Phone Programs, Inc

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IN THE MATTER OF PHONE PROGRAMS, INC.

CONSENT ORDER, ETC., INREGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9247. Complaint, May 7, 1991--Decision, December 10, 1992 This consent order prohibits, among other things, a New York corporation from misrepresenting the ease with which a premium is obtainable and the content of any telephone information service message to children aged twelve and under. In addition, the respondent is required to include a clear statement at the beginning of each children's message giving the child a chance to hang up without charge, and is required to provide a means for parents to prevent, or not be charged for, unauthorized calls by their children. Appearances For the Commission: Richard L. Cleland, Joel Winston, and Robert C. Cheek.

For the respondent: Eric L. Chase, Hannock Weisman, Roseland, N.J.

COMPLAINT The Federal Trade Commission, having reason to believe that Phone Programs Incorporated, a corporation, has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges:

PARAGRAPH 1. Respondent Phone Programs Incorporated is a New York corporation with its office and principal place of business located at 919 Third Avenue, New York, New York. PAR. 2. Respondent has advertised, offered for sale and has sold information services to consumers, including children. Accessed by the telephone through a 900 number exchange, respondent's information services for children ordinarily consist of recorded Complaint 115 F.T.C.

stories featuring animated or fictional characters (such as Popeye and P.J. Funny Bunny) along with recorded promotional messages. Advertisements designed to induce consumers to purchase these services have been broadcast on television across state lines. PAR. 3. As alleged in this complaint, the acts and practices of the respondent have been in or affecting commerce, as commerce is defined in Section 4 of the Federal Trade Commission Act. PAR. 4. Respondent has disseminated, or has caused to be disseminated, advertisements and telephone messages for various information services for children. Typical of respondent's advertisements and telephone messages, but not necessarily all-inclusive thereof, are the advertisements and telephone messages attached hereto as Exhibits A through D. Specifically, the aforesaid contain the following statements and depictions:

1. Plus,5 1 4 1 1 3 928 1519 85 28 96.941513 every5 1 4 1 1 4 1027 1511 98 36 96.763474 bunny5 1 4 1 1 5 1138 1512 58 27 96.401436 that5 1 4 1 1 6 1209 1512 70 27 96.858833 calls5 1 4 1 1 7 1294 1512 58 27 96.766968 will5 1 4 1 1 8 1366 1512 113 28 96.619568 receives 1 4 1 1 9 1493 1521 15 20 96.619568 a5 1 4 1 1 10 1522 1513 106 36 96.439392 specials 1 4 1 1 11 1642 1514 100 36 96.849617 Funny5 1 4 1 1 12 1756 1514 104 37 95.798050 Bunny5 1 4 1 1 13 1874 1515 141 36 96.442482 present! (Audio, Complaint Exhibit A) 2. “Plus every caller gets a special gift." (Audio) Every5 1 4 2 1 11 1696 1617 97 29 96.593857 Callers 1 4 2 1 12 1804 1618 70 29 88.629456 Gets5 1 4 2 1 13 1900 1627 15 19 88.629456 a5 1 4 2 1 14 1927 1618 87 29 81.973747 Gift. (Video) (Complaint Exhibit B) 3. Calls 1 4 3 1 3 906 1728 66 18 96.996872 now5 1 4 3 1 4 984 1719 55 27 96.940056 ands 1 4 3 1 5 1051 1719 141 28 96.838188 celebrate5 1 4 3 1 6 1204 1719 136 36 96.910706 Popeye's5 1 4 3 1 7 1352 1719 155 37 95.349052 birthday. (Audio) (Complaint Exhibit B) 4. It's5 1 4 4 1 3 892 1777 136 36 96.636612 Popeye's5 1 4 4 1 4 1041 1777 140 36 96.703133 birthday,5 1 4 4 1 5 1194 1778 50 28 96.836052 but5 1 4 4 1 6 1256 1786 57 28 96.999100 you5 1 4 4 1 7 1327 1782 46 32 96.884453 gets 1 4 4 1 8 1385 1778 47 28 96.884453 thes 1 4 4 1 9 1444 1779 137 36 96.323082 present. (Audio). [Video depicts a large birthday cake with Popeye and his friends seated on the cake] (Complaint Exhibit B) 5. Ands 1 4 5 1 3 910 1928 77 28 93.284294 would5 1 4 5 1 4 1000 1937 91 27 93.139839 youse5 1 4 5 1 5 1102 1928 58 28 96.643867 likes 1 4 5 1 6 1171 1934 29 22 96.986252 to5 1 4 5 1 7 1213 1929 54 27 96.393433 calls 1 4 5 1 8 1280 1929 83 36 93.003616 again5 1 4 5 1 9 1375 1934 124 23 93.003616 tomorra5 1 4 5 1 10 1511 1929 42 28 96.948509 fers 1 4 5 1 11 1565 1938 81 20 96.963516 some5 1 4 5 1 12 1658 1938 80 20 93.295357 more5 1 4 5 1 13 1750 1930 159 36 93.229286 surpriskes5 1 4 5 1 14 1921 1946 25 4 91.392746 --5 1 4 5 1 15 1958 1931 56 28 96.667587 anda 1 4 5 2 0 676 1977 1338 38 -1 5 1 4 5 2 1 676 1985 80 20 96.456284 some5 1 4 5 2 2 768 1985 78 20 96.671844 news5 1 4 5 2 3 859 1977 85 28 96.530495 about5 1 4 5 2 4 955 1985 16 20 96.530495 a5 1 4 5 2 5 982 1977 105 36 93.119667 specials 1 4 5 2 6 1099 1977 136 37 92.987289 boithday5 1 4 5 2 7 1247 1977 112 37 94.532700 party? [telephone message] (Complaint Exhibit C) 6. Ands 1 4 6 1 3 910 2079 38 28 7.226189 I'll5 1 4 6 1 4 960 2079 35 28 92.406929 be5 1 4 6 1 5 1006 2079 28 28 92.406929 in5 1 4 6 1 6 1045 2079 35 28 96.913467 da5 1 4 6 1 7 1091 2088 80 28 96.009903 soup,5 1 4 6 1 8 1183 2079 72 37 96.960121 boys5 1 4 6 1 9 1267 2080 54 27 93.270874 ands 1 4 6 1 10 1331 2079 83 37 91.774651 goils,5 1 4 6 1 11 1426 2080 24 27 96.695885 if5 1 4 6 1 12 1458 2089 56 27 96.521202 you5 1 4 6 1 13 1525 2081 76 27 94.371323 don't5 1 4 6 1 14 1611 2089 98 20 96.881477 comes5 1 4 6 1 15 1720 2081 73 28 93.290314 backs 1 4 6 1 16 1803 2086 123 23 91.627449 tomorra5 1 4 6 1 17 1936 2097 24 4 92.732933 --5 1 4 6 1 18 1971 2081 42 29 97.016022 fer4 1 4 6 2 0 676 2127 1333 39 -1 5 1 4 6 2 1 676 2136 79 19 96.996773 some5 1 4 6 2 2 766 2136 78 19 96.737999 news5 1 4 6 2 3 856 2128 84 27 96.821266 about5 1 4 6 2 4 951 2136 46 19 93.083748 me5 1 4 6 2 5 1007 2127 102 28 89.147751 comin'5 1 4 6 2 6 1121 2127 135 37 92.046623 boithday5 1 4 6 2 7 1267 2133 77 31 93.306244 party5 1 4 6 2 8 1356 2145 23 4 93.041931 --5 1 4 6 2 9 1390 2128 55 28 93.259003 ands 1 4 6 2 10 1456 2129 124 27 93.172913 anudder5 1 4 6 2 11 1591 2129 90 36 88.287918 story [telephone message] (Complaint Exhibit C) PAR. 5. Through the use of the statements and depictions contained in the attached advertisements and in others not specifically set forth herein, respondent has represented, directly or by implication, that children who complete a call to respondent's information service will readily and easily obtain the premium specified in the advertisement.

PAR. 6. In truth and in fact children who complete a call to respondent's information service will not readily and easily obtain the premium specified in the advertisement, because the child must: (1) PHONE PROGRAMS, INC. 979 977 Complaint complete a call to the information service; (2) record an address, given once at the end of the recorded message announcement, to which a request must be sent to the item; (3) obtain a copy of the telephone bill which contains the call to the information service; and (4) send a copy of the bill to the respondent at the proper address. This ordering information is given in a rapid and difficult to follow manner during the course of the recorded message. Therefore, the representation set forth in paragraph five was, and is, false and misleading.

PAR. 7. Through the combined use of the statements and depictions contained in the attached advertisements and telephone messages and in others not specifically set forth herein, respondent has represented, directly or by implication, that children who call the Popeye information service will in most cases hear information about Popeye's birthday.

PAR. 8. In truth and in fact, children who call the Popeye information service will not in most cases hear information about Popeye's birthday, because only one of the 29 episodes in the series of Popeye messages contained information about Popeye's birthday. Therefore, the representation set forth in paragraph seven was, and is, false and misleading.

PAR. 9. In its advertising for its information services for children, respondent has represented, directly or by implication, that children could easily obtain a premium by making a call to the information service. Said advertisements failed to disclose that there are material terms and conditions for obtaining the premium, including but not limited to, the need for a writing implement to transcribe the ordering information. These terms and conditions would be material to the caller in deciding whether to purchase the service. Respondent's failure to disclose these terms and conditions was, and is, a deceptive practice.

PAR. 10. In the course of advertising, promoting, and selling its information services for children, respondent has induced children to call its story service and thereby incur charges, without providing any reasonable means for persons responsible for payment of these charges to exercise control over the transaction. This practice has caused such persons to pay these charges. Respondent's conduct as set forth above has caused substantial injury to consumers that is not Complaint 115 F.T.C.

outweighed by any countervailing benefits to consumers or competition and is not reasonably avoidable by consumers. This conduct was, and is, an unfair act or practice.

PAR. 11. The acts and practices of the respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

PHONE PROGRAMS, INC. 981 977 Complaint EXHIBIT A PRODUCT: P.J. FUNNY BUNNY PHONE LINE vIDEC MON TING LENGTH: :30 STATION: WNYW NM OF AMERICA, INC. MARKET: NEW YORK Y = 330 WEST 42ND STREET. DATE: 03/22/89 TIME: 2:00 PM NEW YORK, NEW YORK 10036 PROGRAM: BEWITCHED (212) 736-2010 CODE #: 0389-3221 Complaint Exhi A (BKG MUSIC) and I've got exciting news for P. J. FUNNY BUNNY: Hey, boys and you! Dial this number now, giris! and my friends and ! will tell you all about our terrifically will receive a special Funny Bunny So join us on our magically fun and become a part of the Funny Bunn: present’ adventures, family, too! Don't wait! Call now! We're hoppin’ to hear from you! FEMALE ANNCR: $2.00 for first Children, get your parents’ (GIGGLES) minute, 45 cents each additional permission before you dial. minute. (MUSIC ENDS) NEW YORK + LOS ANGELES : CHICAGO - PHILADELPHIA : SAN FRANCISCO - BOSTON : DALLAS « WASHINGTON « HOUSTON - MIAMI + DENVER « KARTFORD - SAN DIEG: Matenal supplied by video Monitonng Services of Amenca. inc may be used for internal review. analysis or research ae ceprnaccast % Suone aisolay for 2roht is fortagen Complaint 115 F.T.c.

EXHIBIT B “POPEYE”

Phone Programs, Inc.

Audio Popeye: Shiver me timbers, boys and girls. I gots a secret to tell you.

I gots a brand new phone line story.

Me, Popeye. And all me buddies, of course. A goi, goi, goi.

Olive Oil: Oh, Popeye.

Man with club: Yeah, boys and girls. Call now, and I’ll tell you about our adventures. Plus, every caller gets a special gift.

Olive Oil: That’s right. It’s Popeye’s birthday, but you get the present. Oh, I’m so excited.

Voice: Remember, kids. Call now and celebrate Popeye’s birthday.

Popeye: That’s right, boys and girls. We’re waiting to hear from you.

Other voice: $2 the first minute.

45 cents each additional minute.

Children, get your parents’ permission before you dial.

Video Call Popeye Now! 1-900-909-4 POP Every Caller Gets a Gift.

Call Popeye Now 1-900-909-4 POP Call Popeye Now 1-900-909-4 POP Call Popeye Now 1-900-909-4 POP $2 the first minute.

45 cents each additional minute.

By 900 U.S.

PHONE PROGRAMS, INC. 983 977 Complaint EXHIBIT C “POPEYE” #1 “NO TRAPEZE, PLEASE!” 1:50 _ LIONEL WILSON MUSIC: (POPEYE THEME) POPEYE: Shiver me timbers, boys and goils, it’s your old friend, Popeye the sailor -- wit’ Jots 0’ new stories and surpriskes -- like the time I takes me goil Olive to the coicus ... (MUSIC: CIRCUS MUSIC) OLIVE: Oh, joy of joys, Popeye! The show’s starting! RINGMASTER: (AFTER SFX: FANFARE) And on the flying trapeze -- the one and only -- BLUTO, THE BIRDMAN! ...

POPEYE: Me peepers is deceivin’ me! It’s that swab, Bluto! OLIVE: Popeye! He’s swinging right towards US! SEX: (SLIDE WHISTLE AS TRAPEZE APPROACHES) BLUTO: Hiya, Olive cutie! How about a ride on my trapeze? OLIVE: Scram, you rude dude! I’m with my financee! POPEYE: Swing elsekwhere before I decks you wit’ my fisks! BLUTO: Oh, yeah! TAKE THAT! ...

SEX: (POW! ... POPEYE RIPS THROUGH THE CANVAS) OLIVE: Oh, how desplicable! You’ve knocked Popeye out of the tent! BLUTO: Let’s fly, Baby-doll! Up and away! OLIVE: HELP! HELP! ... (FADES) POPEYE! ... POPEYE: What am I doing’ here - at the refreshkment stand? VENDOR: Hot dogs! Spinach pie! ...

POPEYE: SPINACH PIE? Gimme three! ... (MUSIC: POPEYE THEME) Now I makes mincemeat outta dat flyin’ fink! ... Hey! He’s got Olive two-hundred feets in de air! OLIVE: (AT DISTANCE) HELP! ...

POPEYE: He’s comin’ at me again! (SFX: TRAPEZE APPROACHES) BLUTO: I thought I got rid 0” you! POPEYE: I taught one good tain desoives anudder! SEX: (EXPLOSION AS POPEYE’S FIST CONNECTS) OLIVE: Popeye! He landed in that cannon! (SFX: CANNON SHOT) Now he’s flyin’ through the top of the tent! POPEYE TENT nuthin’ at all! Ca-ca-ca! Would youse like ta swing wit’ me, Miss Oyl? OLIVE: My daring young man on the flying trapeze! POPEYE And would YOUSE like to call again tomorra fer some more surpriskes -- and some news about a special boithday party? ... Complaint 115 F.T.C.

EXHIBIT D “POPEYE” #2 “COUNT TEN, MEN!” _ 1:50 LIONEL WILSON MUSIC: (POPEYE THEME) POPEYE: Avast, Mateys! Popeye da two-fisted sailor here and I’m glad youse called -- ‘cause I wanna tell you dat fisticuffing just ain’t genteel. And dat’s what I told me little nephews when I takes dem to dinner in a restaurank ... (MUSIC -- OUT) ... So remember, fellers -- ALWAYS COUNTS TEN BEFORE USIN’ YOUR FISKS! ...

POOPEYE: Yes, Unca Popeye ...

PIPEYE: Here’s the waiter, Unca Popeye! POPEYE: HEY! Dat’s no waiter! Dat’s BLUTO! BLUTO: Welcome to Bluto’s Beanery! Whaddaya want fer starters, bowlegs? Some ice cold potato soup? (SEX SPLASH!) Ooops! It slipped! (LAUGHS) POPEYE: Hey! I wants to slurp me soup -- not WEAR it! PEEPEYE: Uh-UH! Count ten, Unca Popeye! POPEYE: One - two - three ...

BLUTO: How about a couple 0’ hard-boiled eggs? Here! I’ll crack ‘em for ya! (SEX: EGGS CRACK ON POPEYE’S HEAD) POPEYE: Oh, me delicate dome! PUPEYE: Count ten, Unca Popeye! POPEYE: ... four - five - six ...

BLUTO: How about a nice fresh LOBSTER? It’s so fresh, it’s still ALIVE! ... LAUGHS - SFX: LOBSTER SNAPS CLAW!) POPEYE: He-e-e-ey! Dat’s my nose! POOPEYE: Count ten, Unca Popeye! POPEYE: ... seven - eight - nine ...

BLUTO: And here’s a nice bowl of GREEN salad! ... OOPS! Now wasn’t dat clumsy 0’ me? (LAUGHS) I guess dey’ll all be callin’ ya SPINACH-HEAD! POPEYE: Did I hear dat name what’s muskic to my ears? SPINACH? MUSIC: (POPEYE’S THEME) PIPEYE: Count ten, Unca Popeye! POPEYE: TEN!!! (SEX: “SPLAT” AS POPEYE SOCKS BLUTO -- THEN SOUND OF BLUTO CRASHING INTO TABLE NEARBY) PUPEYE: Gee, Unca Popeye -- looka Bluto! He’s layin’ on dat table over dere covered with gravy! POPEYE: Ya might say Bluto’s ina STEW! Ca-ca-ca! ... And PLL be in da SOUP, boys and goils, if you don’t comes back tomorra -- fer some news about me comin’ boithday party -- and anudder story ...

PHONE PROGRAMS, INC. 985 977 Decision and Order DECISION AND ORDER The Commission having heretofore issued its complaint charging the respondent named in the caption hereof with violation of Section 5 of the Federal Trade Commission Act, as amended, and the respondent having been served with a copy of that complaint, together with a notice of contemplated relief; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission's Rules; and The Secretary having thereafter withdrawn this matter from adjudication in accordance with Section 3.25(c) of its Rules; and The Commission having considered the matter and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 3.25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order: 1. Respondent Phone Programs, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 919 Third Avenue, New York, New York. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER For purposes of this order, the term children or child shall mean a person of age twelve or under.

For purposes of this order, the term information5 1 7 2 1 9 1620 2704 140 34 96.424736 services 1 7 2 1 10 1774 2703 67 45 96.657166 fora 1 7 2 2 0 502 2761 1335 46 -1 5 1 7 2 2 1 502 2761 182 35 96.419914 children shall mean a telephone message accessed through a num- Decision and Order 115 F.T.C.

bered exchange (e.g., 900) for which a fee is charged, consisting of live or recorded statements promoted or sold primarily to children. For purposes of this order, the term premium shall mean any item respondent offers to send to those who call its information service for children.

For purposes of this order, the term information5 1 3 3 1 9 1886 917 139 34 95.828079 service4 1 3 3 2 0 688 974 1339 46 -1 5 1 3 3 2 1 688 974 186 46 91.192207 message shall mean any live or recorded story, program or other communication transmitted to callers of respondent's information service for children.

For purposes of this order, the term videos 1 3 4 1 9 1620 1148 295 35 93.220901 advertisement shall mean any advertisement intended for dissemination on television broadcast, cablecast, home video, or theatrical release. For purposes of this order, the term affiliate includes, but is not limited to, corporations with a majority of shareholders or directors in common with respondent.

It is ordered, That respondent Phone Programs Incorporated, a corporation, its successors, assigns, and affiliates, and its officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, offering for sale, sale or transmission of any information service for children in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, directly or by implication:

A. The ease with which a premium is obtainable; and B. The content of any information service message for children. Il.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, offering for sale, sale or transmission of any PHONE PROGRAMS, INC. 987 977 Decision and Order information service for children in or affecting commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from failing as specified below to disclose, clearly and prominently, whenever an offer of any premium is made, all the material terms, conditions and obligations upon which receipt and retention of the premium is contingent. Such terms, conditions, and obligations shall include, but not be limited to, the number of calls necessary to receive the premium, if more than one, and the need to have a writing implement and paper available to record the necessary information given during the information service message. The disclosure shall be made in a manner understandable to children, and shall be made in the same medium in which the offer of the premium is made and, in addition, in any information service message.

Il.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from disseminating or causing to be disseminated any advertisement in any medium for an information service for children that does not include the following statement:

KIDS,5 1 6 1 1 2 749 2085 87 30 96.510635 YOU5 1 6 1 1 3 848 2085 114 31 96.667458 MUST5 1 6 1 1 4 973 2087 81 30 95.784431 ASKS 1 6 1 1 5 1067 2088 113 31 95.784431 YOURS 1 6 1 1 6 1193 2090 101 29 96.528816 MOM5 1 6 1 1 7 1307 2091 54 29 96.594620 OR5 1 6 1 1 8 1375 2091 85 30 96.158508 DAD5 1 6 1 1 9 1473 2093 87 29 96.800339 ANDS 1 6 1 1 10 1573 2094 79 29 96.611961 GETS 1 6 1 1 11 1663 2095 120 30 96.054810 THEIR4 1 6 1 2 0 635 2132 1194 41 -1 5 1 6 1 2 1 635 2132 243 31 95.967628 PERMISSION5 1 6 1 2 2 890 2135 156 29 96.596184 BEFORE5 1 6 1 2 3 1060 2136 86 30 96.758026 YOU5 1 6 1 2 4 1159 2138 113 29 96.440140 CALL.5 1 6 1 2 5 1297 2139 87 30 96.809128 THIS5 1 6 1 2 6 1399 2140 105 30 95.827835 CALLS 1 6 1 2 7 1516 2141 124 31 95.827835 COSTS5 1 6 1 2 8 1654 2143 175 30 93.736702 MONEY. The above required disclosure shall be presented in a manner designed to ensure clarity and prominence. If the disclosure is made in the manner described below, it will be considered as complying with this provision of the order.

A. In any video advertisement, the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. The disclosure shall appear immediately following the first video presentation of the 900 telephone number, but in any event shall begin within the first fifteen (15) seconds of the advertisement. Decision and Order 115 F.T.C.

The audio portion shall be presented in a slow and deliberate manner. Each line of the video portion shall be at least as large as one-half of the size of the largest presentation of the 900 number that appears on the screen during the advertisement, shall be of a color or shade that readily contrasts with the background, and shall appear on the screen for the duration of the audio disclosure. B. In any print advertisement, the disclosure shall be parallel to the base of the advertisement and shall be placed in close proximity to the 900 number. All lines of the disclosure when taken together shall be the same size or larger than the largest presentation of the 900 number, but in any event the type size of each line of the disclosure shall be no less than 12 point, bold-face type. C. In any radio advertisement, the disclosure shall be presented in a slow and deliberate manner and shall appear immediately following the first presentation of the 900 telephone number, but in any event it shall begin within the first fifteen (15) seconds of the advertisement.

Nothing contrary to, inconsistent with, or in mitigation of the above required statement shall be used in any advertisement in any medium.

IV.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from disseminating or causing to be disseminated any advertisement in any medium for an information service for children that does not include a disclosure of the cost of a call to the information service. This disclosure shall be presented in a manner designed to ensure clarity and prominence. In any video advertisement, the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement.

PHONE PROGRAMS, INC. 989 977 Decision and Order V.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, shall include, at the beginning of every information service message, an introductory preamble that states in a slow, deliberate and clear manner the following: THIS5 1 5 1 1 2 750 1151 237 31 96.447449 TELEPHONES 1 5 1 1 3 1003 1153 105 30 96.563530 CALLS 1 5 1 1 4 1123 1154 124 31 96.536713 COSTS5 1 5 1 1 5 1264 1155 158 31 96.319939 MONEY.5 1 5 1 1 6 1453 1157 36 29 96.512512 IF5 1 5 1 1 7 1503 1157 88 31 96.671837 YOU5 1 5 1 1 8 1606 1158 57 30 95.706871 DO5 1 5 1 1 9 1678 1159 85 30 95.706871 NOT5 1 5 1 1 10 1777 1160 113 30 96.137917 HAVE4 1 5 1 2 0 626 1199 1263 40 -1 5 1 5 1 2 1 626 1199 116 30 96.980980 YOURS 1 5 1 2 2 758 1199 101 31 96.589462 MOM5 1 5 1 2 3 875 1200 55 30 96.098366 OR5 1 5 1 2 4 944 1201 117 30 96.017677 DAD'S5 1 5 1 2 5 1078 1202 252 37 95.615410 PERMISSION,5 1 5 1 2 6 1346 1205 116 30 95.615410 HANG5 1 5 1 2 7 1478 1205 51 30 96.705750 UP5 1 5 1 2 8 1543 1206 97 30 96.815552 NOW5 1 5 1 2 9 1654 1208 88 29 96.089226 ANDS 1 5 1 2 10 1758 1208 131 31 96.737495 THERE4 1 5 1 3 0 625 1247 749 34 -1 5 1 5 1 3 1 625 1247 102 29 96.728996 WILL5 1 5 1 3 2 739 1249 51 28 94.888611 BE5 1 5 1 3 3 802 1249 58 29 96.572525 NO5 1 5 1 3 4 872 1249 167 30 95.238937 CHARGES 1 5 1 3 5 1051 1251 78 28 96.397385 FOR5 1 5 1 3 6 1141 1252 88 29 96.321854 THIS5 1 5 1 3 7 1243 1252 131 29 96.219910 CALL. VI.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist from billing or causing to be billed, or collecting any funds or causing any funds to be collected, for any call to any information service for children terminated within no less than five (5) seconds of the end of the introductory preamble, as required by paragraph V of this order.

Provided, in the event that any provision of a federal law or regulation of the Federal Communications Commission is in actual4 1 7 2 3 0 538 2111 1338 55 -1 5 1 7 2 3 1 538 2111 165 37 96.492325 conflict with any requirement imposed by paragraphs V or VI of this order, compliance with such law or regulation shall not be deemed to be a violation of this order. As used herein, actual5 1 7 2 5 11 1597 2237 167 36 96.797455 conflict shall mean that it is impossible for respondent to comply with both the law or regulation and paragraphs V and VI of this order. VIL.

It is further ordered, That respondent Phone Programs Incorporated, its successors, assigns, and affiliates, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, do forthwith cease and desist Decision and Order 115 F.T.C.

from inducing children to call its information service for children and thereby incur charges, without providing any reasonable means for the person responsible for payment of such charges to exercise control over the transaction. For purposes of this paragraph, if the respondent does not provide, prior to placement of any call by a child, a reasonable means for the person responsible for payment to avoid unauthorized calls, the provision of a reasonable means to exercise control over the transaction shall be the use of the respondent's best efforts to ensure that one-time refunds or credits are provided upon request for unauthorized calls made by children, as specified below. Best efforts shall include at least the following: A. Contracting with the appropriate interstate common carrier or local exchange carrier to:

(1) Identify in all telephone bills containing charges for calls to respondent's information service for children each telephone call to such service by the characters CHILDS 1 5 1 3 7 1435 1618 160 41 96.082283 CALL; (2) Place in all telephone bills containing charges for calls to respondent's information service for children, clearly and prominently in close proximity to the itemization of those charges, a toll-free or local telephone number specified to be used for consumer inquiries concerning charges on the telephone bill; provided, that a general billing inquiry telephone number for customer inquiries concerning charges on the telephone bill shall satisfy this requirement; (3) Refer all customers who call the toll-free number inquiring about the charges for respondent's information service for children to their local exchange carrier for information regarding the availability of blocking in their jurisdiction; and (4) Provide a one-time prompt and full credit or refund at the customer's request for all such calls, whether such request is made to the toll-free or local telephone number specified herein or in any other manner; provided, that respondent must contract with the carrier to provide a second prompt and full credit or refund to any customer who requests the first credit or refund during a period of the billing cycle where unauthorized calls have been made, but do not yet appear on the customer's bill, and subsequently requests a second credit or refund for any additional unauthorized calls made before the PHONE PROGRAMS, INC. 991 977 Decision and Order date of the first request for a credit or refund; provided, that if the interstate common carrier utilized by respondent employs local exchange carriers to provide billing inquiry services, respondent shall be in compliance with subparagraphs A(3) and (4) of this paragraph if its contract with the interstate common carrier provides that the interstate common carrier notify each local exchange carrier of the interstate common carrier's policies to:

(i) Provide the customer with information regarding the availability of blocking 900 number calls; and (ii) Provide upon request one-time refunds or credits for unauthorized calls by children, as provided in subparagraph A(4) of this paragraph.

B. In the event that respondent receives any information that the interstate common carrier has failed to fulfill its obligations under the contract required by subparagraph A of this paragraph, immediately notifying the interstate common carrier:

(1) Of the existence of the alleged failure(s); (2) Of the carrier's responsibility to fulfill its obligations under the contract;

(3) Of the need to investigate and correct all past failures; and (4) That if a pattern or practice of failures continues, respondent will terminate the use of said carrier for any information service for children; and C. Terminating the use of said interstate common carrier for any information service for children, in the event that the interstate common carrier does not correct all past failures or continues to fail to fulfill its obligations under said contract. D. Compliance with the requirements set forth in subparagraphs A - Cof this paragraph is deemed to be satisfactory compliance with this paragraph.

Provided, that for purposes of this paragraph, the mere inclusion of any audio or video disclosure relating to parental authorization in advertisements or information service messages is expressly deemed not to be a reasonable means, prior to placement of any call by a Decision and Order 115 F.T.C.

child, for the person responsible for payment to avoid unauthorized calls.

Vill.

It is further ordered, That for three (3) years from the date of service of this order, respondent shall maintain and upon request make available to the Federal Trade Commission for inspection and copying: (1) all advertisements for information services for children and all corresponding information service messages; (2) a record of all credit or refund requests made for charges billed for respondent's information services for children; (3) all documents relating to compliance with paragraph VII of this order; and (4) all consumer complaints and dispositions thereof relating to respondent's information services for children.

IX.

It is further ordered, That respondent shall notify the Commission at least thirty (30) days prior to any proposed change in the corporation such as dissolution, assignment or sale resulting in the emergence of a successor corporation or corporations, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of this order. X.

It is further ordered, That respondent shall forthwith distribute a copy of this order to each of its operating divisions and any carrier(s) or other entities providing billing and/or collection service for its information services for children.

XI.

It is further ordered, That respondent shall, within sixty (60) days after service of this order and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

AMERICAN PSYCHOLOGICAL ASSOCIATION 993 993 Complaint