Advisory Opinion Compliance advisory opinion as to whether nine proposed advertisements if published, would…

Advisory Opinion 1195 Compliance advisory opinion as to whether nine proposed advertisements* if published, would comply “with the order issued on

March 16, 1970 (77 F.T.C. 277), Dkt. 8792.
Opinion Letter
- April 20, 1978
Dear Mr. Lamberson:

This is in response to your letters of July 25, 1977, September 2, 1977 and September 8, 1977, on behalf of your clients, Golden Fifty Pharmaceutical Co., Inc., and Michael Posen requesting an advisory opinion as to whether nine proposed advertisements comply with an order of the Commission issued on June 29, 1970 [sic]. The requests were made pursuant to Section 3.61(d) of the Commission’s Rules of Practice.

This is to advise you that the Commission has determined that none of the nine proposed advertisements, if published, would comply with the 1970 order.

The nine proposed advertisements are identified as follows:

Submission Date Identified by
Number Submitted Product Line You as
1 1/25/71 Golden Fifty (unnumbered)
2 9/2/77 Golden Fifty Exhibit A
3 9/2/77 Cosmetique Exhibit B (COS-01)
4 9/2/77 Cosmetique Exhibit C (COS-02)
5 9/2/77 Cosemtique Exhibit D (COS—03)
6 9/2/77 * Cosmetique Exhibit E (COS-—04)
7 9/2/77 Cosmetique Exhibit F (COS—05)
8 9/8/77 Golden Fifty GF-02
9 9/8/77 Golden Fifty GF-08

Paragraph 1(b) of the Commission’s order prohibits your clients from “Disseminating or causing the dissemination of . . .any advertisement which: . . .(b) Represents directly or by implication that any product is offered free or under any other terms when the offer is used as!a means of enrolling those who accept the offer in a plan whereby additional supplies of the product are shipped at an additional charge unless all of the conditions of the plan are disclosed clearly and conspicuously and within close proximity to the “free” or other offer.” (emphasis added) At the bottom of Submission 1 there is a coupon which includes the statement: “I may cancel at any time by sending in the cancellation card included with each shipment.” The top part of the advertisement * Not reproduced herein.

which contains the “$3.00 Bottle of Vitamins Free” offer makes no mention of the cancellation card requirement. It is the opinion of the Commission that the failure to disclose the cancellation card requirement in close proximity to the free offer would constitute a violation of Paragraph 1(b).

Each of Submissions 2 through 7 are designed to be folded in thirds. When folded each of them contain a “free” or other offer on the cover. None of them adequately disclose the full conditions of the monthly or bi-monthly program on the cover. Instead, a prospective customer would have to open the advertisements and read the conditions either in the body of the advertisements or on the attached reply coupon. It is the Commissions opinion that the failure to disclose all of the conditions of the plan on the cover of Submissions 2 through 7 in close proximity to the “free” or other offer would be a violation of Paragraph 1(b) of the order.

The Commission also believes that the conditions disclosed in Submission 2 are contradictory and unclear in violation of Paragraph 1(b) and may also violate Paragraph 1(c). The letter included in the top of Submission 2 implies that the customer has an option to decide in advance whether he wants additional supplies of Golden Fifty tabulets. The coupon implies that additional supplies will be sent automatically. This contradiction violates Paragraph 1(b) in that the conditions of the plan are not clearly disclosed and may also violate Paragraph 1(c) which prohibits any representation that an offer is made without obligation when in fact there is an obligation to receive additional monthly supplies.

Submission 2 also fails to explain what is meant by the “10-day approval” language which appears solely in the coupon and not in close . proximity to the free offer on the cover or on the middle of the page above the coupon. Furthermore, the “I may cancel at any time. . .” language in the coupon is confusing when compared to the “10-day approval” language. These failures would be a violation of Paragraphs 1(b) and 1(c) and may also be a violation of Paragraph 1(d) which prohibits an offer for a limited period of time unless such limitations are actually imposed.

The Commission is also of the view that the conditions of the plan utilized in Submission 3 are unclear and confusing in violation of Paragraph 1(b). It is not clear from the language in this proposal whether the special annual “$100 Prestige Perfume Collection,” if accepted by the consumer counts towards the four kits that need to be purchased over the next two years. The cover and body of Submission 3 and the coupon attached to the proposal make the representation that the “&7A Roaautwy Kit far Ankle C1” te wanes Tf wan inin tha alith and aneunn

Advisory Opinion 1197 to buy four kits over the next two years. The Commission is of the opinion that unless the proposal adequately discloses what is the penalty for failing to buy four kits, it is not in compliance with Paragraph 1(b).

The reply coupons in Submissions through 7 use the term “on approval” and also state “I may return any kit for full credit (or refund)” without any limitations. Unless the advertisement clearly explains what is meant by “on approval” it does not comply with Paragraph 1(b). The Commission also notes that the return privilege (Cosmetique pays postage) is not set out on the cover or in the body of the flyer above the reply coupon in close proximity to the offer. This may constitute anotne: failure to comply with Paragraph 1(b). The reply coupons in Submissions 3 through 7 contain the limitation that only one introductory kit is offered per household; that the offer is void if previously accepted; and that the offer is good only in the USA. It is the Commission’s view that these limitations are conditions of the plan and in order to comply with Paragraph 1(b) should be set out on the cover and in the body of the ad in close proximity to the offer.

Submissions 3 through 7 each contain photographs of various identifiable cosmetic items. In order to comply with Paragraph 1(f) of the order, the Commission is of the opinion that the “$74 Beauty Kit for Only $1” sent to customers must contain these identifiable items. The advertisements also contain representations that customers receive “full-size” cosmetics, “never any samples.” It is not possible to determine from the photographs if the cosmetic items so displayed are full size and not samples. Therefore, the Commission is of the opinion, that the advertisements would violate Paragraph 1(g) of the order if the photographed items and the items actually included in your client’s kits are less than regular commercial size or are “trial” or “sample” size.

Submissions 6, 7, 8 and 9 all use the term “trial membership” yet there is no explanation as to whether a trial membership differs from a regular membership. In order to comply with Paragraph 1(b), the Commission is of the opinion that the conditions of the trial membership should be disclosed clearly and conspicuously and within close proximity to the free or other offer. Continued use of the term, without explanation, would be confusing and a violation of Paragraph 1(b).

The top and back of Submissions 8 and 9 contain the “$3.00 Bottle of Vitamins Free” offer followed by the conditions of the plan. Both advertisements contain “Dear Friend” letters explaining that additional monthly supplies will be shipped automatically. The Commission is

of the view that the conditions mentioned on the top and back fail to disclose the automatic aspect of the monthly shipments. This could cause confusion in the minds of some customers and would therefore be a violation of Paragraph 1(b).

Finally, the Commission advises you that the opinion expressed herein apply solely to the question as to whether the nine proposed advertisements comply with the Order of the Commission issued June | 29, 1970. The Commission has made no determination concerning the legality of any other representations, contained in the proposed advertisements, which do not come within the terms of the order, Docket 8792. In taking this action, the Commission has not considered the various advertisements which have been submitted to the _ Commission’s staff pursuant to the Court’s Injunction of June 6, 1977. By direction of the Commission.

Second Supplemental Letter Relative to Request September 8, 1977