[Federal Register Volume 61, Number 161 (Monday, August 19, 1996)]
[Notices]
[Pages 42906-42908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21030]


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FEDERAL TRADE COMMISSION
[File No. 952-3231]


Grey Advertising, Inc.; Proposed Consent Agreement With Analysis 
To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would prohibit, among other things, the New York 
City-based advertising agency from using deceptive demonstrations or 
otherwise misrepresenting the performance of a toy. The consent 
agreement settles allegations stemming from Grey's role in a commercial 
for Hasbro, Inc.'s ``Colorblaster'' paint sprayer toy. The Commission 
had alleged that the commercial represented that children can operate 
the toy with very little effort when, in fact, Hasbro used a motorized 
air compressor during filming to provide the pressure necessary to 
operate the toy with ease and to achieve the results shown in the 
commercial.

DATES: Comments must be received on or before October 18, 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:
Elaine Kolish, Federal Trade Commission, 6th and Pennsylvania Avenue, 
NW, S-4302, Washington, DC 20850. (202) 326-3042.
    Justin Dingfelder, Federal Trade Commission, 6th and Pennsylvania 
Avenue, NW, S-4302, Washington, DC 20850. (202) 326-3017.
    Rosemary Rosso, Federal Trade Commission, 6th and Pennsylvania 
Avenue, NW, S-4002, Washington, DC 20850. (202) 326-2174.

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)).

Agreement Containing Consent Order to Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Grey Advertising, Inc., a corporation 
(``proposed respondent''), and it now appears that proposed respondent 
is willing to enter into an agreement containing an order to cease and 
desist from the acts and practices being investigated,
    It is hereby agreed by and between Grey Advertising, Inc., by its 
duly authorized officer, and its attorney, and counsel for the Federal 
Trade Commission that:
    1. Proposed respondent Grey Advertising, Inc. is a corporation 
organized, existing and doing business under and by virtue of the laws 
of the State of New York with its principal office or place of business 
at 777 Third Avenue, New York, New York 10017.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    3. Proposed respondent waives:
    (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 a 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 the complaint contemplated hereby, 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 proposed 
respondent, in which event it will take such action as it may consider 
appropriate, or issue and serve its

[[Page 42907]]

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 respondent that the law has been 
violated as alleged in the draft complaint 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 
respondent, (1) issue its complaint corresponding in form and substance 
with the draft complaint 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 decision 
containing the agreed-to order to proposed respondent's address as 
stated in this agreement shall constitute service. Proposed respondent 
waives any right it might 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 respondent has read the proposed complaint and the 
order contemplated hereby. It understands that once the order has been 
issued, it will be required to file one or more compliance reports 
showing it has fully complied with the order. Proposed respondent 
further understands that it 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 respondent Grey Advertising, Inc., a 
corporation, its successors and assigns, and its officers, 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 depicting a demonstration, 
experiment or test, making any representation, directly or by 
implication, that the demonstration, experiment, or test depicted in 
the advertisement proves, demonstrates, or confirms any material 
quality, feature, or merit of any toy when such demonstration, 
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 respondent neither knew nor had reason to know that the 
demonstration, experiment or test did not prove, demonstrate or confirm 
the representation.
    B. Misrepresenting, in any manner, directly or by implication, any 
performance characteristics of any Colorblaster Design Toy or any other 
toy.
II
    It is further ordered that respondent shall notify the Commission 
at least thirty (30) days prior to any proposed change in the 
respondent such as a dissolution, assignment, or sale resulting in the 
emergence of a successor corporation, the creation or dissolution of 
subsidiaries, or any other change in the respondent which may affect 
compliance obligations arising under this Order.
III
    It is further ordered that respondent shall, within thirty (30) 
days after service of this Order, distribute a copy of this Order to 
each of its operating divisions and to each of its officers, agents, 
representatives, or employees engaged in the preparation or placement 
of advertisements or other materials covered by this Order.
IV
    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent, or its successors and assigns, shall maintain and upon 
request make available to the Federal Trade Commission for inspection 
and copying:
    1. All materials that were relied upon in disseminating such 
representation;
    2. All tests, reports, studies, surveys, demonstrations, or other 
evidence in its possession or control that contradict, qualify, or call 
into question such representation, or the basis relied upon for such 
representation, including complaints from consumers, and complaints or 
inquiries from governmental organizations; and
    3. Any and all affidavits or certificates 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 a toy 
advertisement.
V
    This Order will terminate twenty years from the date of its 
issuance, or twenty 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

[[Page 42908]]

ruling and the date such dismissal or ruling is upheld on appeal.
VI
    It is further ordered that respondent shall, within sixty (60) days 
after service of this Order, and at such other times as the Commission 
may require, file with the Commission a report, in writing, setting 
forth in detail the manner and form in which it has complied with this 
Order.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order Grey Advertising, Inc. 
(``Grey'') in connection with its advertising of the Colorblaster 
Design Toy (the ``Colorblaster''), manufactured by Hasbro, Inc. In a 
related matter, the Commission has also accepted, subject to final 
approval, and separately placed on the public record, an agreement to a 
proposed consent order from Grey involving claims made in advertising 
created by Grey for Dannon Pure Indulgence frozen yogurts.
    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 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.
    According to the complaint, the Colorblaster is a spray painting 
toy consisting of a plastic drawing tray with an oblong plastic air 
tank underneath. An attached handle is used to pump up pressure inside 
the air tank. Special color pens are inserted into a sprayer connected 
to a hose attached to the air tank. The enclosed instructions state: 
``Fully extend handle and pump it quickly 50 strokes * * * The more you 
pump, the more you spray.''
    The complaint alleges that television advertisements for the 
Colorblaster represented that the demonstrations of the toy were 
unaltered and the results shown accurately represent the performance of 
actual, unaltered toys under the depicted conditions. This 
representation is alleged to be false and misleading. According to the 
complaint, the Colorblaster depicted in the advertisements was not 
manually pumped to provide the air pressure necessary to operate the 
paint sprayer. Instead, a motorized air compressor was attached to the 
toy to provide the air pressure necessary to operate the paint sprayer, 
making it appear that children can operate the toy and complete multi-
part stencils with a small amount of pumping and little effort.
    The complaint also alleges that the advertisements for the 
Colorblaster misrepresented that children can operate the toy and 
complete multi-part stencils with a small amount of pumping and little 
effort.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent Grey from engaging in similar 
acts and practices in the future.
    Part I.A. of the proposed order prohibits Grey from misrepresenting 
that a demonstration, experiment, or test depicted in an advertisement 
proves, demonstrates, or confirms any material quality, feature, or 
merit of any toy when it does not do so. Part I.A. 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;

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.
    Part I.A. does not preclude the use of fantasy segments or 
prototypes which use is otherwise not deceptive. Part I.A. provides 
Grey with a defense liability if it neither knew nor had reason to know 
that a demonstration, experiment or test did not prove, demonstrate or 
confirm a representation.
    Part I.B prohibits Grey from misrepresenting any performance 
characteristic of the Colorblaster Design Toy or any other toy.
    The proposed order also requires Grey to maintain certain materials 
relating to advertisements covered by the order, to distribute copies 
of the order to its operating divisions and certain company officials, 
to notify the Commission of any changes in corporate structure that 
might affect compliance with the order, and to file one or more reports 
detailing compliance with the order. The order also contains a 
provision stating that it will terminate after twenty (20) years absent 
the filing in federal court, by either the United States or the FTC, of 
a complaint against Grey alleging a violation of the order.
    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 any of 
their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 96-21030 Filed 8-16-96; 8:45 am]
BILLING CODE 6750-01-M