FTC Agreements Protect Consumers from Misleading Coupon and Rebate Offers

Settlements Reached with Bumble Bee Seafoods, Memtek Products and UMAX Technologies

For Release

 

The Federal Trade Commission has obtained agreements with three companies addressing concerns that recent coupon and cash rebate offers were either false or misleading. Through the first proposed agreement, Bumble Bee Seafoods, Inc. will implement a new coupon program valued at not less than $200,000 to settle Commission charges that a previous coupon campaign violated the FTC Act. That campaign promised consumers they could get seventy-five cents off on their next purchase of tuna, while actually requiring them to buy five cans of tuna in order to redeem each 75-cents off coupon. The second set of agreements settles Commission allegations that Memtek Products, Inc., which sells Memorex brand products, and UMAX Technologies, Inc., a seller of computer scanners, in many instances sent rebates to their customers between one and five months later than promised. Under these settlements, both companies would be prohibited from violating promised delivery dates in the future, and would be required to send all rebates within the time they promised or within 30 days, if no time is specified.

 

"Cents-off deals should make sense to consumers," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Companies that offer savings through coupons and rebates have an obligation to say what they mean and mean what they say."

 

Bumble Bee Seafoods, Inc.

 

Nationally known as one of the major producers and sellers of canned tuna in the United States, Bumble Bee Seafoods, Inc. is based in San Diego, California. While the company markets many different types of tuna products that vary by size and content, the Commission's complaint focused specifically on one coupon promotion that ran nationwide in 1998.

In this promotion, the face of the can label indicated that consumers would find a coupon on the inside of the label enabling them to save seventy-five cents on their next Bumble Bee purchase. Because the coupon was printed on the inside of the label, consumers were only able to read the details of the offer once they had bought the product and removed the label at home. Once they did this, they found that they were required to purchase five cans of tuna in order to redeem the coupon. According to the FTC's complaint, the coupon campaign misled consumers into believing that they only had to purchase a single can of tuna to redeem the coupon.

Under the terms of the proposed agreement, Bumble Bee would be prohibited from misrepresenting the terms or conditions of any rebate offer in the future, and also would be required to disclose "clearly and prominently and in close proximity to the offer" the number of products that must be purchased in order for consumers to qualify for any rebate.

In addition, within 90 days after service of the order, Bumble Bee would be required to begin a new consumer tear-pad coupon program, available in stores, that would include the national distribution of at least 7.6 million coupons. The coupons would prominently offer seventy-five cents off the purchase of "any two cans or multi-packs" of the company's solid white albacore tuna. The coupons would be redeemable at the place of purchase and would not expire until at least six months after being distributed.

The order further provides that if Bumble Bee's payout to consumers and incurred costs of the promotion do not exceed $200,000 within 90 days after the program ends, the company would be required to pay the difference between the actual cost and $200,000 to the U.S. Treasury. Finally, the order contains standard monitoring provisions to ensure the coupon program is put into place as specified and that the company keeps all relevant records and makes them available to the Commission.

Memtek Products, Inc. and UMAX Technologies, Inc.

Memtek Products, Inc. repackages, advertises, labels and sells printing supplies, PC accessories, optical storage media, and audio and video equipment and accessories, including the well-known Memorex brand of computer diskettes and blank videotapes and audiotapes. According to the Commission's complaint, Memtek represented to purchasers of its package of 100 computer diskettes that they would receive a $29.99 cash rebate within 12 weeks of the company's receipt of the rebate request. In many instances, however, purchasers received their rebates one-to-two months late. In addition, according to the complaint, Memtek represented that purchasers of the company's blank audiotapes and videotapes would receive a $10 gift check within eight weeks of the company's receipt of gift check requests, good at the electronics retailer Best Buy for $10 off of any pre-recorded videotape or compact disc. The complaint alleges that in many instances these checks were sent to purchasers one-to-three months late.

 

UMAX Technologies, Inc. is a wholesale distributor of computer scanners, digital cameras and personal computers. According to the Commission's complaint, UMAX deceptively advertised rebate offers made in connection with its sale of computer scanners. Specifically, the FTC alleged that UMAX represented that purchasers of its Astra 1220P scanner, for example, would receive a cash rebate of $30 - and that purchasers of its Astra 1220S scanner would receive a cash rebate of $50 - within 12 weeks of the company's receipt of the rebate request. The complaint alleges, however, that in many instances purchasers received their rebates one-to-five months late.

The proposed consent orders with Memtek and UMAX Technologies would prohibit the companies from misrepresenting the time in which any cash rebate (or rebate in the form of credit towards future purchases) will be mailed to consumers. The orders also would prohibit Memtek and UMAX from failing to provide such rebates within the time the companies specified, or if no time is specified, within 30 days.

In addition, the orders would prohibit Memtek and UMAX from violating any provision of the FTC's Mail or Telephone Order Merchandise Rule in the future in connection with rebates they might offer in the form of merchandise. The Rule requires that merchandise be delivered within the time specified in the offer, or if no time is specified, within 30 days, unless companies offer consumers the option of consenting to a delay or canceling a rebate request and promptly receiving "reasonable cash compensation" instead of the merchandise originally offered. The proposed orders also contain routine record-keeping and reporting requirements.

The Commission votes to issue the complaints and approve the settlements with Bumble Bee, Memtek and UMAX were each 5-0. An announcement regarding the proposed consent agreements will be published in the Federal Register shortly. The public comment period in the Bumble Bee Seafoods matter is 60 days, until March 10, 2000, and the public comment period in the Memtek and UMAX matters is 30 days, until February 9, 2000, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

--------------------------------------------------------------------------------

NOTE: The consent agreements referenced in this release are for settlement purposes only and do not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent agreements and an analysis of each agreement to aid public comment are available from the FTC's web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

 

Contact Information

Media Contact:
Mitchell J. Katz,
Office of Public Affairs

202-326-2161
Staff Contact:
Donald D'Amato
Northeast Region

Bureau of Consumer Protection
212-607-2802
(Bumble Bee Seafoods)

Michael Dershowitz and Joel Winston
Bureau of Consumer Protection
202-326-3158 or 202-326-3153
(Memtex Products, Inc. and UMAX Technologies, Inc.)

FTC File Nos.:
Bumble Bee Seafoods, Inc., 982-3560;
Memtek Products, Inc., 992-3114;
UMAX Technologies, Inc., 992-3242.