Markets Wired

Marketers of violent music, movies, and video games can do more to restrict the promotion of these products to children, according to the seventh in a series of Federal Trade Commission reports on marketing violent entertainment to children.

“The Commission has been reviewing and reporting on the movie, music, and video game industries’ advertising and marketing practices relating to violent entertainment for 10 years now,” noted FTC Chairman Jon Leibowitz in a separate statement accompanying the report. “Despite considerable improvements, the self-regulatory systems are far from perfect.” He also emphasized that “in the future, it will be particularly important to address the challenges presented by emerging technologies – such as mobile gaming – that are quickly changing the ways that children access entertainment.”

The FTC’s report states that the music industry still has not adopted objective marketing standards limiting ad placement for explicit-content music. As a result, the industry still advertises music labeled with a Parental Advisory Label (PAL) on television shows viewed by a substantial number of children. Music retailers routinely sell labeled music to unaccompanied teens.

The report also finds that movie studios intentionally market PG-13 movies to children under 13, and the movie industry does not have explicit standards in place to restrict this practice. The growing practice of releasing unrated DVDs undermines the rating system, and confuses parents.

Both the video game and movie industries can do more to limit ad placement on Web sites that disproportionately attract children and teens, according to the report.

Since the FTC issued its first report on marketing violent entertainment to children in 2000, the agency has called on the entertainment industry to be more vigilant in three areas: restricting the marketing of mature-rated products to children; clearly and prominently disclosing rating information; and restricting children’s access to mature-rated products at retail. This latest report found areas for improvement among music, movie, and video game marketers, but credited the game industry with outpacing the other two industries in all three areas.

Parents who want to know more about how entertainment for children is rated can visit ftc.gov/ratings. This site describes the different ratings systems, and provides links to the organizations that sponsor them.

“Marketing Violent Entertainment to Children: A Sixth Follow-up Review of Industry Practices in the Motion Picture, Music Recording & Electronic Game Industries” analyzed information from sources including marketing documents submitted by industry members, an undercover “mystery” shopper survey, consumer surveys conducted in shopping malls and by telephone, “surfs” of industry Web sites, and data acquired from proprietary ad-monitoring services. Findings include:

• Music: While the music industry’s Parental Advisory Label alerts parents to explicit lyrics in recordings, it does not provide information about the nature of that content. The music industry has declined to implement rules restricting the marketing of explicit-content labeled music to children. The report does not find any indication of specific targeting of children, but does show numerous examples of ads for explicit-content music on television programs popular with teens. Disclosure of the label in advertising is still spotty, including on official artist and company Web sites, where the label usually is not readable. Television ads display the explicit content label only half the time, and even then usually not prominently. Music CD retailers and online download sites, by contrast, do an excellent job of displaying the parental advisory label. Finally, retailers do not effectively prevent children from buying explicit-content music, with seven in 10 underage shoppers able to buy CDs with a Parental Advisory Label.
• Movies: Although the movie industry determines on a case-by-case basis whether a PG-13-rated film may be advertised to children under 13, there is no explicit policy restricting such marketing. As detailed in the marketing plans reviewed by the Commission, movie studios targeted violent PG-13 films to children under 13 both through advertising and promotional tie-ins with foods, toys, and other licensed products. Studios continued to place a significant number of ads for violent R-rated movies on television shows and Internet sites highly popular with children under 17. Increasingly, industry members post “red tag” trailers for R-rated movies, intended for age-restricted audiences, on the Internet without age-based access restrictions. Although the MPAA rating and rating reasons are not always prominent, the industry generally does display the MPAA rating in advertising. Rating information on DVDs is not prominently placed; moreover, more and more DVD versions of movies are not rated, and some studios hype the lack of a rating. The Commission’s research shows that parents are not adequately informed that unrated DVDs may contain additional violent or adult content. On the positive side, theaters denied 72 percent of underage shoppers admission to R-rated movies, a significant improvement from 2006 and even more so from 2000. Most retailers, however, continue their poor record of enforcement against underage purchase of R-rated and unrated DVDs.
• Electronic Games: The FTC finds a high degree of compliance with the video game industry’s marketing and advertising rules, although these standards allow game
  marketers to advertise on many television shows and Web sites popular with children. Further, retailers are enforcing age restrictions on the sale of M-rated games to children, with an average denial rate of 80 percent. The report notes, however, that children may be able to obtain M-rated games by, for example, using retailer gift cards online. Finally, the proliferation of game applications for mobile devices provides challenges – for example, some companies do not provide any rating system for games available on their networks, and there is no consistent system of age-based parental controls for these applications.

The Commission recommends these measures to strengthen the entertainment industry’s self-regulatory programs and better restrict the marketing of violent entertainment to children:

• The movie and music industries should develop specific and objective criteria to restrict the marketing of violent movies and music to children. Specifically, marketing of PG-13 movies to young children directly and through tie-ins with foods, toys, and other licensed products should be restricted. All three industries should tighten restrictions on online and viral marketing.
• The movie industry should increase enforcement against online posting of “red tag” trailers without adequate age-based access restrictions, and should ensure that the content of “appropriate audience” trailers is consistent with the feature films they will precede.
• All three industries should improve their display of rating information in advertising and packaging. The movie industry should place the rating and rating reasons on the front of DVD cases and disclose rating information prominently in all advertising venues. The music industry should display the Parental Advisory Label more prominently in advertising, particularly in television and online venues, and it should provide information about the specific type of explicit content. The electronic game industry should include content descriptors with the rating on the front panel of game packaging and continue to provide more detailed rating summaries for parents online.
• The movie industry should better inform parents about additional adult content in unrated DVDs and give parents a way to evaluate unrated versions. The industry should consider re-rating DVD releases or, at a minimum, expand new disclosure rules for unrated DVDs.
• Gaps in enforcement of age-based sales restrictions for movies, music, and electronic games should be closed, and enforcement challenges created by the use of gift cards for online purchases should be addressed.

The Commission vote to approve the report was 4-0. Chairman Jon Leibowitz issued a separate statement, which can be found on the FTC’s Web site and as a link to this press release.

Copies of the report are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. 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 1,700 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.

(Violent Entertainment Report NR.wpd)
(FTC File No. P994511)

For Your Information

December 3, 2009

WHAT:	The Federal Trade Commission will host the first of three public Roundtables to explore the privacy challenges posed by technology and business practices that collect and use consumer data. This first roundtable will focus on the benefits and risks of information-sharing practices, consumer expectations regarding such practices, behavioral advertising, information brokers, and the adequacy of existing legal and self-regulatory frameworks. The updated agenda and other information about the Roundtable is at http://www.ftc.gov/bcp/workshops/privacyroundtables/index.shtml
WHEN:	Monday, December 7, 2009 8:30 AM – 6:00 PM
WHERE:	FTC Conference Center 601 New Jersey Avenue N.W. Washington, DC 20580

The Roundtable is free and open to the public. Pre-registration is not required. Members of the public and press who wish to participate but cannot attend can view a live Webcast.

(Roundtable)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

STAFF CONTACT:

Christopher Olsen,
Bureau of Consumer Protection
202-326-3621

The Federal Trade Commission will host a public event on consumer protection issues arising when debt collectors sue consumers to recover on a debt. This will be the last in a series of three FTC roundtable discussions on these topics.

WHO:	“Protecting Consumers in Debt Collection Litigation: A Roundtable Discussion”
WHEN:	December 4, 2009, 9 a.m. to 5 p.m. Registration – begins at 8 a.m.
WHERE:	FTC’s Satellite Building Conference Center 601 New Jersey Avenue, N.W., Washington, D.C. 20001

This Roundtable follows up on the Commission’s February 2009 Report, Collecting Consumer Debts: The Challenges of Change – A Workshop Report, which announced that the FTC would hold regional roundtables to help develop policy recommendations related to debt collection litigation and arbitration proceedings. A group of state court judges, government officials, debt collectors and debt buyers, consumer attorneys and advocates, academics, and other stakeholders will discuss topics related to consumer debt collection litigation proceedings, such as service of process, consumer default rates, time-barred debts, evidentiary requirements in collection actions, and post-judgment issues.

The Roundtable is free and open to the public. No pre-registration is required. The Commission will also offer a live webcast of the event for those who wish to participate but cannot attend. For details and a link to the webcast, go to http://www.ftc.gov/bcp/workshops/debtcollectround/index.shtm.

Interested parties are encouraged to submit written comments or original research relating to debt collection litigation or arbitration proceedings through January 8, 2009. Comments should refer to “Debt Collection Roundtable – Comment, Project No. P094806.” To file electronically, follow the instructions and fill out the form at https://public.commentworks.com/ftc/debtcollectroundtable3. Paper comments should include the above reference both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex A), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Comments containing confidential material, however, must be filed in paper form, must be clearly labeled “Confidential,” and must comply with Commission Rule 4.9(c). The FTC requests that any paper comments be sent by courier or overnight service, if possible, because postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

Reasonable accommodations for people with disabilities are available upon request. If you need an accommodation related to a disability, please contact Bevin Murphy at 202-326-3224 or via e-mail at [email protected]. Your request should include a detailed description of the accommodations you need and a way to contact you if we need more information. Please provide advance notice.

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 1,700 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.

(Roundtable)

Today, the Federal Trade Commission opened new areas of a “virtual mall” with content that will help kids learn to protect their privacy, spot frauds and scams, and avoid identity theft. The FTC Web site, www.ftc.gov/YouAreHere, introduces key consumer and business concepts and helps youngsters understand their role in the marketplace. The FTC is the nation’s consumer protection agency.

“YouAreHere presents practical lessons about money and business in a fun and familiar setting,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “The new content takes kids behind the scenes to raise their awareness of advertising and marketing, pricing and competition, fraud and identity theft.

At the FTC’s online mall, visitors play games, watch short animated films, and interact with customers and store owners. They can design and print advertisements for a shoe store, investigate suspicious claims in ads and sales pitches, learn to identify the catches behind bogus modeling schemes and vacation offers, and guess the retail prices of various candies based on their supply, demand, and production costs.

At the Security Plaza, visitors can build a social networking page and see the unintended consequences of posting personal information. They also get tips on how to keep their computers safe while they’re online. In the arcade, visitors can play Info Defender 3 and protect Earthlings from Cyclorian invaders who would steal their identities. The game teaches the importance of protecting personal information, including Social Security numbers.

For parents and teachers, the site offers detailed fact sheets with ideas for related activities. Teachers can use the site to complement lessons in consumer economics, government, social studies, language arts, and critical thinking. The National Council for Economic Education has developed a lesson plan that prominently features YouAreHere; it is available on the Parents and Teachers page.

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 1,700 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.

(You Are Here NR.wpd)

The Federal Trade Commission will host more than 250 government officials, business leaders, consumer advocates, and academics from around the world to discuss opportunities and challenges for consumers in electronic commerce at a conference organized by the Organization for Economic Co-operation and Development (OECD) December 8-10, 2009. The event, Empowering E-consumers: Strengthening Consumer Protection in the Internet Economy, coincides with the ten year anniversary of the OECD’s Guidelines for Consumer Protection in the Context of Electronic Commerce, which were adopted on December 9, 1999. The OECD is a 30-nation forum that promotes sustainable economic growth, trade, and development, and provides a setting for governments to compare policy experiences and coordinate domestic and international policies.

On December 8, FTC Chairman Jon Leibowitz will welcome conference participants, and U.S. Permanent Representative to the OECD, Karen Kornbluh, will deliver opening remarks. On December 9, U.S. Secretary of Commerce Gary Locke and OECD Secretary-General Angel Gurría will deliver keynote addresses. Later that day, John Donahoe, the President and CEO of eBay, Inc. will give a keynote address at an invitation-only luncheon at the Canadian Embassy.

More information on the conference, including registration materials, the conference program, a list of speakers, and a background report on e-commerce trends and the conference topics is available on the OECD’s website at www.oecd.org/ict/econsumerconference.

The event, which is organized by the OECD, is free; however, there are space limitations and advance registration through the OECD is required. The conference will be held at the FTC’s satellite building conference center, located at 601 New Jersey Avenue, N.W., Washington, DC. Overflow rooms will be available at the FTC Headquarters Building, 600 Pennsylvania Avenue, N.W., Washington, D.C. All attendees will be required to display a current driver’s license or other form of photo identification for entry. All sessions are open to the media.

There will also be live webcast of the event for those who wish to participate but cannot attend. The link for the webcast, which will begin at 9:00 a.m. on December 8 is http://htc-01.media.globix.net/COMP008760MOD1/ftc_web/FTCindex.html.

Questions may be made by the public, using the tool at: http://moderator.appspot.com/. These will be shared with the panelists at the conference. Discussion may also be followed via the OECD Twitter group, http://search.twitter.com.  You must enter the hashtag (#ecom) as a keyword.

Reasonable accommodations for people with disabilities are available upon request. Requests for such accommodations should be submitted via e-mail to: [email protected] or by calling Carrie McGlothin at 202-326-3388. Such requests should include a detailed description of the accommodations needed and a way to contact you if we need more information.

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 1,700 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.

(OECD E-consumer Conference)

At the request of the Federal Trade Commission, a federal judge has ordered the mastermind of a vast international spam network to pay $15.15 million in a default judgment for his role in what was identified by the anti-spam organization Spamhaus as the largest “spam gang” in the world. The spam gang deceptively marketed products such as male-enhancement pills, prescription drugs, and weight-loss pills. Ringleader Lance Atkinson, a New Zealand citizen and Australian resident, last December admitted his involvement in the spam network to New Zealand authorities and has already paid more than $80,000 (nearly $108,000 New Zealand dollars). Atkinson’s accomplice, U.S. resident Jody Smith, agreed to an order requiring him to turn over nearly all of his assets to the FTC, to settle FTC charges.

Atkinson and Smith recruited spammers from around the world, according to the FTC’s complaint filed last year. The spammers sent billions of e-mail messages directing consumers to Web sites operated by an affiliate program called “Affking,” according to the complaint. By using false header information to hide the origin of the messages, and by failing to provide an opt-out link or list a physical postal address, the defendants are alleged to have violated the CAN-SPAM Act of 2003.

The FTC charged that, using the “Canadian Healthcare” brand name and other labels, the defendants’ spam messages deceptively marketed a male-enhancement pill, prescription drugs, and a weight-loss pill in violation of federal law. They falsely claimed that the medications came from a U.S.-licensed pharmacy that dispenses FDA-approved generic versions of drugs such as Levitra, Avodart, Cialis, Propecia, Viagra, Lipitor, Celebrex, and Zoloft. In fact, the defendants do not operate a U.S.-licensed pharmacy, and the drugs they sold were shipped from India, had not been approved by the FDA, and were potentially unsafe.

The FTC also alleged that Atkinson and Smith made false claims about the security of consumers’ credit card information and other personal data consumers provided when they bought goods. In operating the online pharmacy, which was called “Target Pharmacy” and later “Canadian Healthcare,” the defendants’ Web site assured potential consumers that “TARGET PHARMACY treats your personal information (including credit card data) with the highest level of security.” The Web site went on to describe its encryption process, which supposedly involved “Secure Socket Layer (SSL) technology.” However, there was no indication that consumers’ information was encrypted using SSL technology.

A U.S. district court last fall ordered an asset freeze and a halt to the spam gang’s operation, which was responsible for sending potentially billions of illegal spam messages, and has accounted for more than three million complaints.

The court has since issued a default judgment against Atkinson, his company, and three companies affiliated with Smith. In addition to the $15.15 million that Atkinson and his company have been ordered to pay, the three companies affiliated with Smith are liable for $3.77 million. All five defendants are prohibited from making unlawful claims about male enhancement products, hoodia products, and any dietary supplement, food, drug, or service purported to provide health-related benefits; from misrepresenting that they can lawfully sell prescription drugs or pharmacy services over the Internet; from misrepresenting the data security measures they provide on their Web sites; and from violating the CAN-SPAM Act.

To settle FTC charges that he helped illegally send spam e-mails to millions of consumers as part of a campaign to peddle prescription drugs and supplements that were phony and potentially dangerous, Smith will turn over nearly all his assets. Under the terms of the settlement, Smith will pay approximately $212,000. He also will assign any rights he has to $91,000 frozen in the name of one of his co-defendants, and $547,000 that may be held for his benefit in an Israeli bank.

The settlement order also prohibits Smith from violating the CAN-SPAM Act and from making deceptive claims related to either the sale of prescription drugs or pharmacy services over the Internet or the security of Web sites that sell any product or service. Smith is required to substantiate any claims about the benefits or safety of any dietary supplement, food, or health-related service.

Smith pled guilty in August 2009 to the criminal charge of conspiracy to traffic counterfeit goods, and faces up to five years in prison. He is scheduled to be sentenced in December in U.S. District Court for the Eastern District of Missouri.

In a related development, New Zealand authorities announced earlier this month that Atkinson’s brother, Shane Atkinson, and another New Zealander will pay nearly $112,000 ($150,000 New Zealand dollars) collectively for sending spam e-mails as part of the scam.

The Commission vote authorizing the filing of a stipulated permanent injunction settling the case against defendant Jody Smith was 4-0. A $15.15 default judgment against Atkinson and his company, Inet Ventures Pty Ltd.; a $3.77 million default judgment against the remaining three corporate defendants, Tango Pay, Click Fusion, and Two Bucks Trading; and the stipulated permanent injunction against Smith were entered by the U.S. District Court for the Northern District of Illinois on November 4, 2009.

The FTC would like to thank the following groups for their collaboration in bringing this case: the New Zealand Department of Internal Affairs; the Australian Communications and Media Authority; the U.S. Food and Drug Administration’s Office of Generic Drugs and Division of Pharmaceutical Analysis; the Chicago-based National Association of Boards of Pharmacy; and Marshall Software (NZ) Ltd.

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 1,700 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.

(Herbal Kings Settlement NR.wpd)
(FTC File No. X090001)

WHAT: The Federal Trade Commission will hold a two-day workshop to explore how the Internet has affected journalism, with representatives from print, online, broadcast, and cable news organizations; academics; consumer advocates; bloggers; and others involved in new media. Participants include the Honorable Henry A. Waxman, Chairman, House Energy and Commerce Committee, Rupert Murdoch, Chairman and CEO of News Corp., Arianna Huffington, Co-Founder and Editor-in-Chief of The Huffington Post, and Aneesh Chopra, Assistant to the President, Associate Director and Chief Technology Officer for the Office of Science and Technology of the Executive Office of the President of the United States. More information on the event, including the agenda, past news releases, public comments, a Federal Register notice, and updates after the event, can be found on this Web page: http://www.ftc.gov/opp/workshops/news/index.shtml

WHERE: FTC Conference Center
601 New Jersey Avenue, N.W.
Washington, DC 20001

and

FTC Headquarters, Room 532
600 Pennsylvania Avenue, N.W.
Washington, DC 20580

The workshop will be webcast live and can be viewed at this link: http://htc-01.media.globix.net/COMP008760MOD1/ftc_web/FTCindex.html. The webcast will also be archived for viewing later.

Due to the large number of pre-registrants, we anticipate that the FTC’s Conference Center will reach full capacity. Pre-registration does not guarantee seating, and attendees will be admitted on a first-come, first-served basis with a photo ID starting at 8 a.m. each day.

Once the Conference Center is full, attendees will be directed to Room 532 located in the FTC Headquarters building at 600 Pennsylvania Avenue, N.W., Washington, DC, 20580.

This workshop can be discussed with others on Twitter at: http://twitter.com/ftcnews