[Federal Register Volume 61, Number 36 (Thursday, February 22, 1996)]
[Notices]
[Pages 6851-6854]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4006]
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FEDERAL TRADE COMMISSION
[File No. 952-3481]
Starwood Advertising, Inc., Les Towne; Consent Agreement With
Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Consent Agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
bar the Aspen, Colorado-based advertising agency from using deceptive
demonstrations and certain other misrepresentations in future
advertising campaigns. The consent agreement settles allegations
stemming from Starwood's advertising campaign for Azrak-Hamway
International's line of Steel Tec toy vehicles.
DATES: Comments must be received on or before April 22, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT:
Toby Milgrom Levin, Federal Trade Commission, S-4002, 6th and
Pennsylvania Avenue, NW, Washington, DC 20580. (202) 326-3156.
Joel Winston, Federal Trade Commission, S-4002, 6th and
Pennsylvania Avenue, NW, Washington, DC 20580. (202) 326-3153.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii).
United States of America Before Federal Trade Commission
In the Matter of: Starwood Advertising, Inc., a corporation, and
Les Towne, individually and as an officer of said corporation. File
No. 952 3481.
Agreement Containing Consent Order To Cease and Desist
The Federal Trade Commission, having initiated an investigation of
certain acts and practices of Starwood Advertising Inc., a corporation,
and Les Towne, individually and as an officer of said corporation
(``proposed respondents''), and it now appearing that proposed
respondents are willing to enter into an agreement containing an order
to cease and desist from the use of the acts and practices being
investigated,
It is hereby agreed by and between Starwood Advertising, Inc., by
its duly authorized officer, and Les Towne, individually and as an
officer of said corporation, and their attorney, and counsel for the
Federal Trade Commission that:
1. Proposed respondent Starwood Advertising, Inc. is a corporation
organized, existing, and doing business under and by virtue of the laws
of the State of Colorado, with its office and principal place of
business located at 600 North Starwood Drive, Aspen, Colorado 81612.
Proposed respondent Les Towne is an officer of said corporation. He
formulates, directs and controls the policies, acts and practices of
said
[[Page 6852]]
corporation and his address is the same as that of said corporation.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint here attached.
3. Proposed respondents waive:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondents, in which
event it will take such action as it may consider appropriate, or issue
and serve its complaint (in such form as the circumstances may require)
and decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft of complaint here attached, or that
the facts as alleged in the draft complaint, other than the
jurisdictional facts, are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
Rules, the Commission may, without further notice to proposed
respondents, (1) issue its complaint corresponding in form and
substance with the draft of complaint here attached and its decision
containing the following order to cease and desist in disposition of
the proceeding and (2) make information public in respect thereto. When
so entered, the order to cease and desist shall have the same force and
effect and may be altered, modified, or set aside in the same manner
and within the same time provided by statute for other orders. The
order shall become final upon service. Delivery by the U.S. Postal
Service of the complaint and decision containing the agreed-to order to
proposed respondents' address as stated in this agreement shall
constitute service. Proposed respondents waive any right they may have
to any other manner of service. The complaint may be used in construing
the terms of the order, and no agreement, understanding,
representation, or interpretation not contained in the order or in the
agreement may be used to vary or contradict the terms of the order.
7. Proposed respondents have read the proposed complaint and order
contemplated hereby. Proposed respondents understand that once the
order has been issued, they will be required to file one or more
compliance reports showing that they have fully complied with the
order. Proposed respondents further understand that they may be liable
for civil penalties in the amount provided by law for each violation of
the order after it becomes final.
Order
I
It is ordered that respondents, Starwood Advertising, Inc., a
corporation, its successors and assigns, and its officers, and Les
Towne, individually and as an officer of said corporation, and
respondents' agents, representatives and employees, directly or through
any corporation, subsidiary, division or other device, in connection
with the advertising, promotion, offering for sale, sale, or
distribution of any toy in or affecting commerce, as ``commerce'' is
defined in the Federal Trade Commission Act, do forthwith cease and
desist from:
A. In connection with any advertisement or package depicting a
demonstration, experiment or test, making any representation, directly
or by implication, that the demonstration, picture, experiment or test
depicted in the advertisement or package proves, demonstrates or
confirms any material quality, feature or merit of any toy when such
demonstration, picture, experiment or test does not prove, demonstrate
or confirm the representation for any reason, including but not limited
to:
1. The undisclosed use or substitution of a material mock-up or
prop;
2. The undisclosed material alteration in a material characteristic
of the advertised toy or any other material prop or device depicted in
the advertisement; or
3. The undisclosed use of a visual perspective or camera, film,
audio or video technique;
that, in the context of the advertisement as a whole, materially
misrepresents a material characteristic of the advertised toy or any
other material aspect of the demonstration or depiction.
Provided, however, that notwithstanding the foregoing, nothing in
this order shall be deemed to otherwise preclude the use of fantasy
segments or prototypes which use otherwise is not deceptive.
Provided further, however, that it shall be a defense hereunder
that respondents neither knew nor had reason to know that the
demonstration, experiment or test did not prove, demonstrate or confirm
the representation.
B. Misrepresenting, directly or by implication, any performance
characteristic of any toy.
II
It is further ordered that for three (3) years after the last date
of dissemination of any representation covered by this order,
respondent Starwood Advertising, Inc., or its successors and assigns,
shall maintain and upon request make available to the Federal Trade
Commission or its staff for inspection and copying:
A. All materials that were relied upon in disseminating such
representation;
B. Any and all videotapes, in complete as well as unedited form,
and any and all still photographs taken during the production of any
advertisement depicting a demonstration, experiment, or test;
C. Any and all affidavits or certifications submitted by an
employee, agent or representative of respondent to a television network
or to any other individual or entity, other than counsel for
respondent, which affidavit or certification affirms the accuracy or
integrity of a demonstration or demonstration techniques contained in
an advertisement; and
D. Any toy involved in such representation.
III
It is further ordered that respondent Starwood Advertising, Inc.
shall, within thirty (30) days after its service, distribute a copy of
this order to each of its operating divisions and to each officer,
agent and personnel responsible for the preparation, review or
placement of advertising, or other materials covered by this order and
shall secure from each such person a signed statement acknowledging
receipt of this order.
IV
It is further ordered that respondent Les Towne shall, for a period
of ten (10) years from the date of entry of this order, notify the
Commission within
[[Page 6853]]
thirty (30) days of the discontinuance of his present business or
employment and of his affiliation with any new business or employment.
Each such notice of affiliation with any new business or employment
shall include the respondent's new business address and telephone
number, current home address, and a statement describing the nature of
the business or employment and his duties and responsibilities.
V
It is further ordered that respondent Starwood Advertising, Inc.
shall notify the Federal Trade Commission at least thirty (30) days
prior to any proposed change in its corporate structure, including but
not limited to dissolution, assignment, or sale resulting in the
emergence of a successor corporation, the creation or dissolution of
subsidiaries or affiliates, the planned filing of a bankruptcy
petition, or any other corporate change that may affect compliance
obligations arising out of this order.
VI
This order will terminate twenty (20) years from the date of its
issuance, or twenty (20) years from the most recent date that the
United States or the Federal Trade Commission files a complaint (with
or without an accompanying consent decree) in federal court alleging
any violation of the order, whichever comes later; provided, however,
that the filing of such a complaint will not affect the duration of:
A. Any paragraph in this order that terminates in less than twenty
years;
B. This order's application to any respondent that is not named as
a defendant in such complaint; and
C. This order if such complaint is filed after the order has
terminated pursuant to this paragraph.
Provided further, that if such complaint is dismissed or a federal
court rules that the respondent did not violate any provision of the
order, and the dismissal or ruling is either not appealed or upheld on
appeal, then the order will terminate according to this paragraph as
though the complaint was never filed, except that the order will not
terminate between the date such complaint is filed and the later of the
deadline for appealing such dismissal or ruling and the date such
dismissal or ruling is upheld on appeal.
VII
It is further ordered that respondents shall, within sixty (60)
days after service of this order, and at such other times as the
Federal Trade Commission may require, file with the Commission a
report, in writing, setting forth in detail the manner and form in
which they have complied with this order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Starwood Advertising, Inc. (``Starwood'')
and Les Towne, officer of Starwood. Starwood is the advertising agency
for Azrak-Hamway International, Inc. (``Azrak-Hamway'').
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and comments received and will decide whether it should
withdraw from the agreement or make final the agreement's proposed
order.
The Commission's complaint in this matter alleges that Starwood
prepared and disseminated advertising for the ``Steel Tec Construction
System'' line of toys, which are manufactured by Azrak-Hamway and
marketed by Azrak-Hamway's Remco Toy Division. The complaint challenges
as deceptive television advertisements for eight Steel Tec toys, which
represent that these toys can move and operate in various ways unaided.
According to the complaint, the television advertisements for the
motorized helicopter, the ``Formula 1'' race car, the ``Off Road Super
Sport'' vehicle, the ``Sand Buggy'' vehicle, the ``Harley-
Davidson Electra Glide'' motorcycle, the ``Hypersonic
Fighter'' plane, the ``Dozer'' vehicle, and the ``Dump Truck'' vehicle
represented that the demonstrations of these toys flying, driving, or
moving in the manners depicted in the ads were unaltered and that the
results shown accurately represent the performance of the actual,
unaltered toys under the depicted conditions. This representation is
alleged to be false and misleading. According to the complaint, these
toys were suspended, pulled, and/or guided by monofilament wires, or a
black tube recessed out of view from the camera, held by humans off
camera to create the advertised effects. In the case of the motorized
helicopter, the rotors were also spun manually by humans off camera to
create the effect of motorized spinning.
The complaint also alleges that the challenged advertisements
falsely represented that the eight toys can perform by flying, driving,
or moving in the manners depicted.
The complaint also alleges that the challenged advertisements
falsely represented that the Steel Tec Off Road Super Sport vehicle,
Sand Buggy vehicle, Harley-Davidson Electra Glide motorcycle,
Dozer vehicle, and Dump Truck vehicle can be used on dirt, sand, and
similar surfaces. According to the complaint, the ``Helpful Hints
Manual'' accompanying these products warns against using the toys on
these surfaces to avoid damage to the toys.
The complaint also alleges that the respondents knew or should have
known that the representations set forth above were false and
misleading.
The proposed consent order contains provisions designed to remedy
the violations charged and to prevent the respondents from engaging in
similar acts and practices in the future.
Part IA of the order prohibits the respondents from misrepresenting
that an advertised demonstration, picture, experiment or test proves,
demonstrates or confirms any material quality, feature or merit of any
toy. Part IA enumerates examples of such misrepresentations, including:
(1) the undisclosed use or substitution of a material mock-up or prop;
(2) the undisclosed material alteration in a material characteristic of
the advertised toy or any other material prop or device depicted in the
advertisement; or (3) the undisclosed use of a visual perspective or
camera, film, audio or video technique. Part IA also states that the
order does not preclude the use of fantasy segments or prototypes which
are otherwise not deceptive, and provides the respondents with a
defense to liability if they neither knew nor had reason to know that
the demonstration, experiment or test did not prove, demonstrate or
confirm the representation. Part IB prohibits the respondents from
misrepresenting any performance characteristic of any toy.
Part II requires the respondents to maintain certain records and
materials relating to future representations covered by the order.
Parts III through V and VII relate to the respondents' obligations
to provide copies of the order to certain Starwood officers and
personnel; to notify the Commission of changes in corporate structure,
or, in the case of the individual, changes in employment; and to file
compliance reports with the Commission. Part VI provides that the order
will terminate after twenty years under certain circumstances.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of
[[Page 6854]]
the agreement and proposed order or to modify in any way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 96-4006 Filed 2-21-96; 8:45 am]
BILLING CODE 6750-01-M
