[Federal Register Volume 61, Number 36 (Thursday, February 22, 1996)]
[Notices]
[Pages 6841-6847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4007]
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FEDERAL TRADE COMMISSION
[File No. 952-3188]
Azrak-Hamway International, Inc., Marvin Azrak, Ezra Hamway;
Consent Agreement With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Consent agreement.
-----------------------------------------------------------------------
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 New York City-based corporation from using deceptive
demonstrations and certain other misrepresentations in future
advertising campaigns. Azrak-Hamway, which distributes toys through its
Remco Toys Division, is also required to notify television stations
that ran its allegedly deceptive ads of the FTC action, to advise
television stations of the availability of guidelines for screening
children's advertising, and to offer a refund to customers who bought
its Steel Tec toy vehicles. The consent agreement settles allegations
stemming from the advertising and marketing of 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 Street and Pennsylvania Avenue, NW., 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: Azrak-Hamway International, Inc., a
corporation, and Marvin Azrak and Ezra Hamway, individually and as
officers of said corporation. File No. 952 3188.
Agreement Containing Consent Order To Cease and Desist
The Federal Trade Commission, having initiated an investigation of
certain acts and practices of Azrak-
[[Page 6842]]
Hamway International, Inc., a corporation, and Marvin Azrak and Ezra
Hamway, individually and as officers 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 Azrak-Hamway International,
Inc., by its duly authorized officer, and Marvin Azrak and Ezra Hamway,
individually and as officers of said corporation, and their attorney,
and counsel for the Federal Trade Commission that:
1. Proposed respondent Azrak-Hamway International, Inc. is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of New York, with its office and principal
place of business located at 1107 Broadway, New York, New York 10010.
Proposed respondents Marvin Azrak and Ezra Hamway are owners and
officers of Azrak-Hamway International, Inc. They formulate, direct and
control the policies, acts and practices of said corporation and their
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, Azrak-Hamway International, Inc., a
corporation, its successors and assigns, and its officers, and Marvin
Azrak and Ezra Hamway, individually and as officers of said
corporation, and respondents' agents, representatives and employees,
directly or through any corporation, subsidiary, division or other
device, in connection with the manufacturing, labeling, 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.
B. Misrepresenting, directly or by implication, any performance
characteristic of any toy.
C. Misrepresenting the number of toys contained in, or that can be
constructed with the parts contained in, the package.
II
It is further ordered that for three (3) years after the last date
of dissemination of any representation covered by this order,
respondent Azrak-Hamway International, 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, which affidavit or certification
affirms the accuracy or
[[Page 6843]]
integrity of a demonstration or demonstration techniques contained in
an advertisement; and
D. Any toy, as well as the packaging for any toy, involved in such
representation.
III
It is further ordered that respondent Azrak-Hamway International,
Inc., or its successors and assigns, shall offer refunds to purchasers
of any Steel Tec toy(s) in accordance with the provisions of this Part.
A. Within fifteen (15) days from the date of service of this order,
respondents shall compile a mailing list containing the name and last
known address of each purchaser in respondents' possession or control.
This list shall include all purchasers who have contacted respondents,
either in writing or by telephone, regarding a Steel Tec toy. Within
sixty (60) days from the date of service of this order, respondents
shall provide Commission staff with a computer print-out copy of the
mailing list, as well as provide the list in computer readable form, in
standard MS-DOS diskettes or IBM-mainframe compatible tape.
B. Within sixty (60) days from the date of service of this order,
respondents shall send via first-class mail, postage prepaid, a Notice
of Refund Offer in the form set forth in Appendix B to this order, to
all purchasers listed on the mailing list required by subpart A of this
Part.
C. Respondents shall also send via first-class mail, a postage
prepaid, a Notice of Refund Offer, in the form set forth in Appendix B
to this order, to all purchasers who contact respondents or the
Commission in any manner within one hundred twenty (120) days from the
date of service of this order. Each mailing shall be made within
fifteen (15) business days after respondents receive the purchaser's
name and address.
D. No information other than that contained in Appendix B shall be
included in or added to the Notice of Refund Offer, nor shall any other
material be transmitted therewith. The envelope containing the Notice
of Refund Offer shall be in the form set forth in Appendix C to this
order. For each mailing returned by the U.S. Postal Service as
undeliverable for which respondents thereafter obtain a corrected
address, respondents shall, within fifteen (15) business days after
receiving the corrected address, send a Notice of Refund Offer to the
corrected address.
E. Respondents shall send a refund check to each purchaser who
returns the completed application form appended to the Notice of Refund
Offer to respondents or who otherwise requests a refund in writing, and
who returns the toy(s), or a substantial portion of the toy(s), to
respondents within one hundred eighty days (180) from the date of
service of this order. The amount of the refund shall equal the sum of
the price for the toy(s) as set forth in Appendix A to this order and
the actual cost of postage for returning the toy(s). Respondents shall
send refund checks by first-class mail, postage prepaid within fifteen
(15) business days after respondents receive the returned toy(s) from
the purchaser. The envelope containing the refund check shall be in the
form set forth in Appendix D to this order.
F. Respondents shall notify any purchaser who applies for a refund
but fails to return the Steel Tec toy or to otherwise apply properly of
any error in the purchaser's refund application, and shall provide a
reasonable opportunity for the purchaser to rectify any such error.
G. Within two hundred forty (240) days from the date of service of
this order, respondents shall furnish to Commission staff the
following:
1. In computer readable form (standard MS-Dos diskettes or IBM-
mainframe compatible tape) and in computer print-out form, a list of
the names and addresses of all consumers who were sent refund checks
pursuant to Part III of this order, and for each name included on the
list, the amount, check number and mailing date of every refund check
sent;
2. In computer readable form (standard MS-Dos diskettes or IBM-
mainframe compatible tape) and in computer print-out form, a list of
the names and addresses of all consumers who contacted respondents or
were referred to respondents by the Commission in accordance with
subpart C of this Part;
3. Copies of all correspondence and other communications to, from,
or concerning all consumers who requested a refund but were refused,
and the reason(s) for denying the refund;
4. All Notices of Refund Offer returned to respondents as
undeliverable; and
5. All other documents and records evidencing efforts made and
actions taken by respondents to identify, locate, contact and provide
refunds to consumers requesting a refund.
For purposes of this Part, ``purchaser'' shall mean any person who
has purchased a Steel Tec toy and who has not previously received a
full refund of the purchase price. ``Steel Tec toy(s)'' shall mean any
of the toys identified in Appendix A to this order. ``Substantial
portion'' of the toy shall mean a majority of the parts, including the
battery pack, if such is part of the toy.
IV
It is further ordered that respondent Azrak-Hamway International,
Inc., or its successors and assigns, shall within sixty (60) days after
the date of service of this order send by certified mail, return
receipt requested, to the station president or manager of each
television station that aired any advertisement that was the subject of
the complaint issued in this matter, as identified in Appendix F to
this order, a copy of the letter set forth in Appendix E to this order.
V
It is further ordered that respondent Azrak-Hamway International,
Inc., or its successors and assigns, shall within thirty (30) days
after service of this order, provide a copy of this order to its
current principals, officers, directors, and managers, and to all
personnel, agents, and representatives having sales, advertising, or
policy responsibility with respect to the subject matter of this order.
VI
It is further ordered that respondents Marvin Azrak and Ezra Hamway
shall, for a period of ten (10) years from the date of entry of this
order, notify the Commission within thirty (30) days of the
discontinuance of their present business or employment and of their
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.
VII
It is further ordered that respondent Azrak-Hamway International,
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 of affiliates, the planned filing of a bankruptcy
petition, or any other corporate change that may affect compliance
obligations arising out of this order.
[[Page 6844]]
VIII
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.
IX
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.
Appendix A.--Steel Tec Toys Subject to the Refund Offer
------------------------------------------------------------------------
Refund
Toy or toy set amount
------------------------------------------------------------------------
Helicopter (not battery operated):
Helicopter (packaged individually)(System 203/item
#7009)................................................ $8.99
Starter Set Copters (System 151/item #7085)............ 14.99
Street and Flying Vehicles (System 203/item #7000)..... 8.99
Helicopter (battery operated):
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Construction & Road Vehicles Set (System 202/item
#7010)................................................ 19.99
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road, Rail and Air Vehicles Set (System 302/item #7024) 34.99
Formula 1 race car:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road & Air Vehicles Plus Waling Robot Set (System 395/
item #7022)........................................... 39.99
Off road super sport:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Construction Vehicles Set (System 306/item #7021)...... 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Sand buggy:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Road, Rail and Air Vehicles Set (System 302/item #7024) 34.99
Excavating and Land Vehicles Set (System 303/item
#7025)................................................ 24.99
Dump truck (not battery operated):
Street and Flying Vehicles (System 202/item #7000)..... 8.99
Construction and Road Vehicles (System 202/item #7010). 19.99
Dump truck (battery operated):
Heavy Machinery/Construction Vehicles Plus Walking
Dinosaur Set (System 304/item #7023).................. 39.99
Dozer (bulldozer):
Construction Vehicles Set (System 306/item #7021....... 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Heavy Machinery/Construction Vehicles Plus Walking
Dinosaur Set (System 304/item #7023).................. 39.99
Excavating and Land Vehicles Set (System 303/item
#7025)................................................ 24.99
Harley-Davidson Motorcycles Set (not battery
operated):
(System 201/item #7090)................................ 34.99
Harley-Davidson Motorcycles Set (battery
operated):
(System 301item #7091)................................. 44.99
Hypersonic jet fighter:
Power Command Center/Value Pack: including Fighter Jet,
Power Wrench and Storage Case (item #7031)............ 19.99
Power Command Center/Value Pack: including Fighter Jet
and Power Wrench but without Storage Case (item
#7031A)............................................... 12.49
Power Command Center/Value Pack: including Fighter Jet
and Storage Case but without Power Wrench item #7031B) 12.49
Power Command Center/Value Pack: without Power Wrench
and Storage Case [returning Fighter Jet only] (item
#7031C)............................................... 4.99
Starter Set Airplanes Assortment (System 151/item
#7085)................................................ 14.99
------------------------------------------------------------------------
Appendix B.--Notice of Refund Offer
Dear Remco Toys Customer:
YOU MAY BE ENTITLED TO A CASH REFUND. We understand that you may
have bought one or more Steel Tec Toys. We recently settled a
dispute with the Federal Trade Commission about allegedly deceptive
advertising for Steel Tec Toys. The FTC alleges that certain Steel
Tec ads showed the toy vehicles flying, driving or moving in ways
that they cannot actually do. Although we don't believe that our ads
were deceptive, we have agreed to give a full refund to all eligible
purchasers who return the toy and ask for their money back.
To get a refund, here's what you need to do:
(1) Check the attached list to make sure that the toy you bought
is included in this refund offer.
(2) Return the toy(s), assembled or unassembled, including the
battery pack, if it is part of the toy. The original packaging is
not required.
(3) Fill out the attached form. Then send the form and the toy
back to us by first-class
[[Page 6845]]
mail. To be eligible for a refund, you must send us the toy by [DATE
CERTAIN 180 DAYS AFTER THE DATE OF SERVICE OF THE ORDER].
(4) For every eligible toy you return, we'll send you a check
for the price of the toy as stated on the attached list and the
return postage. We'll send you a refund check within 15 business
days of receiving the toy.
If you believe that you were not deceived by the alleged
deceptive advertising and you are satisfied with your Steel Tec toy,
you are not required to return the toy for a refund.
To get your refund, please make sure to write your correct
address on the attached form. If you have any questions, please call
1-800-243-2961.
President,
Remco Toys.
Detach and Return This Form With the Toy
Name-------------------------------------------------------------------
Street Address---------------------------------------------------------
City/State/Zip---------------------------------------------------------
Name of Steel Tec Toy or Toy Set---------------------------------------
Return this form and the toy by first-class mail to: Steel Tec
Toy Refund, Remco Toys, 36 W. 25th Street, New York, New York 10016.
Deadline: (Date Certain 180 Days After Date of Service of the
Order)
For Office Use Only:
Date Received----------------------------------------------------------
Toy Received-----------------------------------------------------------
Postage Paid-----------------------------------------------------------
Receiver---------------------------------------------------------------
Refund $---------------------------------------------------------------
Approved by------------------------------------------------------------
Check Date-------------------------------------------------------------
Check #----------------------------------------------------------------
Check $----------------------------------------------------------------
Mailing Date-----------------------------------------------------------
Steel Tec Toys Subject to the Refund Offer
------------------------------------------------------------------------
Refund
Toy or toy set amount
------------------------------------------------------------------------
Helicopter (not battery operated):
Helicopter (packaged individually) (System 203/item
#7009)................................................ $8.99
Starter Set Copters (System 151/item #7085)............ 14.99
Street and Flying Vehicles (System 203/item #7000)..... 8.99
Helicopter (battery operated):
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Construction & Road Vehicles Set (System 202/item
#7010)................................................ 19.99
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road, Rail and Air Vehicles Set (System 302/item #7024) 34.99
Formula 1 race car:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Off road super sport:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Construction Vehicles Set (System 306/item #7021)...... 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Sand buggy:
Road & Air Vehicles Set (System 307/item #7020)........ 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Road, Rail and Air Vehicles Set (System 302/item #7024) 34.99
Excavating and Land Vehicles Set (System 303/item
#7025)................................................ 24.99
Dump truck (not battery operated):
Street and Flying Vehicles (System 203/item #7000)..... 8.99
Construction and Road Vehicles (System 202/item #7010). 19.99
Dump truck (battery operated):
Heavy Machinery/Construction Vehicles Plus Walking
Dinosaur Set (System 304/item #7023).................. 39.99
Dozer (bulldozer):
Construction Vehicles Set (System 306/item #7021)...... 29.99
Road & Air Vehicles Plus Walking Robot Set (System 305/
item #7022)........................................... 39.99
Heavy Machinery/Construction Vehicles Plus Walking
Dinosaur Set (System 304/item #7023).................. 39.99
Excavating and Land Vehicles Set (System 303/item
#7025)................................................ 24.99
Harley-Davidson motorcycles set (not battery
operated):
(System 201/item #7090)................................ 34.99
Harley-Davidson motorcycles set (battery
operated):
(System 301/item #7091)................................ 44.99
Hypersonic jet fighter:
Power Command Center/Value Pack: including Fighter Jet,
Power Wrench and Storage Case (item #7031)............ 19.99
Power Command Center/Value Pack: including Fighter Jet
and Power Wrench but without Storage Case (item
#7031A)............................................... 12.49
Power Command Center/Value Pack: including Fighter Jet
and Storage Case but without Power Wrench (item
#7031B)............................................... 12.49
Power Command Center/Value Pack: without Power Wrench
and Storage Case [returning Fighter Jet only] (item
#7031C)............................................... 4.99
Starter Set Airplanes Assortment (System 151/item
#7085)................................................ 14.99
------------------------------------------------------------------------
Appendix C.--Refund Notice Letter Envelope
Forwarding and Return Postage Guaranteed: Remco Toys, 36 W. 25th
Street, New York, New York 10016
Window Envelope
[The following statement is to appear in a box, on the left hand
side of the envelope in red, in extra large, bold type face]
-----------------------------------------------------------------------
ATTENTION: IMPORTANT REFUND INFORMATION INSIDE
-----------------------------------------------------------------------
Appendix D.--Refund Check Envelope
Forwarding and Return Postage Guaranteed: Remco Toys, 36 W. 25th
Street, New York, New York 10016
Window Envelope
(indicates a check is enclosed)
Appendix E
(Azrak-Hamway stationery)
Dear Station President/Manager: This letter notifies you that
Azrak-Hamway International, Inc. (``Azrak-Hamway'') has entered into
a consent agreement with the Federal Trade Commission (``FTC'')
regarding certain advertising for its Remco Toys Steel
[[Page 6846]]
Tec toy line. We have agreed as part of the settlement to send you this
letter. It will advise you of how you may obtain information
recognized by many organizations as useful in reviewing children's
advertising to avoid misleading the public.
The FTC complaint in this matter alleges that advertisements for
the Steel Tec toys included false demonstrations and representations
of the performance of the depicted toys. More specifically, the FTC
alleges that the ads depicted Steel Tec vehicles driving, flying, or
otherwise moving in ways they cannot do in actual use. Azrak-Hamway
does not admit to the alleged violations. The FTC action does not
allege any liability on the part of the television stations that
broadcast our ads.
Under Section 5 of the Federal Trade Commission Act (15 U.S.C.
Sec. 45), advertisers are prohibited from disseminating false or
deceptive advertising. As you may be aware, the advertising industry
has undertaken various self-regulatory efforts to assist companies
to comply with the law and to promote other industry goals. The
Children's Advertising Review Unit (``CARU'') was established in
1974 by the advertising industry to promote responsible children's
advertising and to respond to public concerns. CARU reviews and
evaluates child-directed advertising in all media. It is not
affiliated with the Federal Trade Commission, but is part of the
Council of Better Business Bureaus.
CARU has issued Guidelines on Children's Advertising that many
industry members use to screen child-directed advertising. The
Guidelines address many issues relating to advertising to children,
some of which include deceptive advertising. For additional
information regarding the CARU Guidelines, or a copy of the
Guidelines, you may write to Elizabeth Lascoutx, Esq., Director of
CARU, at 845 Third Avenue, New York, N.Y. 10022, or call her at
(212) 705-0111.
If you need further information regarding deceptive advertising
under the Federal Trade Commission Act, you may write to Dean C.
Forbes, Esq., Division of Advertising Practices, Federal Trade
Commission, 6th and Pennsylvania Ave., N.W., Washington, D.C. 20580,
or call him at (202) 326-2831.
Sincerely,
----------------------------------------------------------------------
[Azrak-Hamway representative to be identified]
Appendix F.--List of Television Stations to Receive Letter
------------------------------------------------------------------------
Station Channel Location
------------------------------------------------------------------------
KABB-TV.......................... 29 San Antonio, TX.
KCAL-TV.......................... 09 Los Angeles, CA.
KCPQ-TV.......................... 13 Seattle-Tacoma, WA.
KDAF-TV.......................... 33 Dallas-Ft. Worth, TX.
KDEB-TV.......................... 27 Springfield, MO.
KDNL-TV.......................... 30 St. Louis, MO.
KHTV-TV.......................... 39 Houston, TX.
KITN-TV.......................... 29 Minneapolis-St. Paul, MN.
KLGT-TV.......................... 23 Minneapolis-St. Paul, MN.
KMSP-TV.......................... 09 Minneapolis-St. Paul, MN.
KNXV-TV.......................... 15 Phoenix-Flagstaff, AZ.
KOKH-TV.......................... 25 Oklahoma City, OK.
KPDX-TV.......................... 49 Portland, OR.
KPLR-TV.......................... 11 St. Louis, MO.
KPHO-TV.......................... 05 Phoenix-Flagstaff, AZ.
KPRC-TV.......................... 02 Houston, TX.
KPRL-TV.......................... 11 St. Louis, MO.
KSHB-TV.......................... 41 Kansas City, MO.
KSMO-TV.......................... 62 Kansas City, MO.
KSTU-TV.......................... 20 Salt Lake City, UT.
KSTW-TV.......................... 11 Seattle-Tacoma, WA.
KTLA-TV.......................... 05 Los Angeles, CA.
KTTV-TV.......................... 11 Los Angeles, CA.
KTVD-TV.......................... 20 Denver, CO.
KTVT-TV.......................... 11 Dallas-Ft. Worth, TX.
KTXH-TV.......................... 20 Houston, TX.
KWGN-TV.......................... 02 Denver, CO.
WBFS-TV.......................... 33 Miami-Ft. Lauderdale, FL.
WCCB-TV.......................... 18 Charlotte, NC.
WCNC-TV.......................... 36 Charlotte, NC.
WFLD-TV.......................... 32 Chicago, IL.
WFXI-TV.......................... 08 Greenville, New Bern-
Washington, NC.
WFXT-TV.......................... 25 Boston, MA.
WGBS-TV.......................... 57 Philadelphia, PA.
WGN-TV........................... 09 Chicago, IL.
WGNX-TV.......................... 46 Atlanta, GA.
WGRZ-TV.......................... 02 Buffalo, NY.
WHNS-TV.......................... 21 Greenville-Asheville-
Spartanburg, NC.
WIVB-TV.......................... 04 Buffalo, NY.
WJZY-TV.......................... 03 Charlotte, NC.
WKBD-TV.......................... 50 Detroit, MI.
WKCF-TV.......................... 18 Orlando-Daytona, FL.
WKFT-TV.......................... 40 Raleigh-Durham, NC.
WKRN-TV.......................... 02 Nashville, TN.
WLBZ-TV.......................... 02 Bangor, ME.
WLFL-TV.......................... 22 Raleigh-Durham, NC.
WLVI-TV.......................... 56 Boston, MA.
WNUV-TV.......................... 54 Baltimore, MD.
WOFL-TV.......................... 35 Orlando-Daytona, FL.
WOIO-TV.......................... 19 Cleveland-Akron, OH.
WPGH-TV.......................... 53 Pittsburgh, PA.
WPHL-TV.......................... 17 Philadelphia, PA.
WPIX-TV.......................... 11 New York, NY.
WPTT-TV.......................... 22 Pittsburgh, PA.
WPWR-TV.......................... 60 Chicago, IL.
WSBK-TV.......................... 38 Boston, MA.
WSTR-TV.......................... 64 Cincinnati, OH.
WSYT-TV.......................... 68 Syracuse, NY.
WTBS-TV.......................... 17 Atlanta, GA
WTEN-TV.......................... 10 Albany-Schenectedy, NY.
WTIC-TV.......................... 61 Hartford-New Haven, CT.
WTOG-TV.......................... 44 Tampa-St. Petersburg, FL.
WTTG-TV.......................... 05 Washington, DC.
WTTV-TV.......................... 04 Indianapolis, IN.
WTVZ-TV.......................... 33 Norfolk-Portsmith, VA.
WTXF-TV.......................... 29 Philadelphia, PA.
WUAB-TV.......................... 43 Cleveland-Akron, OH.
WXIX-TV.......................... 19 Cincinnati, OH.
WXMI-TV.......................... 17 Grand Rapids-Kalamazoo, MI.
WXON-TV.......................... 62 Detroit, MI.
WYFF-TV.......................... 04 Greenville-Asheville-
Spartanburg, NC.
WZTV-TV.......................... 17 Nashville, TN.
------------------------------------------------------------------------
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Azrak-Hamway, International, Inc. (``Azrak-
Hamway''), and Marvin Azrak and Ezra Hamway, officers of 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 the 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 charges Azrak-Hamway with
engaging in deceptive advertising of the ``Steel Tec Construction
System'' line of toys, which are marketed by Azrak-Hamway's Remco Toy
Division. The complaint challenges television advertisements and
packaging for eight Steel Tec toys, which represent that
[[Page 6847]]
these toys can move and operate in various ways unaided. According to
the complaint, the television advertisements and packaging 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 respondents falsely represented
that the above-listed toys can perform by flying, driving, or moving in
the manners depicted.
The complaint also alleges that the respondents 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 packaging for the challenged
Steel Tec toy sets misrepresented that each package contains the number
of parts required to build the number of toys depicted on the package
at the same time.
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. Part IB prohibits the respondents from
misrepresenting any performance characteristic of any toy. Part IC
prohibits the respondents from misrepresenting the number of toys
contained in, or that can be constructed with the parts contained in,
the package.
Part II requires the respondents to maintain certain records and
materials relating to future representations covered by the order.
Part III sets forth a consumer redress program through which
purchasers of the Steel Tec toys at issue in this matter may obtain a
refund of the price of the toy(s) plus postage upon return of the
toy(s) to the company. The respondents are required to mail an
explanatory letter and refund application to all purchaser names known
to them and to any others that contact them within one hundred twenty
(120) days after the order is issued.
Part IV requires the respondents to send a letter to each
television station that aired any of the challenged advertisements
notifying those stations that Azrak-Hamway has entered into a consent
agreement with the Commission, and referring those stations to the
availability of the Guidelines for Children's Advertising published by
the Children's Advertising Review Unit of the Council of Better
Business Bureaus, Inc.
Parts V through VII and IX relate to the respondents' obligations
to provide copies of the order to certain Azrak-Hamway officers and
personnel; to notify the Commission of changes in corporate structure,
or, in the case of the individuals, changes in employment; and to file
compliance reports with the Commission. Part VIII 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 the agreement and proposed order or to modify in any
way their terms.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-4007 Filed 2-21-96; 8:45 am]
BILLING CODE 6750-01-M
