Starwood Advertising, Inc., Les Towne; Consent Agreement With Analysis to Aid Public Comment

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

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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

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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

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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