Countdown to National Consumer Protection Week 2011 Begins; Website and Blog Launched

The Federal Trade Commission has launched the website and blog for National Consumer Protection Week (NCPW) 2011, to be held March 6-12. The annual event, now in its 13th year, is hosted by the FTC and nearly 30 other government agencies, consumer groups, and national organizations. The website, www.ncpw.gov, provides information about consumer rights, and promotes free resources to help consumers protect their privacy, manage credit and debt, avoid identity theft, understand mortgages, and recognize frauds and scams.

Consumer experts will provide blog posts on a wide variety of subjects. The Consumer Topics section of the website has print and video resources to read, view, download, print, copy, and share.

Government agencies and organizations planning an event for National Consumer Protection Week should visit the site at www.ncpw.gov and send an email (ncpw(at)ftc.gov) including the date, time, location, and concise details.

Learn more about the government agencies, consumer groups, and national participating organizations on the About Us section of the website.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.

(FYI NCPW)

FTC Offers Online Shopping Tips for the Holidays

Tips for Consumers

The Federal Trade Commission, the nation’s consumer protection agency, has tips to help consumers make smart online shopping decisions for the holidays:

  • Know who you’re dealing with:
    • Confirm the online seller’s physical address and phone number before you buy.
  • Know what you’re buying:
    • Read the seller’s description of the product and the fine print.
    • Understand the terms and conditions regarding refunds, including who pays the shipping costs, and whether there is a restocking fee.  
    • Print and save records of your online transactions, including all emails to and from the seller.
    • Buy gift cards from known and trusted sources, and avoid online auction sites for gift cards. 
  • Be stingy with your personal information:
    • Don’t give out your credit card or other financial information in exchange for a tech toy, a free gift card, a seasonal job, or a holiday vacation rental.
    • Don’t email your financial information or click on a link in an email. Legitimate companies don’t ask for your financial information via email or pop-up message.
  • Check the privacy policy:
    • If you can’t find it or it doesn’t make sense, consider taking your business elsewhere, and letting the site know what you think.
  • Shop around:
    • Use the manufacturer and model number of the item to compare prices among merchants. Consider whether shipping is included. If the item is offered for pick-up at a store, consider the cost of parking or public transportation.
  • Use caution when buying on public WiFi:
    • If a hot spot has doesn’t have effective security measures in place, it’s risky to send sensitive information like your credit card number over that network.
  • Pay by credit or charge card:
    • They offer the best consumer protections. If you wire money and there’s a problem, you probably won’t get it back. Buying online using cash equivalents – debit card, personal check, cashier’s check, or money order – can be risky.  Use them only if you know the party you’re doing business with.
  • Free screen savers, e-cards, or other seasonal downloads can carry dangerous viruses:
    • Keep your anti-virus and anti-spyware software and your firewall current.
  •  Monitor your financial accounts:
    • Read your statements regularly, making sure they reflect the charges you authorized.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.

Contact Information

MEDIA CONTACT:
Office of Public Affairs
202-326-2180

FTC Staff Submits Comments to Federal Reserve on Making Fair Lending Law Stronger; FTC Announces Increase in Maximum Charge for Extra Copies of Credit Reports

FTC Staff Submits Comments to Federal Reserve on Making Fair Lending Law Stronger

The Federal Trade Commission staff has submitted comments to the Federal Reserve Board recommending ways the Board could strengthen the rules under the Home Mortgage Disclosure Act, which requires some mortgage lenders to collect and report loan data that the government uses to analyze whether they are complying with fair lending laws.

In response to a request for comments by the Federal Reserve Board, the FTC staff outlined the FTC’s enforcement of fair lending laws and recommended changes to the Home Mortgage Disclosure Act’s Regulation C. The FTC staff recommended that the Board expand the number of mortgage lenders required to report loan data by modifying the criteria for determining which ones are required to report. According to FTC staff, these changes would not be overly burdensome to lenders and would provide regulators with better data to enforce fair lending laws. FTC staff also suggested that the Board require lenders to report on additional types of loans, such as reverse mortgages and home equity lines of credit, and to report additional data fields for all reported loans. In addition, the FTC staff recommended that the Board make the mortgage data available to the public and useful to researchers while still protecting mortgage applicants’ privacy.

The FTC vote approving the comment was 5-0. (FTC File No. P064806; the staff contact is Allison Brown, Bureau of Consumer Protection, 202-326-3079).

FTC Announces Increase in Maximum Charge for Extra Copies of Credit Reports

The Federal Trade Commission announced that the limit on how much consumer reporting companies are allowed to charge consumers for an extra copy of their credit report will increase from $10.50 to $11.00, effective January 1, 2011. The FTC is required to review the maximum credit report charge each year under the Fair Credit Reporting Act, and revise it based on the Consumer Price Index.

The FTC reminds consumers that this charge does not apply to the first free copy of their credit report that consumers are entitled to request from each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — once every 12 months through www.annualcreditreport.com. For details, see “Your Access to Free Credit Reports.” Consumers also are entitled to a free report if a company takes adverse action against them (such as denying an application for credit, insurance, or employment) and consumers request their report within 60 days of receiving notice of the action. In addition, consumers are entitled to one free report a year if they are unemployed and plan to look for a job within 60 days; if they are on welfare; or if their report is inaccurate because of fraud, including identity theft.

The $11.00 maximum charge applies when a consumer who has received a free annual credit report does not otherwise qualify for an additional free report.

The Commission vote to publish the notice in the Federal Register was 5-0. (File No. P075400; staff contact is Clarke W. Brinckerhoff, Bureau of Consumer Protection, 202-326-3208; or Keith B. Anderson, Bureau of Economics, 202-326-3428.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

FTC Revises Jewelry Guides to Reflect the Use of Base Metal Alloys in Platinum Jewelry

In response to industry changes, the Federal Trade Commission today announced revisions to its Jewelry Guides to help ensure that consumers are not deceived when buying platinum products and that marketers understand how certain new platinum/metal alloys – products made of a combination of platinum and non-precious “base” metals – should be described and advertised.

In recent years, some marketers have added base metals, such as copper and cobalt, to platinum jewelry sold to consumers. While this has made jewelry marketed as “platinum” more affordable, it also has made buying it more complicated. and increased the need to clarify how combination platinum/base metal alloy products should be marked and advertised to prevent deception.

In a Federal Register notice describing the changes to the Platinum Section of the FTC’s Guides for the Jewelry, Precious Metals, and Pewter Industries, the FTC states how marketers should mark or describe “platinum/base metal alloys,” which contain between 50 and 85 percent platinum.

Specifically, the new Platinum Section states that marketers of platinum/base metal alloys should: 1) disclose the product’s full composition, by name and not abbreviation, and the percentage of each metal it contains – for example, 75% Platinum, 25% Copper or 60% Platinum, 35% Cobalt, 5% Rhodium; and 2) disclose that the product may not have the same attributes or properties as traditional platinum products, which are comprised of at least 85 percent pure platinum.

The amendments further state that marketers need not make the second disclosure if they have competent and reliable scientific evidence that a product is materially the same as one containing at least 85 percent pure platinum, based on a variety of attributes such as durability, luster, and hypoallergenicity. The notice also provides background information on the FTC’s review process, discusses the public comments received during the review, and describes how the Platinum Section has been updated. The updated Guides became effective on December 28, 2010, the date they were published in the Federal Register.

The FTC issued the Jewelry Guides and their Platinum Section to help manufacturers avoid making claims that are unfair or deceptive under the FTC Act. Industry guides are administrative interpretations of the law and are not independently enforceable. However, the FTC can take action under the FTC Act if a business makes marketing claims that are inconsistent with the Guides and it believes such claims are unfair or deceptive, in violation of the FTC Act.

New Consumer and Business Education

The FTC has issued two new publications to help consumers and businesses understand and comply with the changes to the Jewelry Guides. “Going Platinum: What to Look for When Buying Platinum Jewelry,” is intended to help inform consumers before they go shopping. It explains that while traditionally platinum jewelry contained 85 to 95 percent pure platinum alloyed with other precious metals, in recent years, some platinum pieces have been alloyed with a larger percentage of non-precious metals, such as copper and cobalt.

It suggests that consumers ask their jeweler about the attributes of any piece of platinum jewelry they are considering buying, so they can have an idea of the piece’s quality and value for the cost. It also describes and explains how platinum jewelry is marked, and provides a table with examples of markings they are likely to see.

The business education publication, “Advertising Platinum Jewelry,” describes how the platinum content of jewelry should be marked and advertised to comply with the changes to the Jewelry Guides. It also describes when disclosures should be made, and states that they should not be misleading and should disclose material information to customers. For example, if the platinum/base metal-alloy item being sold does not have the properties of products that are almost pure platinum, or have a very high percentage of platinum, this should be disclosed to potential buyers.

The document also describes terms used in advertising platinum jewelry, as well as how such jewelry should be labeled. It also provides a table with marking examples and what percentage platinum and alloy the marked jewelry should contain.

The Commission vote approving issuance of the Federal Register notice amending section 23.7 of the Guides (taken before Commissioners Edith Ramirez and Julie Brill joined the FTC) was 4-0. The Commission vote to modify the Federal Register notice to amend section 23.0 of the Guides was 5-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. G711001)
(Platinum Guides.final)

Statement by FTC Chairman Jon Leibowitz on Department of Commerce’s Green Paper on Consumer Privacy

For Release

“The Department of Commerce’s Green Paper is a welcome addition to the ongoing dialogue about protecting consumers’ privacy.  It places special emphasis on policies that will preserve the viability of the Internet as it evolves through innovation, transforms the marketplace, and spurs economic growth.  We think it will make a significant contribution to the growing and critical debate about how best to protect the privacy of American consumers.”

Contact Information

MEDIA CONTACT:
Cecelia J. Prewett
Office of Public Affairs

202-326-2180

Statement by FTC Chairman Jon Leibowitz Regarding House and Senate Passage of Legislation to Combat Deceptive Online Sales Tactics

Congress has passed the “Restore Online Shoppers’ Confidence Act” to combat deceptive online sales tactics that keep charging consumers for goods and services until they cancel their membership.  In so-called “negative option” plans, the seller interprets the consumer’s silence or failure to reject goods or services, or to cancel the sales agreement, as acceptance of the offer.

“We’re pleased Congress passed this legislation,” FTC Chairman Jon Leibowitz said.  “Too many companies are trying to use phony monthly billing to rip off Americans and this bill will help strengthen our hand.  Consumers should be able to make informed decisions, so the terms and conditions of any offer must be disclosed clearly and conspicuously.  I want to thank Chairman Rockefeller for his leadership on this issue.” 

S 3386 provides three important protections for online consumers.  First, it would make it unlawful for a post-transaction third-party seller – a seller who markets goods and services online through an initial merchant after a consumer has initiated a transaction – to charge, or attempt to charge, a consumer for any good or service sold in an online transaction, unless:

  • the seller clearly discloses to the consumer all the material terms of the transaction; and
  • the seller has obtained the consumer’s consent before charging their credit card, bank account, or other financial account.  Importantly, as a part of that consent, such sellers must obtain directly from the consumer the full financial account number to be charged.

Second, it would make it unlawful for any online seller to transfer a consumer’s financial account number to a third party seller.

Finally, S 3386 would make it unlawful for a seller to charge, or attempt to charge, a consumer for any good or service with a negative option feature in an online transaction, unless:

  • the seller clearly discloses to the consumer all the material terms of the transaction;
  • the seller has obtained the consumer’s consent before charging their credit card, bank account, or other financial account; and
  • the seller provides a simple way for the consumer to stop charges.

Dannon Agrees to Drop Exaggerated Health Claims for Activia Yogurt and DanActive Dairy Drink

The Dannon Company, Inc. has agreed to settle Federal Trade Commission charges of deceptive advertising and drop claims that allegedly exaggerated the health benefits of its Activia yogurt and DanActive dairy drink. These two popular Dannon products contain beneficial bacteria known as probiotics. Dannon will stop claiming that one daily serving of Activia relieves irregularity, and that DanActive helps people avoid catching colds or the flu.

According to the FTC’s complaint, Dannon claimed in nationwide advertising campaigns that DanActive helps prevent colds and flu, and that one daily serving of Activia relieves temporary irregularity and helps with “slow intestinal transit time.” In television, Internet, and print ads, as well as on product packaging, Dannon also stated that there was scientific proof to back up these claims.

As part of its ongoing efforts to make sure that marketers do not overstate the health benefits of their products, the FTC charged that Dannon’s ads were deceptive because it did not have substantiation for its claims. The Commission also charged that Dannon’s claims that Activia and DanActive were clinically proven were false.

“These types of misleading claims are enough to give consumers indigestion,” said FTC Chairman Jon Leibowitz. “Consumers want, and are entitled to, accurate information when it comes to their health. Companies like Dannon shouldn’t exaggerate the strength of scientific support for their products.”

In one television advertisement for Activia yogurt, actress Jamie Lee Curtis lounges on a couch holding a newspaper. She tells viewers that many people suffer from irregularity, and that “our busy lives sometimes force us to eat the wrong things at the wrong time.” She reassures viewers that Activia can help.

The screen then shows a woman’s midsection, on which a clump of yellow-green balls is superimposed, representing the transit of food through the digestive system. The balls merge into a downward-facing arrow, which moves off the screen while a man’s voice states, “With the natural culture Bifidus Regularis, Activia eaten every day is clinically proven to help regulate your digestive system in two weeks.”

According to the FTC’s complaint, Dannon’s advertisements for DanActive conveyed to consumers that drinking the product reduces the likelihood of getting a cold or flu. In one television ad, a boy takes an exam at school, plays baseball in the rain, and gets thrown to a mat during a martial arts class. The color drains from his face and body as he arrives home, and his mother hands him a bottle of DanActive. A graphic shows Dannon’s probiotic ingredient, L. casei Immunitas, plugging holes in the intestinal wall so that purple balls bounce off the wall rather than entering the holes. As a voiceover assures that DanActive is “clinically proven to help strengthen your body’s defenses,” color returns to the boy’s face and body and he is surrounded by a new, protective, yellow shield as he runs out of the house.

Under the proposed settlement:

  • Dannon is prohibited from claiming that any yogurt, dairy drink, or probiotic food or drink reduces the likelihood of getting a cold or the flu, unless the claim is approved by the Food and Drug Administration. Although companies usually do not need FDA approval of their health claims to comply with the FTC Act, the FTC determined in this case that requiring FDA approval will give Dannon clearer guidance going forward, and help ensure that it complies with the settlement order.
  • Dannon may not claim that Activia yogurt will relieve temporary irregularity or help with slow intestinal transit time, unless the claim is not misleading and the ad conveys that three servings of Activia yogurt must be eaten each day to obtain these benefits. Dannon may claim that eating fewer than three servings a day provides these benefits only if the company is relying on two well-designed human clinical studies substantiating that the claim is true.
  • Dannon may not claim that any other yogurt, dairy drink, or probiotic food or drink will relieve temporary irregularity or help with slow intestinal transit time unless the claim is not misleading and the company has two well-designed human clinical studies that substantiate the claim.
  • Dannon may not make any other claims about the health benefits, performance, or efficacy of any yogurt, dairy drink, or probiotic food or drink, unless the claims are true and backed by competent and reliable scientific evidence. Dannon also is prohibited from misrepresenting the results of any tests or studies.

The FTC worked in close coordination with 39 state attorneys general, who are simultaneously announcing the resolution of their own inquiries into Dannon’s advertising of DanActive and Activia. Dannon has agreed to pay the states $21 million to resolve these investigations.

The FTC vote to approve the administrative complaint and proposed consent agreement was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through January 18, 2011, after which the FTC will decide whether to make it final. Consumers can file a public comment online.

Copies of the complaint, the proposed consent agreement, and an analysis of the agreement to aid in public comment are available from both the FTC’s website at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

NOTE: The Commission issues an administrative complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the respondent has actually violated the law. The consent agreement is for settlement purposes only and does not constitute admission by the respondent of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. 0823158)
(Dannon)

FTC Halts Operation that Posed as Government Agencies and Duped Consumers into Paying to Collect Bogus Prize Money

At the Federal Trade Commission’s request, a federal judge has halted an operation that allegedly tricked people into paying a $20 fee to collect a fake multi-million-dollar sweepstakes prize. The case is part of an ongoing FTC crackdown on scams that target financially strapped Americans, and the agency is seeking to make the defendants give up their ill-gotten gains.

According to the FTC’s complaint, operators of the scam sent personalized mailers, some with fictitious government agency names and official-looking seals, to hundreds of thousands of consumers. The mailers included statements such as:

“Your identification as recipient for reported cash award entitlements totalling over $2,500,000.00 has been confirmed! We are so pleased at having the honor of informing you of this wonderful news.”

Some of the mailers prominently touted that they were affiliated with a government agency, such as the “State of Illinois Commissioners of Regulation” and “OFFICE OF THE PRESIDENT OFFICIAL NOTIFICATION,” along with language, symbols, and artwork such as “In God We Trust” and a bald eagle.

The mailers stated that, in order to collect the prize, the consumer had to send a $20 “processing fee” by a certain deadline. Instead of receiving a prize, however, some consumers received information about entering sweepstakes. The mailers contained fine-print language stating vaguely that the operation was a reporting service that provided information on various sweepstakes, but they did not clearly inform consumers that they had not won any prize.

The defendants operate through a network of companies and use multiple business names and dozens of versions of their mailers. The defendants are National Awards Service Advisory LLC, Central Processing of Nevada LLC, International Award Advisors Inc., Spectrum Caging Service Inc., Prize Registry Bureau Inc., Consolidated Data Bureau Inc., Registered Data Analytics Inc., Lloyd Brannigan Exchange Inc., Geovanni Sorino, Jorge A. Castro, Tully A. Lovisa, and Steven McClenahan.

Under the judge’s order, the operation has been halted pending a hearing.

The Commission vote to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of California. The order was entered on December 1, 2010.

Legitimate sweepstakes don’t require you to pay or buy something to enter or improve your chances of winning, or to pay “taxes” or “shipping and handling charges” to get your prize. If you have to pay to receive your “prize,” it’s not a prize at all. Click here for information about prize offers.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe”
that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 1023078)
(Prize Information Bureau)

FTC Orders Polypore International to Divest Rival Manufacturer it Acquired in 2008

The Federal Trade Commission has ruled unanimously that Polypore International, Inc.’s 2008 acquisition of a rival manufacturer of battery components was anticompetitive, and ordered Polypore to divest the company to an FTC-approved buyer within six months. The Commission today made public its final Order and a provisional public version of the Commission Opinion. A final public version of the Commission Opinion will be released after the Commission resolves a motion filed by Polypore objecting to the disclosure of certain information in the opinion.

The FTC’s five Commissioners voted to uphold in large part a March 2010 Initial Decision by Chief Administrative Law Judge D. Michael Chappell. Judge Chappell found that Polypore’s February 2008 acquisition of Microporous Products L.P. violated the antitrust laws by reducing competition in four North American markets for flooded lead-acid battery separators – membranes that are placed between the positive and negative plates of flooded lead-acid batteries.

The Commission held that the acquisition harmed competition in three of the four relevant markets, and agreed with Judge Chappell that complete divestiture of the acquired assets was the appropriate remedy. The Commission reversed the Administrative Law Judge and ruled in favor of Polypore with regard to one market. The Commission found that the FTC staff who prosecuted the complaint, known as complaint counsel, did not prove that Microporous participated sufficiently in that market for the transaction to have reduced competition.

The FTC issued its Opinion and Final Order on November 5, 2010, meeting new self-imposed deadlines designed to expedite the agency’s administrative trial process. Under the new Rules, which were finalized in April 2009, and which the Commission applied retroactively to the issuance of its decision in this matter, the Commission must issue its ruling to the parties within 100 days after a case is argued before the Commission.

Case History. In September 2008, the FTC issued an administrative complaint alleging that the transaction, as well as some of Polypore’s business tactics, were anticompetitive and violated the federal antitrust laws. According to the complaint, Polypore had competed with Microporous, and the combination decreased competition and raised prices for four types of battery separators sold to customers in North America:

  • Deep-cycle separators for batteries used primarily in golf carts;
  • Motive separators for batteries used primarily in forklifts;
  • Automotive separators used in car batteries for starters, lighting, and ignition; and
  • Uninterruptible power supply separators used in batteries that provide backup power in the event of power outages.

The complaint also charged that Polypore’s 2001 joint marketing agreement with a potential competitor, Hollingsworth & Vose, unlawfully prevented Hollingsworth & Vose from selling polyethylene separators. Finally, the complaint alleged that Polypore maintained its monopoly power in several battery separator markets through anticompetitive means.

In an Initial Decision announced on March 8, 2010, Judge Chappell found that Polypore’s acquisition of Microporous was anticompetitive and ordered Polypore to divest Microporous to an FTC-approved buyer within six months after the divestiture provisions of the Order become final.

Judge Chappell also ruled that Polypore and Hollingsworth & Vose had illegally agreed to divide markets for certain types of battery separators in North America, and ordered Polypore to void a covenant not-to-compete that was contained in the agreement. Polypore did not appeal this ruling. Finally, Judge Chappell dismissed a separate count charging Polypore with monopolization in specific battery separator markets. FTC complaint counsel did not appeal that ruling.

The Commission Opinion. In its Opinion, the Commission ruled that Polypore’s acquisition of Microporous is illegal in three of the four North American markets identified in the complaint. The Commission found that the acquisition was not likely to harm competition in a fourth market for separators used to make batteries for backup power supply.

The Commission disagreed with Polypore’s argument that any anticompetitive effects of the deal would be offset by entry from Entek, another U.S. battery separator maker, or Asian suppliers. It also disagreed with Polypore’s contention that large, powerful buyers would prevent Polypore from exercising market power.

The Final Order. The Commission’s Final Order requires Polypore to divest assets including Microporous’s former plants in Piney Flats, Tennessee, and Feistritz, Austria; a “line in boxes” containing unassembled manufacturing equipment; and technology and intellectual property that Microporous owned at the time of the acquisition.

In addition to other ancillary relief necessary to support the divestiture, the Final Order requires Polypore to “take all reasonable actions necessary” to help the acquirer evaluate, recruit, and employ personnel that it needs to be successful, and prohibits Polypore from hiring any Microporous employee who is working for the acquirer for two years from the date of the divestiture. The Final Order also directs Polypore to grant the acquirer a license to any intellectual property Polypore chose to use or incorporate in Microporous’s products and to provide the acquirer with confidential business information relating to the Microporous business.

The Commission vote approving the Opinion and Final Order was 5-0, with Commissioner J. Thomas Rosch issuing a concurring opinion that can be found on the FTC’s website and as a link to this press release. Polypore may file a petition to review the Commission’s Final Order to a U.S. Court of Appeals within 60 days from November 29, the date the decision was served.

In his separate concurring opinion, Commissioner Rosch explained that even though it is essential to define the relevant market at some point in the process, there was no need in this case to follow the traditional Section 7 framework that begins with defining the relevant market and only then considers the transaction’s competitive effects. Rather, in a consummated merger, “it is generally preferable to determine whether a merger has had anticompetitive effects by reference to the parties’ motives for the transaction and the actual effects resulting from the merger instead of trying first to define with precision the dimensions of relevant market.” According to Commissioner Rosch, the key facts establishing the transaction’s effects and Polypore’s liability were the company’s pre-merger documents describing the transaction’s anticompetitive purposes and the company’s post-merger price increases.

Copies of the public version of the Commission’s Opinion and Final Order are available from the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

(FTC Docket No. 9327)

FTC Settlement Prohibits Marketers of Children’s Vitamins from Making Deceptive Health Claims about Brain and Eye Development

As part of its ongoing efforts to stop bogus health claims, the Federal Trade
Commission has reached a settlement requiring major marketers of children’s vitamins to stop making false and unproven claims that their supplements promote healthy brain and eye development in children.  The companies have agreed to pay $2.1 million to provide refunds to consumers who purchased certain multivitamins in their Disney and Marvel Heroes line.

The FTC charged NBTY, Inc. and two subsidiaries, NatureSmart LLC and Rexall Sundown, Inc., with making deceptive claims about the amount of DHA – an Omega-3 fatty acid – used in their line of Disney- and Marvel Heroes-licensed children’s multivitamin gummies and tablets.  The companies also made unsupported claims that a daily serving of the products promotes healthy brain and eye development in children, according to the FTC administrative complaint.

Sold by major retailers such as CVS Pharmacy, Wal-Mart, Target, Walgreens, Kroger, Kmart, Meijer, and Rite Aid, as well as online, the multivitamins featured characters such as the Disney Princesses, Winnie the Pooh, Finding Nemo, and Spider-Man.  Product packaging and print ads promoting the vitamins had bold graphics highlighting that the products contained DHA, but in reality, the products allegedly had only a trace amount of DHA.  While the vitamins’ packaging touted the purported health benefits of 100 milligrams of DHA, a daily serving of the Disney and Marvel multivitamins for children ages four years and older contained only one thousandth of that amount (0.1 mg or 100 mcg), according to the FTC’s complaint.

The FTC alleged that the packaging and ads for the Disney and Marvel multivitamins misrepresented that they contained a significant amount of DHA, and that NBTY, NatureSmart, and Rexall Sundown made unsubstantiated claims that the amount of DHA provided by the multivitamins promotes healthy brain and eye development in children.

The settlement:

  • bars NBTY, NatureSmart, and Rexall Sundown from misrepresenting the amount of any ingredient contained in any product.
  • bars them from misrepresenting that any ingredient, including DHA, promotes brain or eye health or provides any other health benefit, unless the claim is true and backed by competent and reliable scientific evidence.
  • specifies that any violations could subject the NBTY, NatureSmart, and Rexall Sundown to civil penalties.

A refund program to distribute the $2.1 million to purchasers of the Disney and Marvel multivitamins will be administered by the FTC.  The agency will reach out to affected consumers in the coming months.

The FTC vote to approve the administrative complaint and proposed consent order was 5-0.  The FTC will publish an announcement regarding the proposed consent order in the Federal Register shortly.  The proposed consent order will be subject to public comment for 30 days, beginning today and continuing through January 14, 2011, after which the FTC will decide whether to make it final.  Consumers can file a public comment online.  Copies of the complaint, the proposed consent agreement, and an analysis of the agreement to aid in public comment are available from both the FTC’s website at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

NOTE:  The Commission issues an administrative complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the respondents have actually violated the law.  A consent order is for settlement purposes only and does not constitute an admission by the respondents of a law violation.  When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.  Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. 1023080)
(NBTY NR)