Kellogg settles FTC charges that cereal ads were deceptive

Breakfast cereal maker Kellogg will settle with the Federal Trade Commission over charges that its ads for Frosted Mini-Wheats were misleading, the FTC announced Monday.

Ads for Frosted Mini-Wheats said that kids' attentiveness improved by 20 percent after eating the cereal, but the government disagreed.

According to the FTC:

The complaint alleges that, in fact, according to the clinical study referred to in Kellogg’s advertising, only about half the children who ate Frosted Mini-Wheats for breakfast showed any improvement in attentiveness, and only about one in nine improved by 20 percent or more.

The complaint also challenges the claim, made in a different television ad, that a breakfast of Frosted Mini-Wheats was clinically shown to improve children’s attentiveness by nearly 20 percent when compared to children who ate no breakfast. In fact, the study showed that the children who ate the cereal for breakfast averaged just under 11 percent better in attentiveness, by comparison, and that relatively few were nearly 20 percent more attentive. Based on the clinical study results, the complaint alleges that both of the challenged claims are false and violate the FTC Act.

The proposed settlement would prevent Kellogg from making similar claims in the future, the FTC said.

“We tell consumers that they should deal with trusted national brands,” said Chairman Jon Leibowitz. “So it’s especially important that America’s leading companies are more ‘attentive’ to the truthfulness of their ads and don’t exaggerate the results of tests or research. In the future, the Commission will certainly be more attentive to national advertisers.”

Kellogg responded with a statement: "We stand behind the validity of our clinical study yet have adjusted our communication to incorporate FTC's guidance."

The latest cereal ratings from Consumer Reports put Frosted Mini-Wheats in the "GOOD: Room for improvement in sugars and/or fiber; high in or a good source of iron" category. (Ratings are available to subscribers.)

CR's look at breakfast cereals found that some child-focused products are as much as 50 percent sugar.

FTC: Comcast, DIRECTV to pay for "Do Not Call" violations

Cable and Internet provider Comcast and DIRECTV, the satellite TV company, have agreed to pay fines to settle charges that both companies called consumers who had asked not to be called again, the Federal Trade Commission announced Thursday.

DIRECTV will pay $2.31 million, and Comcast will pay $900,000, the FTC said.

“In both of these cases, DIRECTV and Comcast violated consumers’ privacy by calling people who specifically had asked these companies not to call them again,” said FTC Chairman Jon Leibowitz.

Comcast responded with a statement from Sena Fitzmaurice, executive director of corporate communications:

Comcast fully supports all Do-Not-Call regulations and we are committed to preventing unwanted telemarketing calls.  The FTC found our compliance with the national Registry to be 99.85% and chose not to pursue any claim against Comcast in that area.  This settlement is limited to alleged calls made to persons identified on our internal do-not-call list, where our compliance percentage was at 99.74%.  Both compliance percentages are greater than those reported by the FTC to Congress last year as evidencing ‘highly effective’ performance.    Since the period under review, we have further strengthened our policies and procedures to prevent unwanted telemarketing calls.

FTC offers financial help with new Web site

The Federal Trade Commission has launched Money Matters, a new Web site to help people struggling through the recession.

"Practicing positive, tried and true money management techniques – and learning how to recognize and avoid some 'ripped from the headlines' consumer scams and rip-offs – can help you weather tough economic times," the site tells visitors.

According to the announcement:

Money Matters offers short, practical tips, videos, and links to reliable resources for more information on topics like credit repair, debt collection, job-hunting and jobs scams, vehicle repossession, managing mortgage payments, and foreclosure rescue scams.

If you're looking for more tips on saving money and living in a tough economy, visit CR's Money Blog. 

Miss a call from a 649 or 809 number? Be careful.

There's a new twist on an old scam, wireless advocates a warning.

Phone companies are noticing a pattern of calls that ring once or twice but automatically disconnect after that, according to the non-profit group mywireless.org.

Here's what happens:

When the number appears on the customer's cell phone as a missed call, it appears to be a typical domestic three-digit phone number starting with the "649" area code. If the customer decides to return the missed call, the call is returned to an Adult Entertainment chat line in the Turks and Caicos, outside the reach of U.S. regulators. While wireless companies are working to block suspicious numbers on their networks, some individuals may be victims of this and similar schemes involving international area codes and end up being billed for expensive international call and chat line charges.

What to do about it?

MyWireless.org urges wireless consumers to always check an area code first before returning a call to an unknown caller. Be skeptical about area codes you don't recognize, especially: "649" (Turks and Caicos); "809" (Dominican Republic); "284" (British Virgin Islands); "876" (Jamaica); "758" (St. Lucia); or "664" (Montserrat). There are dozens of area codes (mostly in the Caribbean islands) which connect callers to an international telephone number. In addition, if you do not make international calls, ask your wireless carrier to block outgoing international calls on your account.

The Federal Trade Commission has more details in a Fact Sheet for International Telephone Number Scams (PDF).

Government accuses Dish Network of calling those on "Do Not Call" list

Dish Network is being sued by the U.S. government over accusations that the satellite TV provider called numerous consumers who had entered their phone numbers on the National Do Not Call Registry, the Federal Trade Commission announced today.

The Justice Department filed complaints against Dish Network and two of its authorized dealers--Vision Quest and New Edge Satellite--also alleges that by using robocalls the companies violated the Telemarketing Sales Rule.

“Since the National Do Not Call Registry was launched, it has been enormously effective at protecting millions of Americans from unwanted telemarketing calls at home,” Eileen Harrington, Acting Director of the FTC’s Bureau of Consumer Protection, said in a statement. “But because a few bad actors still don’t get it, we want to make it crystal clear. If you call consumers whose numbers are on the Do Not Call Registry, you’re breaking the law. If your authorized dealers call consumers whose numbers are on the Registry, you’re breaking the law. Either way, we will protect the privacy of American consumers and we will hold you accountable.”

The FTC said the government is seeking civil penalties from Dish Networks, as well as making sure that Dish changes its policies and practices for marketing calls.

The attorneys general of California, Illinois, Ohio, and North Carolina joined the federal government in the suit.

The company responded with a statement:

We respectfully disagree with the allegations made today by the Federal Trade Commission and certain States that DISH Network has engaged in 'do-not-call' violations and that DISH Network should be held responsible for 'do-not-call' violations by independent retailers. An independent audit demonstrates that DISH Network is in compliance with 'do-not-call' laws, has proper controls in place, and is well within the safe-harbor provisions of the law. We also believe that the FTC is equating merely doing business with an independent retailer to 'causing' or 'assisting and facilitating' violations by that retailer, which creates a strict liability standard that does not exist in the law and was not intended by Congress. We look forward to resolving these differences of opinion through the judicial process.

Congressional hearings tackle consumer credit issues

More and more of us having trouble paying the bills--whether they're from the mortgage, credit cards, or car loans--and it doesn't look like there is a bailout in store for individual consumers. But all of our tough times being talked about in Washington.

Today two Congressional hearings tackled the problems consumers are having in this recession. A House subcommittee examined "Consumer Credit and Debt: The Role of the Federal Trade Commission in Protecting the Public,” while a Senate subcommittee took on “Abusive Credit Card Practices and Bankruptcy.”

The head of the FTC told the House Subcommittee on Commerce, Trade, and Consumer Protection that his agency is trying to protect regular folks, but it needs more funding and more authority.

"The agency has used its traditional consumer protection tools of law enforcement, broad-based research and policy development, and consumer and business outreach to provide important protections for consumers of financial services," FTC Chairman Jon Leibowitz said. "However, the Commission must do more. To enable the FTC to perform a greater and more effective role protecting consumers, it recommends changes in the law and resources to enhance its authority to promulgate needed rules, prosecute cases against law violators, and conduct critical research. If given more authority, the Commission certainly will use it to protect consumers."

The Senate hearing focused on one area of personal finance over which the FTC chief said his agency had very little authority: credit cards.

Senators on the Judiciary Subcommittee on Administrative Oversight and the Courts heard about how credit card companies--some of which have taken billion-dollar bailouts from the government--are treating their customers.

"The standard credit card agreement gives the lender the power to bleed their customer through evolving and ever more crafty trick and traps," Sen. Sheldon Whitehouse said. "Under this business model, the lender focuses on squeezing out as much revenue as possible in penalty rates and fees, pushing the customer closer and closer to the edge of bankruptcy."

Whitehouse is sponsoring legislation that would limit interest rates that credit card companies can charge consumers who are in bankruptcy proceedings.

The proposal would change bankruptcy laws to dissolve claims for repayment of debt carrying interest over a certain level, now 18.5 percent, according to the Associated Press. It could affect millions of dollars in claims made by credit card companies from consumers who have filed for bankruptcy protection.

Federal Trade Commission to crackdown on deceptive testimonials

The Federal Trade Commission is preparing to put an end to commercials that flaunt disingenuous results while hiding behind disclaimers like "results not typical" or "individual results may vary."

The FTC's guidelines for marketers, designed to empower consumers to independently judge the worthiness of a product, have not been updated since 1980. Since then, marketers have increasingly relied on deceptive advertisements that mask a product's true effect.

"The use of consumer testimonials had become almost a safe harbor for companies as long as they threw in some sort of disclaimer about results not being typical," Richard Cleland, assistant director of the FTC's division of advertising practices told the Chicago Tribune.

Under the new rules, marketers would be able to demonstrate extreme examples only if they also demonstrated more typical results. Advertisers who fail to comply could be subject to legal action.

The proposal would also extend to bloggers and corporate web sites, which worries the Word of Mouth Marketing Association.

"For example, could a blogger be subject to liability for endorsements even if they represent an honest appraisal of the product and the blogger's experience?," WOMMA President John Bell asked. "Bloggers might be afraid to state their opinions or experiences if they believe they go against the grain of mainstream opinion or are not supported by empirical evidence."

The rules, originally proposed two years ago, are currently under final review and are expected to be adopted once finalized.

FTC: QVC to pay $7.5 million over charges of false dietary supplement, anti-cellulite claims

QVC, the TV shopping channel, will pay $7.5 million to settle claims that it aired "false and unsubstantiated claims" about three dietary supplements and an anti-cellulite sknin cream, the Federal Trade Commission announced Thursday.

From the FTC announcement:

The agency alleged that QVC violated a 2000 FTC order barring it from making deceptive claims for dietary supplements. According to the Commission, QVC aired approximately 200 programs in which false and unsubstantiated claims were made about For Women Only weight-loss pills; Lite Bites weight-loss food bars and shakes; and Bee-Alive Royal Jelly energy supplements. In addition, the complaint charged that QVC violated Section 5 of the FTC Act by making unsubstantiated claims about Lipofactor Cellulite Target Lotion.

The settlement requires QVC to pay $6 million for consumer redress and a $1.5 million civil penalty. In addition, the settlement expands the prior FTC order and further bars QVC from making unsubstantiated claims that any drug or cosmetic eliminates or reduces a user’s cellulite.

The singing pirates of the FTC and your free credit reports

For those of you who can't get the freecreditreport.com jingle out of your head, the Federal Trade Commission has something for you to think about: there's only one place approved under federal law for you to get your free annual credit report.

The government-mandated place for those free credits reports is: AnnualCreditReport.com.

"Other sites require users to pay hidden fees or agree to additional services," the FTC said in a statement. "For example, some sites provide a free credit report if you enroll in a new service."

To let everybody know that, the FTC has launched an ad campaign that looks a whole lot like the ubiquitous freecreditreport.com spots. The government's jingles may not be quite as catchy, but they are pretty good spoofs of the originals.

The FTC's ads:

And the freecreditreport.com ads:

Freecreditreport.com does note on its web site that it is not part of the government's program. The site says this on the front page:

ConsumerInfo.com, Inc. and Freecreditreport.com are not affiliated with the annual free credit report program. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies.