[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