fraud complaints submitted to "Consumer Sentinel,"--a national fraud database used by law enforcers in the U.S. and Canada.

FTC also released a report outlining the hundreds of law enforcement actions targeting mass mail fraud brought by the agency, the state Attorneys General, the USPIS, and the SEC.

(FTC Release, October 5, 1999.)

Gallo Cattle Company sued the California Milk Producers Advisory Board (CMAB), alleging that CMAB's compulsory assessments for the promotion and advertising of California milk and dairy products violate Gallo's First Amendment rights. The district court granted summary judgment in favor of CMAB and the other defendants. The Ninth Circuit affirmed, concluded that the "Marketing Order" is a species of economic regulation that does not abridge Gallo's First Amendment rights.

The Secretary of the California Department of Food and Agriculture (Secretary) is charged with administering the Marketing Act and is authorized to issue "marketing orders" to regulate the marketing, processing, distributing, and handling of commodities. (See Cal. Food & Agric. Code Section 58741.)

Under this grant of authority, the Secretary issued the Marketing Order for Research, Education and Promotion of Market Milk and Dairy Products in California ("Milk Marketing Order" or "Marketing Order") and formed CMAB "to assist in the administration of [the] Marketing Order." The Milk Marketing Order authorizes CMAB to conduct research, prepare and present educational programs, engage in advertising and promotional activities, and develop and regulate the use of certification marks for dairy products. To finance these authorized activities, the Milk Marketing Order allows CMAB to impose an assessment of $0.10 per hundred weight on milk produced by "producers" and "producer-handlers" in California.

(Gallo Cattle Company v. California Milk Advisory Board et al., No. 97-17182, United States Court of Appeals for the Ninth Circuit, 185 F.3d 969; 1999 U.S. App. LEXIS 15706; 99 Cal. Daily Op. Service 5597; 99 Daily Journal DAR 7153 (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.