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FTC To Start Naming Bogus Ad Broadcasters

The FTC is going to start outing broadcast and cable outlets who carry deceptive ads.

In a speech in New York this week, Federal Trade Commission Chairman Deborah Platt Majoras put broadcast and cable networks on notice that she will start naming names.

Majoras praised the broadcast and cable outlets who have made "conscientious efforts" to screen out bogus weight-loss spots and infomercials. She noted that those efforts, according to 2004 data, resulted in a precipitous drop in the number of weight-loss ads being flagged for deceptive claims (from 50% to 15%).

But she says there has been some "backsliding" since. She cited some recent claims: "New Calorie-Busting Slimming Pill  Forces You to Lose Weight Without Diet or Exercise"; and, "How I lost 41 Pounds in Less than 2 Months Without Dieting."

To insure against that backsliding, she said "we are planning to identify those media companies that disseminate allegedly false ads. We will include the names of these companies in our press releases announcing an FTC action challenging those claims.

"In addition," she said, "companies that disseminate 'Red Flag' claims [lose weigh without exercise, cure cancer, etc.) may receive a formal letter from the FTC reminding them of the Red Flags campaign and telling them of the need to take steps to stop such backsliding."

Majoras took aim at media pocketbooks as well as their reputations. She pointed out that "when the FTC takes action, we will try to ensure that all available assets go to pay back consumers, not to pay past due advertising accounts." Translation: You snooze, you lose the ad dollars.

In 2003, when it began its "Red Flag" effort to help the media identify and weed out bogus health and medical claims, the FTC held seminars and produced literature for networks and stations on the warning signs of deceptive advertising. At the same time it, warned that if broadcasters did not do a better job of self-policing for those bogus claims, the FTC could go after them as well.

It has so far confined its legal actions to the marketers of seaweed cancer cures and no-exercise pound-melting contraptions rather than the outlets that carry the deceptive ads and/or infomercials, but it has the power to sue the media as well.

In her speech to the Electronic Retailers Association at a seminar on its Electronic Retailing Self-Regulation Program (ERSP), Majoras extolled the benefits of self-regulation.

She praised the efforts of ERSP, but said that the media, as well as marketers, need to be part of the solution. She said some cable companies were not doing their part, both in terms of diet and health ads and other bogus claims.

She pointed out that in August 2004, the National Cable & Telecommunications Association encouraged its members to better police their ads. She said some companies, naming Discovery, MTV, Lifetime, and ABC, had "stepped forward to do the right thing. Others have not."

If the media would just say no to deceptive ads, Majoras argued, it could prove an even more effective deterrent that the threat of an FTC law suit.

On another diet-related issue--childhood obesity--Majoras said to look for an FTC  report "soon" that would make recommendations on further action to combat the growing health problem and its relationship to food marketing to kids. They will be contained in a report stemming from a July FTC/HHS forum on food marketing to kids.

One of those recommendations will not be a ban on such marketing, she said, pointing out that there would be "significant" First Amendment limitations. Plus, she said, "self-regulation of food marketing practices can be more effective, flexible, and expeditious than government regulation in changing the food marketing environment to address childhood obesity."