In the clearest sign yet that the FTC is siding with consumer groups in their complaints that phone ads are misleading, it has set a Nov. 4 joint forum with the Federal Communications Commission to read marketers the riot act.
"It's not just a question of physically inserting a line about additional costs. Our concern is that the ads don't communicate to consumers what the deal is," said Lee Peeler, the FTC's associate director of advertising practices.
FOOTNOTES VS. ON-AIR DETAILS
"What we want them to do is give the whole cost picture. One of the concerns is putting information in fine-print footnotes as opposed to putting it on the air."
Consumer groups contend ads for "10-10" services, which allow consumers to dial around their long-distance carrier, and some ads for residential service are intentionally misleading.
They charge that "10-10" ads promote savings for 20-minute calls without making clear what a shorter call will cost. They also say long-distance companies that advertise low per-minute rates or other deals don't make adequately clear that monthly fees can make the net per-minute cost much higher.
Mr. Peeler didn't name names, but he said the FTC is especially concerned about dial-around services because the ads consumers see are often the only information they get before they purchase.
"One of the things we want to discuss is, 'Are the disclaimers effective?' " said Mr. Peeler.
WHY FTC INVOLVED
The FCC traditionally regulated long-distance, but the FTC is getting in because it has authority over ads that are misleading or unfair.
The FTC decided to hold the forum rather than bring immediate cases because it saw the ad problems as industrywide issues, Mr. Peeler said.
"It is widespread and the FTC has not looked at the telephone-rate advertising," he said. "There is a general concern about how accurate and complete the advertising was."
At the forum, the FTC intends to offer sample ads and criticize them.
Telecom consultant Jeffrey Kagan said he understands why the FTC is examining the marketing.
"The last few years we've seen an explosion of companies, technology, choices and bundling," he said. "Three years ago, dial-around companies weren't mainstream."
An AT&T Corp. spokesman said the FTC is right to be concerned about consumers, especially when it comes to the dial-around numbers.
AT&T'S DOG NOT SO LUCKY
AT&T was late to the 10-10 game and struggled with its advertising. It began with the Lucky Dog Phone Co. last year featuring talking dog ads and the 10/10/345 number. The spots were largely panned; the Lucky Dog name was dropped. MCI WorldCom has had much greater success with its acquired Telecom USA, which markets the 10/10/321 and 10/10/220 services.
The AT&T spokesman said that the company has already made changes to simplify its offers in anticipation of consumer outcry
The probe seems to put the burden on phone-service advertising, he said, adding,