May 15, 2001
WASHINGTON (AdAge.com) -- The Federal Trade Commission, which is holding a workshop on advertising disclosures next week, sent a warning message to marketers in advance today.
The FTC announced settlements with Juno Online Services and Gateway, which had been accused by federal regulators of failing to adequately disclose fees for free dial-up Internet connections.
Both companies agreed as part of the settlement to reimburse customers.
Toll charges and fine print
Juno was accused of making it difficult for consumers to cancel service after a free trial period expired. The Internet provider also allegedly advertised its service as free or coming with 150 free hours without disclosing that some rural customers would have to pay toll charges to use the service or that the free hours had to be used within a month.
Juno currently has no ad agency. Hampel/Stefanides, New York, formerly handled its business.
Gateway advertised that its computers as coming with a year of Internet access, and that rural access and access of over 150 hours per month costs more. But what had irked the FTC was that the disclaimer appeared in the fine print.
Interpublic Group of Cos.' McCann-Erickson Worldwide handled Gateway's campaign at the time, though personal computer marketer now does its advertising in-house.
The FTC, along with the National Advertising Division of the Council of Better Business Bureaus, announced the May 22 workshop last week, saying that it was seeing increasing instances of marketers failing to make "clear and conspicuous" disclosures in their advertising.
Gary Baker, a Juno spokesman, said his company's policies were little different from other companies.
"We welcome the FTC effort to improve the standards for disclosure and customer service," he said, adding that Juno had already moved to make sure its standards exceeded others in the industry.
Gateway said the advertising cited by the FTC ran in 1999 and that it had started refunding fees to customers that year, well before it was contacted by the commission.
Copyright May 2001, Crain Communications Inc.