CARU Emphasizes Accurate Performance, Use Presentations for Children
Two recent Children's Advertising Review Unit decisions emphasize the importance of providing accurate performance and use presentations for products targeted to children, as well as providing disclosures in an appropriate format.
In the first action, the self-regulatory body recommended that PlayMonster add an audio disclosure to broadcast advertising for its "Chrono Bomb" product so that viewers would better understand that the game uses colored string to simulate a laser field. The spy mission game requires players to first create a "laser field" with string clipped to pieces of furniture that must be navigated during the allotted time before the "bomb" is activated and the game is over.
The commercial for the game depicted a boy climbing over and under lasers in his home while the announcer cautions, "If you touch a laser, the countdown speeds up." At the bottom of the screen, a visual stated: "Visual Effect Added. Not Real Lasers." The product packaging showed children playing the game with graphics of laser beams crisscrossing all sides of the box. Instructions included the statement in large, bold letters: "Cross the laser field before it's too late"; and in smaller print toward the bottom of the package: "Strings imitate the laser field experience."
CARU expressed concern that children viewing the commercial or the product packaging would think that the product includes real laser lights or some other material that lights up or glows.
Children and parents would not think the game included actual lasers, the advertiser countered, because of the inherent dangers with real lasers.
But after considering the net impression of the entire advertisement and the packaging, the self-regulatory body found that one reasonable takeaway was "that the game included laser-type lights or other materials that could light up or glow."
"[T]he combination of the audible word 'laser' with the special effects used to create the illusion of lasers could lead a reasonable child to believe that the game included either real laser lights or a material that could light up or glow," CARU wrote, adding that the video super was not an adequate means of conveying material facts to children.
As for the product packaging, "the prominence and location of the word laser on the front and back of the box, along with graphics of laser lights on all sides of the box, would make a greater impression on a child, who may not even look at the back of the packaging, than the small print disclosure on the bottom back of the box," the decision stated. "Furthermore, the photos of the children in real game play do not cure this misimpression because the lasers appear as thick bright blue lines that do not look obviously like string."
CARU recommended that the commercial be modified to include an audio disclosure and that the product packaging statement that strings imitate the laser field experience be repositioned to the front of the box, "where it is prominent and proximate to the advertising's main message."
The second case involved Moose Toys' "Qixels 3D Maker," where CARU similarly advised the advertiser to add an audio disclosure so that children understand their creations require up to 60 minutes of drying time before they are handled – as opposed to the depictions in the commercials, which show children handling their creations immediately.
Children use the 600 tiny colorful square cubes in a Qixels set to match a template that they place in a special machine to build various creations. As part of the process, four or five coats of water must be applied to each template which must dry for at least one hour according to the product's instructions. When colored cubes become loose or fall off, they can be reattached using water and another 30 minutes of dry time.
But CARU found problems with Qixel's commercial, which featured visuals of children lifting dry and fully formed designs out of the machine. While a visual disclosure appeared on the screen stating: "Drying time is 60 minutes," the statement was insufficient, even with the on-screen depiction of a clock the that indicated the time needed to dry.
The bulk of the instructional footage for how to make the Qixel designs was in fast-motion photography and "dramatically faster than it would be in real life," according to the decision. "CARU recognizes the popularity of fast-motion photography, especially in advertisements involving products like arts and crafts and building toys, where the creation is part of the play patterns and a labor of love for the child. However, when there is an element such as drying which is material to the product's successful completion, CARU requires that the Advertiser clearly disclose this fact to the child."
Creations were shown as fully formed when removed from the machine by the children in the ad, the self-regulatory body noted, "when in reality it would take up to 60 minutes of waiting to duplicate this," in direct contrast to the instructions included with the product.
The clock graphic appeared fleetingly and the written disclosure flashed at the bottom of the screen did not adequately communicate the long dry time to children. CARU recommended that Qixels audibly disclose that the creations require up to 60 minutes of dry time before they are handled.
Both advertisers agreed to make the suggested changes.
To read CARU's press release in the PlayMonster case, click here.
To read CARU's press release in the Moose Toys case, click here.
Why it matters: Advertisers should demonstrate the performance and use of a product in a way that can be duplicated by a child for whom the product is intended, with all disclosures and disclaimers material to children presented in a format understandable to the intended audience. The self-regulatory body was emphatic that written disclosures, "particularly video supers in small print and flashed at the bottom of the screen, are not understandable to children who may not be able to read and are therefore an inadequate means of conveying material facts." Audio disclosures should be added.
back to top
FTC Returns $3.7M From Pyramid Scheme
The Federal Trade Commission announced that it will return more than $3.7 million to consumers who were duped by Fortune Hi-Tech Marketing in a vast pyramid scheme.
In January 2013 the agency filed suit against FHTM and related individuals charging the defendants with violations of the Federal Trade Commission Act and state law. The defendants conned more than 350,000 consumers in the United States, Canada, and Puerto Rico by claiming they could earn significant income by signing up as an FHTM representative and selling various products and services of companies such as Dish Network, Frontpoint Home Security, and various cell phone providers, the regulators said.
The defendants promoted their operation as a way for average people to achieve financial independence, with one FHTM representative claiming that he earned more than $50,000 in a single month and another tweeting about an upcoming recruitment meeting, "Bring ur friends & learn how 2 make $120K aYR."
Participants were required to pay start-up costs, annual fees (ranging from $100 to $300), and if they wanted to qualify for sales commissions and recruiting bonuses, monthly fees of $300 to $400. However, according to the complaint filed by the FTC and the Attorneys General of Illinois, Kentucky, and North Carolina, the defendants in fact perpetuated a pyramid scheme where the defendants recruited new members to pay the existing ones.
At any given time most participants had to spend more money than they earned pursuant to FHTM's compensation plan, the regulators added. Not only did an overwhelming majority (more than 98 percent) lose more money than they ever made, at least 88 percent of participants failed to recoup their enrollment fees.
In 2014, an Illinois federal court judge halted the defendants' operations, banned them from multilevel marketing, and ordered them to surrender assets totaling at least $7.75 million as part of a $169 million judgment. The defendants were also prohibited from misrepresenting material facts about any product or service (including claims about how much money consumers can earn) or from selling or otherwise benefitting from customers' personal information.
Two years later, the FTC announced that it mailed 285,361 checks totaling more than $3.7 million to affected consumers, and that it may distribute additional funds in the future after lawsuits against certain FHTM employees have been resolved.
To read the complaint and the orders in FTC v. Fortune Hi-Tech Marketing Inc., click here.
Why it matters: The case reiterates for operators of multilevel marketing programs the importance of accurately representing potential earnings claims and not stating or implying that certain results will be achieved without competent and reliable evidence for support.
back to top
FTC to Consider Changing Demographics
Changing consumer demographics will be the subject of an upcoming Federal Trade Commission workshop scheduled for December.
The agency wants to "examine changing consumer demographics and how they will affect the FTC's work in the years ahead," noting that according to the U.S. Census Bureau, the population is getting older as well as more racially and ethnically diverse.
"Understanding our changing communities will be necessary as the FTC continues its efforts to combat unfair and deceptive practices affecting all consumers," the agency said in a press release.
Stakeholders, including researchers, marketers, consumer groups, and law enforcement organizations, will discuss issues including who are the consumers of the future, how advertising and marketing are changing to reach these consumers, and how fraud will likely change as a result. Discussion will also include the role of technology in reaching the changing consumer populations and how the FTC and other government agencies can prepare to combat fraud perpetuated against these consumer groups.
"Studying these questions will help the agency continue to strategize, prioritize, and prepare for the years ahead," the FTC said, noting that it will accept pertinent research as well as questions both before and after the free workshop.
For more information on the upcoming workshop, click here.
Why it matters: The workshop is scheduled for December 6. As the FTC will be considering its enforcement priorities and strategies for the coming months and years in light of the changing consumer demographics, advertisers and marketers are well advised to pay careful attention.
back to top