FTC, FCC Issue Joint Guidelines for Long Distance Marketing

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The Federal Trade Commission and Federal Communications Commission yesterday issued joint guidelines for companies that advertise long-distance telephone services. At the same time, the FCC announced a consent decree agreement with MCI Worldcom concerning the advertising of its 10-10 dial-around offerings.

Although the DMA approves of the intentions of the guidelines, it foresees problems in their enforcement and in their practical application by marketers, said Ian Volner, a telecommunications counsel for the Direct Marketing Association said.

According to the guidelines, all claims made by long distance carriers must be truthful, non-misleading and substantiated. In addition, carriers must disclose all costs consumers may occur, including monthly fees and service charges, and the advertisers also must disclose any geographic or time constraints on the rates offered. The basis for price comparisons must be disclosed, and only current information can be used in making marketing claims. The information also must be disclosed in a clear and conspicuous manner and without distracting elements.

"When you are dealing with a situation where your savings really do vary considerably depending on what time you call and other factors, you can't expect the phone companies to substantiate that with the same level of detail as if it were a health claim," said Ian Volner, telecommunications counsel for the DMA.

He also pointed out that there are space constraints in all of the various media that phone companies use that could restrict the amount of information they can provide in a single advertising message.

In addition, he questioned which of the two commissions would have enforcement authority over the guidelines, which are effective immediately and will not be reviewed for at least five years.

An FTC spokesman said the authority over the enforcement would be decided on a case-by-case basis, depending on available resources, familiarity with the defendant and other factors. The FTC has enforcement authority under the Federal Trade Commission Act, while the FCC can enforce the guidelines under the Communications Act.

In the MCI agreement, meanwhile, the company has agreed to review its dial-around advertising for the past year, submit a report to the FCC and pay a $100,000 fine.
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