Coleco Industries, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTEIt OF COLECO INDUSTRIES , INC.

CONSENT ORDJoR, ETC. , IN REGARD TO ALLEGJoD VIOLATION OF SEC. 5 OF THE FEDERAL TRADJo COMMISSION ACT Doclcet C-.12.52, Complaint, May 1989-Decision, May, 1,98.9 This consent order prohibits, among other things, a West Hartford, Ct. corporation from r.aiming that any computer-related produd is or wil be available for sale, or has or wil have any capability, unless the product actually is available or has that capability, or the company has a reasonable basis for saying it wii be available or wil have that capability.

Appearances For the Commission: Don M. Blumenthal. For the respondent: Cathelene Tierney, in-house attorney, Avon Ct.

COMPLAINT The Federal Trade Commission, having reason to believe that Coleco Industries, Inc., a corporation ("respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges:

Paragraph 1. Respondent is a Connecticut corporation, with its office and principal place of business located at 999 Quaker Lane South, West Hartford, Connecticut.

Par. 2. Respondent has manufactured, advertised, offered for sale sold and distributed children s computers, including, but not necessarily limited to, My Talking Computer, and program modules and other products for use with such computers to the public. Par. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce. Par. 4. Respondent has disseminated and caused the dissemination of advertisements and promotional materials for its product, My Talking Computer, published in magazines and broadcasted on television across state lines and disseminated in product brochures 652 FEDERA TRADE COMMISSION DECISIONS Complaint 111 F.

product packages and other sales literature directly to consumers or to distributors for display or distribution to consumers. Typical of respondent' s advertisements and promotional material, but not necessarily all inclusive thereof, are the attached Exhibits A through C. The aforesaid advertisements and promotional material contain the following statements:

(1) Cleverly disguised as fun! Expansion modules sold separately. (Exhibit A television advertisement.

(2) It comes with 22 learning activities and includes a full functio talking calculator. It' s even expandable.

More advanced programs for older children are available too. (Exhibit B, print advertisement.

(3) My Talking Computer Learn-For-Fun Expansion Modules Build a Complete Learning System! MODULE 1 Tellng Time With Hands-that-Speak Clock Overlay This colorful, 3-dimensional overlay programs MY TALING COMPUTER to teach your child how to tell time with fun, hands-on activities! MODULE 2 Fun with Numbers A delightful activity book programs MY TALKNG COMPUTER with a variety of new numbers-learning challenges.

MODULE 3 Sesame Street Talking Cents with My Talking Cash Register Overlay The module comes with a 3-dimensional, plastic overlay program that simulates a cash register keyboard and teaches money counting with a variety of fun tivities. Also included colorful activity booklet. MODULE 4 Sesamc Street Spells FUN! The ever-popular Sesame Street gang gets together for more of their educational antics! Module comes with a colorful activity book containing hours of new, MY TALKING COMPUTER spelling fun! (Exhibit C , point-of-purchase package display. Par. 5. Through the use of the statements referred to in paragraph four, and others in promotional material not specifically set forth herein. respondent has represented. directlv or bv implication. that U"'''UU.I.lH.LU , .lHV.

651 Complaint four expansion modules for use with My Talking Computer, including specifically the modules identified in Exhibit C as Module 3 and Module 4, were available for purchase at the time the statements were published or displayed, and that persons purchasing My Talking Computer would be able to expand the capability of the computer immediately through the purchase of the advertised expansion modules including specifically Modules 3 and 4. Par. 6. In truth and in fact, the expansion modules for use with My Talking Computer, identified in Exhibit C as Modules 3 and 4, were not available for purchase at the time the statements were published or displayed, and persons purchasing My Talking Computer would not be able to expand the capability of the computer immediately through the purchase of Modules 3 and 4. Respondent had abandoned plans to produce Module 3, and respondent did not produce or offer for sale Module 4 until more than one-and-a-half years after the statements first appeared. Therefore the representations set forth in paragraph five were, and are, false and misleading. Par. 7. The acts and practices of respondent as alleged in this Complaint, and the placement in the hands of others of the means and instrumentalities by and through which others may have used said acts and practices, constitute unfair and deceptive acts or practices in or affecting commerce and the dissemination of false advertisements in violation of Section 5(a) of the Federal Trade Commission Act. .. .., ..., Complaint 111 F.

EXHIBIT A PAGE! 06 '2 P"-'- 0-' . 0 " 0 ci ;' a 0 ;: ...., .:.

J'-'- ..u, H''-- 651 Complaint .. ,. .... ,.... ... .. Complaint 111 F.

EXHIBIT B (p ..d fta t+..

701o__--ah II _on.._-,.\Ubo \Uwm 8:th h GCan 1t II .JI -o.-1n aI h& 'I to_(.."' to Ke_-ab U'1n II -11 b' 1m 1b'U m. .....

'-J 'Q,. .

S/j ._T t,\ .. :: .. . . ... ..pg.. .. .... .,.. CULJoCO lNDUST/tlJoS, INC. tHYi 651 Complaint EXHIBIT C 1t loca-:8:ziol1 Xodul.. Le-J'r-J'- :auid . Complete Lear lytel KODVU 1 1'e:U I:€ "';.Ii Wlt H.1nd.--2.-t-5?ux Clock Ove.rLay 'D--D1 UYU UA 2M .. 80 1:.u.. KODVU I - \I:t-b N I.rnj;e,...

.I 4aU' acu bo lJ.. UI8 r1 aolD- wt. wa MY.'a KODVU S S"- .nn'" St"reet' !a.1'kni C"nts :-. Y.y 1,Q:ng Casb Regist.r'. Ove::J.,a n. QCQlU w6 . 'Sf-~... 1U p1 uw &ht d:alc8 . GU -- pr8O n4 kQ ooutbi'."I' KODVU " Ses2.Me. Street Spell.. F U Nr"

pq pt, 80 01"" 8C$i Uti JI fI .. In eM 88 1I -1. II UJ& -__....__oahu",.--_-..o.._ 1"- Complaint 111 F.T.C.

Additional modules (..2%.) make MY TALKING COMPUTER ane expandable fun center that Boo Erows with your child! Learn-for -Fun™ Expansion Module 1 @ Telling Time™ with Hands-that-Speak™ Clock Overlay Learn-for-Fun Expansion Module 2 @® Fun with Numbers Learn-for-Fun Expansion Module 8 @ Sesame Streets Talking Cents”

with My Talking Cash Register™ : Learn-for-Fun™ ps. Expansion Module 4 @ Sesame Streets Spells F U N!™ GUL GU INUUSl'K11;ti, ING. tJb:1 651 Decision and Order DECISION AND Onder The Federal Trade Commission, having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of its Rules, now in further conformity with the procedure prescribed in Section 2. , the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order: 1. Respondent Coleco Industries, Inc., is a corporation organized existing, and doing business under and by virtue of the laws of the State of Connecticut, with its office and principal place of business located at 999 Quaker Lane South, West Hartford, Connecticut. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

Dccision and Ordcr 111 F. ORDER It is ordered That respondent Coleco Industries, Inc., a corporation its successors and assigns, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacture, advertising, offering for sale, sale, or distribution of My Talking Computer, or any other computer or computer-related product, in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication:

(a) That any such product is available for sale to the public or has any capability, unless, at the time such representation is made, such product is then available for sale to the public in reasonable quantities or has said capability.

(b) That any such product wil be available for sale to the public or will have any capabilty, unless, at the time of such representation respondent possesses and relies upon a reasonable basis for said representation.

II.

It is further ordered That respondent, its successors and assigns shall maintain for a period of three (3) years, and upon request make available to the Commission for inspection and copying accurate records of all materials relied upon by respondent in disseminating any representation covered by this order. It is further ordered That respondent shall notify the Commission at least thirty (30) days prior to any proposed change in respondent such as dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of the order.

\._ , ( jULI'. A.J ll'lUU::l.tl llll;. uu, 651 Decision and Order IV.

It is further ordered That respondent shall distribute a copy of this order to each of its operating divisions and to each officer and other personnel responsible for the preparation or review of advertising material. In addition, respondent shall distribute to each distributor retail outlet and wholesale outlet to which it has sold or delivered My Talking Computer, and to each consumer about whom Coleco has records who has inquired about the availabilty of Modules 3 and 4 for My Talking Computer, a copy of Attachment A to this order, a letter outlining the availability of said modules. It is further ordered That respondent shall, within sixty (60) days after service of this order, fie with the Commission a report, in writing, setting forth in detail the manner in which it has complied with this order.

ATTACHMENT A NOTICE TO WHOLESALERS, DISTRIBUTORS, RETAILERS AND PURCHASERS OF MY TALKNG COMPUTER Dear Wholesaler, Distributor, Retailer, or Consumer: Coleco Industries, Inc. Coleco ) is the manufacturer of an electronic learning product known as MY TALKING COMPUTER (Item No. 8200).

As the result of an agreement between Coleco and the Federal Trade Commission, arising out of consumer inquiries relating to certain accessories for MY TALKING COMPUTER known as Module 3 (Sesame Street Talking Cents with MY TALKING CASH REGISTER) and Module 4 (Sesame Street Spells FUN!), Coleco hereby provides you with the following information: Module 3 wil not be available for purchase. While Module 4 was manufactured in limited quantities, it no longer is in production and supplies have been exhausted. It will not be available for purchase.

Coleco Industries, Inc.

, , 662 FEDERAL TRADE COMMISSION DJoCISIONS Set Aside Order 111 F.