Azrak-Hamway International, Inc., Marvin Azrak, Ezra Hamway; Consent Agreement With Analysis To Aid Public Comment

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

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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