Antenna Firm pays FTC charges that misled shoppers in regards to the performance of their merchandise
The Federal Trade Commission announced that it had reached an agreement with a television antenna company and its CEO, dispelling claims that they made false claims that the company’s products would allow users to cancel their cable service, and everyone receive their favorite channels for free. As part of the settlement, Wellco, Inc. and its CEO agreed on a $ 31 million judgment that the FTC wanted to suspend due to its inability to pay that amount – as long as the defendants paid $ 650,000.
As part of the announcement, Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection said, “The defendants used every trick in the book to sell their antennas and amplifiers to people, including older adults looking to save money on cable and satellite television channels. The People should be able to trust the claims made by companies and not discover that they have been told lies after buying. “
Wellco sells indoor television antennas (sometimes called “mud flaps” antennas) and signal amplifiers under the brand names TV Scout, SkyWire, SkyLink and Tilt TV. According to the FTC’s complaint, Wellco has made a number of false claims about its antennas, including that users can no longer pay for cable or satellite television and still receive all of their favorite channels. A significant segment of users will receive more than a hundred premium channels in HD, the company’s antennas allow consumers to receive more channels than most other TV antennas on the market, and Wellco’s antennas are the number 1 HDTV antennas in the USA.
The FTC also alleged that Wellco used bogus consumer endorsements (which were only taken from competitor advertisements) in its advertising. In addition, the FTC alleged that the company also used websites that broadcast objective news reports and that fake news reporters conducted independent tests to prove the effectiveness of the antennas.
This enforcement measure is full of good guidelines for marketers looking to avoid problems with their own advertising. With the first day of spring only a few days away, here are some key tips if you plan on cleaning your own spring advertising:
- Don’t assume that when you cross the line, you will only get a slap on the wrist. There has been a lot of talk at the FTC about tougher settlements and greater damage. If you’re selling a product that doesn’t do what you promised, the FTC will likely want you – and possibly even the running of your business – to give consumers their money back.
- This means that if you make claims about your product that would be material to a consumer’s purchase decision, you should have adequate justification on hand to prove the truth of your claims. (If you’re looking for a refresher on the rationale, you can start with the FTC Advertising Rationale statement.)
- Don’t just assume that positive, boastful statements that you make about your product are just buffering. If objectively demonstrable, they are likely indeed allegations that require evidence. Don’t forget that the FTC has raised concerns about statements like “Favorite Channel” and “Rated # 1” here.
- When promoting new technologies or technologies that consumers may not be as familiar with, it is important to take the extra time explaining to them how they work. In general, the advertiser has an obligation to ensure that consumers are not misled. Often times, when you talk about new technology, you need additional training. When you’re speaking to a more vulnerable audience – say, older consumers who continue to be a high priority for the FTC – it just means you need to be so much clearer.
- When using consumer endorsements, you should ensure that they are genuine, that they reflect the consumers’ honest opinions and beliefs, and that any material connection between the company and the endorsement is clearly disclosed. (If you’re looking for a refresher on the endorsements, check out the FTC guides on Using Endorsements and Testimonials in Advertising.)
- Finally, make sure that the format or design of your advertising doesn’t mislead consumers into believing that they are seeing independent editorial content (if they aren’t). The FTC has done a great deal over the past few years in finding advertisers using misleading formats to mislead consumers. (A great resource on this topic is the FTC’s statement on the Enforcement Policy on Misleadingly Formatted Ads.)
“People should be able to trust companies’ claims and not discover they’ve been told lies after they buy” – Daniel Kaufman, Acting Director, FTC Bureau of Consumer Protection