Fone Telecommunications, Inc

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

IN THE MATTER OF FONE TELECOMMUNICATIONS, INC.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3432. Complaint, June 14, 1993--Decision, June 14, 1993 This consent order prohibits, among other things, a New York marketer of 900 number information services from misrepresenting premium offers, requires a preamble statement at the beginning of each children's message giving the child a chance to hang up without charge, and requires the company to provide a means for parents to prevent, or not be charged for, unauthorized calls by their children. In addition, the consent order prohibits the respondent from misrepresenting the ease with which a premium is obtainable and requires the disclosure of all material terms and conditions for obtaining any premium offers.

Appearances For the Commission: Toby M. Levin and Carol A. Kando. For the respondent: Joel R. Dichter, Seham, Klein & Zelman, New York, N. Y.

COMPLAINT The Federal Trade Commission, having reason to believe that Fone Telecommunications, 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 Fone Telecommunications, Inc., is a New York corporation, with its principal office or place of business at 444 Madison Avenue, Suite 212, New York, New York. PAR. 2. Respondent has advertised, offered for sale and sold information services to consumers, including children. Accessed by FONE TELECOMMUNICATIONS, INC. 427 426 Complaint the telephone through a 900 number exchange, respondent's information services for children have consisted of recorded stories or video game tips featuring animated or fictional characters (such as Santa Claus) along with recorded promotional messages. Advertisements designed to induce consumers to purchase these services have been broadcast on television across state lines. PAR. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as “commerce” is ’ defined in Section 4 of the Federal Trade Commission Act. PAR. 4. Respondent has disseminated or has caused to be disseminated advertisements and telephone messages for various information services for children, including but not necessarily limited to the attached Exhibits A-E. These aforesaid advertisements contain the following statements:

A. I5 1 4 1 1 3 772 1492 77 24 95.385582 wants 1 4 1 1 4 861 1496 58 28 96.127609 you5 1 4 1 1 5 932 1492 30 23 96.207016 to5 1 4 1 1 6 974 1486 69 29 96.680481 hear5 1 4 1 1 7 1055 1485 112 29 71.260498 Santa's5 1 4 1 1 8 1180 1488 94 25 96.950317 secrets 1 4 1 1 9 1288 1491 136 28 96.913048 messages 1 4 1 1 10 1437 1480 57 30 96.656952 ands 1 4 1 1 11 1507 1480 65 29 95.888985 finds 1 4 1 1 12 1584 1485 51 24 96.488396 outs 1 4 1 1 13 1648 1479 68 29 97.005905 how5 1 4 1 1 14 1729 1487 58 29 96.969757 you5 1 4 1 1 15 1801 1486 54 20 96.029640 cans 1 4 1 1 16 1869 1482 48 32 96.978851 get4 1 4 1 2 0 598 1525 1318 45 -1 5 1 4 1 2 1 598 1537 84 29 84.211548 areal5 1 4 1 2 2 696 1537 83 28 96.702614 letters 1 4 1 2 3 788 1535 76 30 96.496170 from5 1 4 1 2 4 877 1535 88 28 96.736816 Santa5 1 4 1 2 5 976 1533 57 30 96.929962 ands 1 4 1 2 6 1045 1542 16 20 96.922852 a5 1 4 1 2 7 1073 1532 110 38 96.922852 specials 1 4 1 2 8 1195 1531 162 29 96.631477 Christmas5 1 4 1 2 9 1369 1534 117 33 96.931999 presents 1 4 1 2 10 1497 1528 77 29 96.112984 from5 1 4 1 2 11 1587 1528 88 29 96.419968 Santa5 1 4 1 2 12 1687 1527 89 29 96.947166 Claus5 1 4 1 2 13 1789 1532 29 22 96.645714 to5 1 4 1 2 14 1831 1525 85 38 87.499847 you. (Audio, Exhibit A) B. Sing5 1 4 2 1 3 837 1632 86 36 96.768547 along5 1 4 2 1 4 934 1630 70 29 96.953117 with5 1 4 2 1 5 1016 1630 88 29 96.188148 Santa5 1 4 2 1 6 1115 1629 56 29 96.915779 ands 1 4 2 1 7 1182 1628 62 29 96.915779 finds 1 4 2 1 8 1255 1633 51 23 96.719627 outs 1 4 2 1 9 1316 1627 67 29 96.639679 how5 1 4 2 1 10 1395 1635 58 29 96.639679 you5 1 4 2 1 11 1465 1634 54 20 96.712753 cans 1 4 2 1 12 1531 1630 48 32 96.616814 gets 1 4 2 1 13 1591 1633 16 20 94.716011 a5 1 4 2 1 14 1618 1629 114 33 94.716011 presents 1 4 2 1 15 1743 1623 76 29 96.975868 from5 1 4 2 1 16 1831 1622 88 28 96.988579 Santa4 1 4 2 2 0 599 1678 438 38 -1 5 1 4 2 2 1 599 1681 115 29 81.862610 Claus. (Audio, Exhibit B) C. Calls 1 4 3 1 3 826 1728 109 28 94.750992 Santa's5 1 4 3 1 4 949 1726 97 38 96.764626 phones 1 4 3 1 5 1058 1731 28 23 96.923965 at5 1 4 3 1 6 1102 1723 260 31 96.562149 1-900-909-43005 1 4 3 1 7 1374 1728 30 24 97.005524 to5 1 4 3 1 8 1417 1722 67 37 96.797043 sing5 1 4 3 1 9 1497 1722 89 36 96.521507 along5 1 4 3 1 10 1599 1719 70 30 96.521507 with5 1 4 3 1 11 1683 1719 89 30 96.961670 Santa5 1 4 3 1 12 1784 1718 57 29 96.961670 ands 1 4 3 1 13 1854 1718 64 28 96.676132 find4 1 4 3 2 0 600 1765 1318 49 -1 5 1 4 3 2 1 600 1783 50 23 96.951317 outs 1 4 3 2 2 661 1777 69 29 96.951317 how5 1 4 3 2 3 743 1783 30 22 96.953468 to5 1 4 3 2 4 785 1781 49 33 93.319572 gets 1 4 3 2 5 847 1785 15 18 93.319572 a5 1 4 3 2 6 875 1775 110 37 96.836670 specials 1 4 3 2 7 999 1779 118 33 96.833885 presents 1 4 3 2 8 1129 1773 77 29 96.721352 from5 1 4 3 2 9 1220 1772 90 29 96.855835 Santa5 1 4 3 2 10 1332 1771 91 29 96.831841 Claus5 1 4 3 2 11 1436 1776 30 22 96.831841 to5 1 4 3 2 12 1479 1769 85 38 90.502075 you.”5 1 4 3 2 13 1590 1770 10 33 92.174080 (5 1 4 3 2 14 1614 1768 110 33 96.876190 Audio,5 1 4 3 2 15 1737 1766 119 30 93.250336 Exhibits 1 4 3 2 16 1869 1765 25 29 91.829063 C5 1 4 3 2 17 1907 1767 11 33 91.829063 )3 1 4 4 0 0 599 1814 1323 289 -1 4 1 4 4 1 0 673 1814 1246 42 -1 5 1 4 4 1 1 673 1825 37 29 91.250481 D.5 1 4 4 1 2 745 1824 67 28 93.006531 “I'm5 1 4 4 1 3 829 1822 106 30 85.881027 startin’5 1 4 4 1 4 952 1831 16 20 93.816719 a5 1 4 4 1 5 985 1830 66 20 96.189079 news 1 4 4 1 6 1068 1821 69 29 96.007423 clubs 1 4 4 1 7 1154 1820 57 28 94.305481 ands 1 4 4 1 8 1227 1820 11 28 78.694794 J5 1 4 4 1 9 1256 1824 78 24 96.900146 wants 1 4 4 1 10 1350 1827 58 29 96.956230 you5 1 4 4 1 11 1427 1823 30 23 96.976707 to5 1 4 4 1 12 1469 1817 75 38 96.092163 join.5 1 4 4 1 13 1577 1816 46 29 92.873993 It's5 1 4 4 1 14 1639 1815 97 30 96.329292 called5 1 4 4 1 15 1753 1815 48 28 96.913071 thes 1 4 4 1 16 1816 1814 103 29 96.832939 Junior4 1 4 4 2 0 599 1857 1318 53 -1 5 1 4 4 2 1 599 1872 156 38 96.388512 Vampires5 1 4 4 2 2 772 1871 35 30 97.017555 of5 1 4 4 2 3 819 1871 138 29 90.838440 Americas 1 4 4 2 4 973 1893 5 5 60.869656 .5 1 4 4 2 5 997 1894 4 5 60.869656 .5 1 4 4 2 6 1025 1893 1 5 82.025970 .5 1 4 4 2 7 1041 1869 97 29 95.926659 You'll5 1 4 4 2 8 1153 1869 71 28 96.569847 hear5 1 4 4 2 9 1237 1875 85 30 96.553879 scary5 1 4 4 2 10 1337 1871 132 24 96.968376 monster5 1 4 4 2 11 1483 1864 104 30 89.530228 stories5 1 4 4 2 12 1604 1888 5 5 88.245323 .5 1 4 4 2 13 1630 1887 2 6 74.421844 .5 1 4 4 2 14 1653 1887 2 6 74.421844 .5 1 4 4 2 15 1672 1863 97 29 92.873856 You'll5 1 4 4 2 16 1785 1863 79 28 96.618988 learns 1 4 4 2 17 1879 1857 38 47 96.212898 all4 1 4 4 3 0 601 1909 1321 49 -1 5 1 4 4 3 1 601 1921 89 30 96.843048 about5 1 4 4 3 2 707 1929 49 29 96.531487 my5 1 4 4 3 3 774 1924 131 25 96.376846 monster5 1 4 4 3 4 921 1917 121 34 96.571945 friends,5 1 4 4 3 5 1060 1917 79 29 96.571945 learns 1 4 4 3 6 1156 1917 68 28 96.827599 how5 1 4 4 3 7 1242 1920 29 24 97.007278 to5 1 4 4 3 8 1288 1920 48 33 96.656464 gets 1 4 4 3 9 1352 1923 17 21 96.656464 a5 1 4 4 3 10 1385 1914 61 29 96.574936 free5 1 4 4 3 11 1463 1912 133 39 96.863792 vampire5 1 4 4 3 12 1612 1911 87 39 96.769165 patch5 1 4 4 3 13 1717 1911 56 28 96.769165 ands 1 4 4 3 14 1789 1919 16 20 96.850624 a5 1 4 4 3 15 1822 1909 48 29 96.707169 lists 1 4 4 3 16 1887 1909 35 29 96.707169 of4 1 4 4 4 0 601 1959 1318 48 -1 5 1 4 4 4 1 601 1968 111 39 96.885010 specials 1 4 4 4 2 727 1968 132 37 96.351997 vampire5 1 4 4 4 3 873 1966 87 30 96.930336 tricks5 1 4 4 4 4 975 1965 57 30 96.983490 ands 1 4 4 4 5 1045 1970 109 25 92.657059 secrets5 1 4 4 4 6 1170 1989 5 4 92.657059 .5 1 4 4 4 7 1194 1988 2 5 46.582672 .5 1 4 4 4 8 1216 1988 1 5 46.582672 .5 1 4 4 4 9 1232 1963 94 30 96.442993 Learns 1 4 4 4 10 1339 1963 68 29 96.442993 how5 1 4 4 4 11 1421 1967 30 24 96.992569 to5 1 4 4 4 12 1465 1969 82 21 96.735809 scare5 1 4 4 4 13 1561 1968 75 30 96.895012 yours 1 4 4 4 14 1648 1959 111 30 95.955254 friends5 1 4 4 4 15 1773 1959 57 28 96.338036 ands 1 4 4 4 16 1843 1966 76 20 96.338036 even4 1 4 4 5 0 601 2005 1319 50 -1 5 1 4 4 5 1 601 2016 142 39 96.042488 yourself.5 1 4 4 5 2 781 2016 67 30 96.042488 Joins 1 4 4 5 3 868 2013 163 39 75.071167 Grandpa's5 1 4 4 5 4 1051 2013 103 30 96.734879 Junior5 1 4 4 5 5 1173 2010 164 39 95.786957 Vampire's5 1 4 4 5 6 1357 2010 78 30 96.638458 Clubs 1 4 4 5 7 1456 2009 58 29 96.903000 ands 1 4 4 5 8 1534 2008 40 30 93.181648 I'll5 1 4 4 5 9 1597 2008 86 29 96.887665 makes 1 4 4 5 10 1703 2016 59 29 95.616928 you5 1 4 4 5 11 1783 2016 15 20 95.616928 a5 1 4 4 5 12 1818 2005 102 30 96.641846 Junior4 1 4 4 6 0 601 2061 500 42 -1 5 1 4 4 6 1 601 2065 166 38 70.179703 Vampire.”5 1 4 4 6 2 793 2064 122 35 90.453857 (Audio,5 1 4 4 6 3 929 2062 120 30 93.283295 Exhibits 1 4 4 6 4 1061 2061 40 36 93.172440 D)3 1 4 5 0 0 602 2101 1320 98 -1 4 1 4 5 1 0 675 2101 1247 48 -1 5 1 4 5 1 1 675 2113 31 29 83.178650 E.5 1 4 5 1 2 730 2112 115 29 95.837303 We've got all the latest clues on the Power Phone. Call now and find out how to get a free super power patch." (Audio, Exhibit E) PAR. 5. Through the use of the statements contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits A-E, respondent has represented, directly or by implication, that children who complete a call to respondent's information service will readily and easily obtain the premium specified in the advertisement. Complaint 116 F.T.C.

PAR. 6. In truth and in fact, children who complete a call to respondent's information service will not readily and easily obtain the premium specified in the advertisement because the child must: (1) complete a call to the information service; (2) record an address, given during the course of the recorded message announcement, to which a request must be sent to obtain the item; and (3) send a self-addressed stamped envelope to the address given during the message. This ordering information is given in a rapid and difficult to follow manner during the course of the recorded message. Therefore, the representation set forth in paragraph five was, and is, false and misleading.

PAR. 7. In its advertising for its information services for children, respondent has represented that children could easily obtain a premium by making a call to the information service. These advertisements failed to disclose that there are material terms and conditions for obtaining the premium, including but not limited to, the need for a writing implement to transcribe the ordering information. These terms and conditions would be material to the caller in deciding whether to purchase the service. Respondent's: failure to disclose these terms and conditions was, and is, a deceptive practice.

PAR. 8. In the course of advertising, promoting, and selling its information services for children, respondent has induced children to call its story service and thereby incur charges, without providing any reasonable means for persons responsible for payment of these charges to exercise control over the transaction. This practice has caused such persons to pay these charges. Respondent's conduct as set forth above has caused substantial injury to consumers that is not outweighed by any countervailing benefits to consumers or competition and is not reasonably avoidable by consumers. This conduct was, and is, an unfair act or practice.

PAR. 9. The acts and practices of the respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

TAPE 2, #1 Number on screen VIDEO Little boy Little girl Little boy Santa in his chair FONE TELECOMMUNICATIONS, INC. 429 Complaint EXHIBIT A AUDIO I called Santa .

Santa is that really you? Hi Santa Ho ho ho. Hello boys and girls.

Get your parents’ permission and write down the phone number so you can call Santa’s phone too.

It’s 1-900-909-4300.

It’s a long number because it’s a long way to the North Pole.

I want you to call to hear Santa’s secret message and find out how you can get a real letter from Santa and a special Christmas present from Santa Claus to you.

So write down my number so you can call Santa’s Christmas phone. Ho ho ho VOICEOVER Call Santa’s Christmas phone.

Dial 1-900-909-4300.

Two dollars the first minute, .45 each additional.

Kids, ask Mom or Dad.

Complaint 116 F.T.C.

EXHIBIT B TAPE 2, #3 VIDEO AUDIO (Number on screen) (kids and Santa singing) Santa in his chair, What do we do when surrounded by kids Christmas is coming, singing into telephones, waving. Gotta call Santa, gotta call Santa, What do we do when Christmas is coming, Gotta call Santa’s Christmas phone.

VOICEOVER Get your parents’ permission to call Santa’s Christmas phone.

CALL 1-900-909-4300.

Sing along with Santa and find out how you can get a present from Santa Claus.

(Kids and Santa singing) What do we do when Christmas is coming, Gotta call Santa, gotta call Santa, What do we do when Christmas is coming, Gotta call Santa’s Christmas phone. (TWICE) VOICEOVER Two dollars the first minute, a dollar each additional. Kids, ask Mom or Dad.

FONE TELECOMMUNICATIONS, INC. 431 426 Complaint EXHIBIT C TAPE 2, #5 (Number on screen) AUDIO VIDEO Santa in chair singing (singing) It’s Santa’s Christmas party, with kids pick up the phone and call us, Come join us all with Santa.

And will sing Christmas songs.

Call 1-900-909-4300.

Call Santa’s phone, call Santa’s phone and we’ll sing Christmas songs.

(TWICE) VOICEOVER Hey kids get your parents’ permission and call Santa’s phone at 1-900-909-4300 to sing along with Santa and find out how you can get a special present from Santa Claus to you. Two dollars first minute, a dollar each additional. Kids, ask Mom or Dad.

Complaint H6F.T.C.

EXHIBIT D TAPE 3 Hi ya kids it’s me, your Grandpa. I gotta tell ya, I’m starting a new club and I want you to join. It’s called the Junior Vampires of America. I mean you’ ll hear scary monster stories. But to call you gotta ask your parents’ permission and call this phone number 1-900-909-4300. You'll hear all about my monster friends, learn how to get a free vampire patch and a list of special vampire tricks and secrets. So call 1-900-909-4300. Learn how to scare your friends and even yourself. Join Grandpa’s Junior Vampire’s Club and I’ll make YOU a junior vampire.

VOICEOVER:

Hey kids, call 1-900-909-4300. That’s 1-900-909-4300 to hear Grandpa’s scary stories and join the Junior Vampire’s Club. That two dollars the first minute and .45 each additional. Ask Mom or Dad first. EXHIBIT E VIDEO various quick edit shots of kids playing video games, video game screens, “CALL NOW,” “SECRET TIPS,” “FREE POWER PATCH”

AUDIO VOICEOVER Power Phone’s back. And now it’s better than ever. Yes, now you can power up your score on all of your latest and greatest Nintendo games. Like, POW, Bases Loaded, and Teenage Mutant Ninja Turtles. PLUS discover the incredible secrets of Gameboy, Power Glove. Call 1-900-909-0300. Power up Blaster Master, Super Mario Brothers II, power your Gameboy scores on Tetra,___ Waves, _ It’s the Power Phone for Nintendo players. Call 1-900-909-0300. For secret tips and clues and find put how you can get a free super power patch. Having fun with Gameboy? ready to take on the Power Glove? We've got all the latest clues on the Power Phone. Call now and find out how to get a free super power patch. 1- 900-909-4300. We’ve got it covered on the Power Phone. Two dollars the first minute, .45 each additional. Ask Mom or Dad first. The power phone is an independent information source not affiliated with Nintendo. Nintendo and Nintendo products are registered trademarks of Nintendo America. FONE TELECOMMUNICATIONS, INC. 433 426 Decision and Order DECISION AND ORDER 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 of 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 respondent of all the jurisdictional fact: set forth in the aforesaid draft of complaint, a’statement that the signing of said agreement is for settlement purpose: 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 thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that 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, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Fone Telecommunications, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 444 Madison Avenue, Suite 212, in the City of New York, State of New York.

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.

Decision and Order 116 F.T.C.

ORDER DEFINITIONS For purposes of this order the term children or child shall mean a person of age twelve or under.

For purposes of this order, the term information5 1 4 2 1 9 1701 948 139 33 96.680115 services 1 4 2 1 10 1852 946 67 44 97.007233 fora 1 4 2 2 0 598 1005 1316 48 -1 5 1 4 2 2 1 598 1009 178 37 96.277412 children shall mean a telephone message accessed through a numbered exchange (e.g., 900) for which a fee is charged, consisting of recorded statements promoted or sold primarily to children. For purposes of this order, the term premium shall mean any item respondent offers to send to those who call its information service for children.

For purposes of this order, the term Information5 1 4 4 1 9 1777 1356 138 33 96.278030 service4 1 4 4 2 0 598 1413 1318 51 -1 5 1 4 4 2 1 598 1419 184 45 93.347183 message shall mean any live or recorded story, program or other communication transmitted to callers of respondents information service for children.

For purposes of this order, the term videos 1 4 5 1 9 1515 1587 291 36 95.264275 advertisement shall mean any advertisement intended for dissemination on television broadcast, cablecast, home video, or theatrical release. It is ordered, That respondent Fone Telecommunications, Inc., a corporation, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, offering for sale, sale or transmission of any information service for children in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, directly or by implication, the ease with which a premium is obtainable.

FONE TELECOMMUNICATIONS, INC. 435 426 Decision and Order II.

It is further ordered, That respondent Fone Telecommunications, Inc., its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, offering for sale, sale or transmission of any information service for children in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from failing as specified below to disclose, clearly and prominently, whenever an offer of any premium is made, all the material terms, conditions and obligations upon which receipt and retention of the premium is contingent. Such terms, conditions, and obligations shall include, but not be limited to, the number of calls necessary to receive the premium, if more than one, and the need to have a writing implement and paper available to record the necessary information given during the information service message.

The disclosure shall be made in a manner understandable to children, and shall be made in the same medium in which the offer of the premium is made and, in addition, in any information service message.

HI.

It is further ordered, That respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from disseminating or causing to be disseminated any advertisement in any medium for an information service for children that does not include the following statement:

KIDS,5 1 7 1 1 2 794 2542 86 30 94.490562 YOU5 1 7 1 1 3 900 2541 112 29 96.120171 MUST5 1 7 1 1 4 1031 2540 79 29 95.764099 ASKS 1 7 1 1 5 1146 2539 114 30 95.881653 YOURS 1 7 1 1 6 1279 2538 100 29 96.686073 MOM5 1 7 1 1 7 1398 2537 55 29 96.712074 OR5 1 7 1 1 8 1471 2536 88 30 96.403900 DAD5 1 7 1 1 9 1579 2535 85 29 96.403900 ANDS 1 7 1 1 10 1684 2534 78 30 96.875328 GETS 1 7 1 1 11 1780 2532 118 31 94.364510 THEIR4 1 7 1 2 0 655 2581 1193 39 -1 5 1 7 1 2 1 655 2590 241 30 95.792656 PERMISSION5 1 7 1 2 2 910 2588 155 30 96.356506 BEFORE5 1 7 1 2 3 1078 2587 85 30 95.930573 YOU5 1 7 1 2 4 1177 2587 114 29 95.930573 CALL.5 1 7 1 2 5 1315 2586 88 29 96.388054 THIS5 1 7 1 2 6 1417 2584 106 30 96.034111 CALLS 1 7 1 2 7 1536 2583 124 30 96.233978 COSTS5 1 7 1 2 8 1674 2581 174 30 94.840973 MONEY. Decision and Order 116 F.T.C.

The above-required disclosure shall be presented in a manner designed to ensure clarity and prominence as follows: A. In any video advertisement, the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. The disclosure shall appear immediately following the first video presentation of the 900 telephone number, but in any event shall begin within the first fifteen (15) seconds of the advertisement. The audio portion shall be presented in a slow and deliberate manner. Each line of the video portion shall be at least as large as one-half of the size of the largest presentation of the 900 number that appears on the screen during the advertisement, shall be of a color or shade that readily contrasts with the background, and shall appear on the screen for the duration of the audio disclosure. B. In any print advertisement, the disclosure shall be parallel to the base of the advertisement and shall be placed in close proximity to the 900 number. All lines of the disclosure taken together shall be the same size or larger than the largest presentation of the 900 number, but in any event the type size of each line of the disclosure shall be no less than 12 point, bold-face type. C. In any radio advertisement, the disclosure shall be presented in a slow and deliberate manner and shall appear immediately following the first presentation of the 900 telephone number, but in any event it shall begin within the first fifteen (15) seconds of the advertisement.

Nothing: contrary to, inconsistent with, or in mitigation of the above-required statement shall be used in any advertisement in any medium.

IV.

It is further ordered, That respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from disseminating or FONE TELECOMMUNICATIONS, INC. 437 426 Decision and Order causing to be disseminated any advertisement in any medium for any information service for children that does not include a disclosure of the cost of a call to the information service. This disclosure shall be presented in a manner designed to ensure clarity and prominence. In any video advertisement, the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement.

V.

It is further ordered, That respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from disseminating or causing to be disseminated any information service message for children that does not include, at the beginning of the message, an introductory preamble that states in a slow, deliberate and clear manner the following:

“THIS TELEPHONE CALL COSTS MONEY. IF YOU DO NOT HAVE YOUR MOM OR DAD'S PERMISSION, HANG UP NOW AND THERE WILL BE NO CHARGE FOR THIS CALL."

VI.

It is further ordered, That respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from billing or causing to be billed, or collecting any funds or causing any funds to be collected, for any call to any information service for children terminated within no less than five (5) seconds of the end of the introductory preamble, as required by paragraph V of this order. Decision and Order 116 F.T.C.

VIL.

It is further ordered, That respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from inducing children to call their information service for children and thereby incur charges; without providing any reasonable means for the person responsible for payment of such charges to exercise control over the transaction. For purposes of this paragraph, if the respondent does not provide, prior to placement of any call by a child, a reasonable means for the person responsible for payment to avoid unauthorized calls, the provision of a reasonable means to exercise control over the transaction shall be the use of the respondent's best efforts to ensure that one-time refunds or credits are provided upon request for unauthorized calls made by children, as specified below. Best efforts shall include at least the following: A. Contracting with the appropriate interstate common carrier or local exchange carrier to:

(1) Identify in all telephone bills containing charges for calls to respondent's information service for children each telephone call to such service by the characters CHILDS 1 6 1 3 7 1423 1938 159 42 89.708023 CALL; (2) Place in all telephone bills containing charges for calls to respondent's information service for children, clearly and prominently in close proximity to the itemization of those charges, a toll-free or local telephone number specified to be used for consumer inquiries concerning charges on the telephone bill; provided, that a general billing inquiry telephone number for customer inquiries concerning charges on the telephone bill shall satisfy this requirement;

(3) Refer all customers who call the toll-free number inquiring about the charges for respondent's information service for children FONE TELECOMMUNICATIONS, INC. 439 426 Decision and Order to their local exchange carrier for information regarding the availability of blocking in their jurisdiction; and (4) Provide a one-time prompt and full credit or refund at the customer's request for all such calls, whether such request is made to the toll-free or local telephone number specified herein or in any other manner; provided, that respondent must contract with the carrier to provide a second prompt and full credit or refund to any customer who requests the first credit or refund during a period of the billing cycle where unauthorized calls have been made, but do not yet appear on the customer's bill, and subsequently requests a second credit or refund for the unauthorized call made before the date of the first request for a credit or refund; provided, that if the interstate common carrier utilized by respondent employs local exchange carriers to provide billing inquiry services, respondent shall be in compliance with subparagraphs A(3) and (4) of the paragraph if its contract with the interstate common carrier provides that the interstate common carrier notify each local exchange carrier of the interstate common carrier's policies to: (i) Provide the customer with information regarding the availability of blocking of 900 number calls; and (ii) Provide upon request one-time refunds or credits for unauthorized calls by children, as provided in subparagraph A(4) of the paragraph.

B. In the event that respondent receives any information that the interstate common carrier has failed to fulfill its obligations under the contract required by subparagraph A of this paragraph, immediately notifying the interstate common carrier: (1) Of the existence of the alleged failure(s); (2) Of the carrier's responsibility to fulfill its obligations under the contract;

(3) Of the need to investigate and correct all past failures; and Decision and Order 116 F.T.C.

(4) That if a pattern or practice of failures continues, respondent will terminate the use of said carrier for any information service for children; and C. Terminating the use of said interstate common carrier for any _ information service for children, in the event that the interstate common carrier does not correct all past failures or continues to fail to fulfill its obligations under said contract. D. Compliance with the requirements set forth in subparagraphs A-C of this paragraph is deemed to be satisfactory compliance with this paragraph.

Provided, that for purposes of this paragraph, the mere inclusion of any audio or video disclosure relating to parental authorization in advertisements or information service messages is expressly deemed not to be a reasonable means, prior to placement of any call by a child, for the person responsible for payment to avoid unauthorized calls.

Vill.

It is further ordered, That for three (3) years from the date of service of this order, respondent, its successors and assigns, and its officers, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, shall maintain and upon request make available to the Federal Trade Commission for inspection and copying: (1) all advertisements for information services for children and all corresponding information service messages; (2) a record of all credit or refund requests made for charges billed for respondent's information services for children; (3) all documents relating to compliance with paragraph VII of this order; and (4) all consumer complaints and dispositions thereof relating to respondent's information services for children.

FONE TELECOMMUNICATIONS, INC. 44] 426 Decision and Order IX.

It is further ordered, That respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent including but not limited to dissolution, assignment or sale resulting in the emergence of a successor corporation or corporations, the creation or dissolution of subsidiaries or affiliates, the planned filing of a bankruptcy petition, any other corporate change that may affect compliance obligations arising out of this order.

X.

It is further ordered, That respondent shall forthwith distribute a copy of this order to each of respondent's operating divisions and any carrier(s) or other entities providing billing and/or collection service for their information services for children. XI.

It is further ordered, That respondent shall, within sixty (60) days after service of this order and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with the order.

Complaint 116 F.T.C.