[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]



-----------------------------------------------------------------------

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