New '10-10' Phone Ad Rules Issued by FTC/FCC
Dateline: 03/01/00
The Federal Trade Commission and Federal Communications Commission today issued a joint policy statement intended to protect consumers from confusing and deceptive advertising techniques used by "dial-around" long distance telephone services -- often called "10-10" numbers.
The new policy provides guidelines to long distance carriers to ensure their advertising is truthful, complete and non-misleading.
As the popularity of "10-10" numbers has increased, so have the number of complaints from consumers. The FCC alone reports almost 3,000 complaints about deceptive advertising between Jan. 1, 1998 and June 30, 1999.
Examples of deceptive advertising identified by the FCC include:
All Day, All Night?: The headline of a direct mail ad for a dial-around service reads, "All day. All night. All calls. 10¢ a minute." In fact, the rate is applicable only for state-to-state calls after 7:00 p.m. and on weekends. Even an otherwise prominent disclosure to that effect will likely not be sufficient considering that the disclosure directly contradicts the express, and false, representations in the headline.
Monthly Fees: An advertisement says that long-distance calls cost 10¢ a minute. In fact, that rate is only available if customers pay a $5.95 monthly fee. Because the imposition of the monthly fee would significantly increase the consumer's per-minute charge, the advertiser's failure to clearly and conspicuously disclose the monthly fee in the ad would likely be deceptive.
Time Restrictions: A company's advertisements prominently feature the phrase "10¢ a minute." In fact, the 10¢ a minute rate is good only between 7:00 p.m. and 7:00 a.m. Consumers are likely to view this time limitation as a significant restriction on the availability of the advertised 10¢ a minute rate. The advertiser's failure to clearly and conspicuously disclose the limited hours in the ad would likely be deceptive.
Cost After Initial Promoted Calling Period: A company advertises "all calls up to 20 minutes for only $1.00," but charges 10¢ for each additional minute. Consumers are likely to be misled by the affirmative claim in the absence of a disclosure about the significantly higher rate after 20 minutes.
"Basic Rates": A company offers consumers a directory assistance service for 99¢. According to the television ad, callers who use this service can be connected to the requested number at no additional charge. In fact, consumers who opt to be connected to the requested number are connected via the advertiser's network and are billed at the advertiser's more expensive per-minute rates.
You will find this complete list of deceptive practices on the FCC's Web site.
The FCC-FTC Policy Statement on Truth-in-Advertising issued today, provides long distance carriers with these guidelines for future advertising:
"All claims must be 1) truthful; 2) non-misleading; and 3) substantiated; carriers should disclose all costs consumers may incur, such as per-call minimum charges, monthly fees, and universal service charges; advertising should disclose any time and/or geographic restriction on the availability of advertised rates; the basis for comparative price claims should be disclosed, and only current information used in making claims; and information should be disclosed in a clear and conspicuous manner, and without distracting elements so that consumers can understand it, and make fully informed choices."
Following the release of today's new policy, FCC Chairman William Kennard stated "Companies that ignore these new truth in advertising guidelines will do so at their own peril."
Reference Resources
Federal Trade Commission
Recommendations on how consumers can protect themselves from unfair or deceptive business practices.MarketSense - Making Sense of Long Distance Ads
The FCC offers this brand new publication about telling the fact from the fiction and how to really save money on you long distance calling.Federal Communications Commission
A detailed look at the FCC. Information includes mission, organization, workforce, job opportunities, phone book, and more.Deceptive 10-10 Advertising Examples
Complete list of deceptive practices cited in the FTC/FCC report on 10-10 services.
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