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Thousands of consumers who bought Steel Tec toy vehicles are eligible for refunds under a settlement agreement between the Federal Trade Commission and Azrak-Hamway International, Inc., which distributes the toys through its Remco Toys Division. The FTC charged that TV ads for the toys, including a "Formula 1" race car, an "Off Road Super Sport" vehicle and a "Hypersonic Fighter" airplane, used off-camera techniques to show the vehicles speeding, flying or peeling out of sand or dirt under their own power -- performance capabilities the toys don't actually have. The packaging for the toys also was deceptive in overstating the number of models that could be constructed at the same time, according to the FTC.

To settle the FTC charges, Azrak-Hamway, its advertising agency, Starwood Advertising, Inc., and their principal officers have signed agreements that would prohibit the use of similar deceptive demonstrations and certain other misrepresentations. In addition, Azrak-Hamway would notify television stations that ran the allegedly deceptive ads of the FTC action, and advise them of the availability of guidelines developed by the Council of Better Business Bureaus' Children's Advertising Review Unit (CARU) that many industry members use to screen children's advertising. Finally, Azrak-Hamway would be required to offer consumers who bought Steel Tec vehicles a full refund. Consumers who feel they have been misled and who would like a refund should contact the company at 1-800-243-2961 to receive a refund application.

Azrak-Hamway is based in New York City. Starwood Advertising, which developed the television advertising campaign for the toys, is based in Aspen, Colorado. Marvin Azrak and Ezra Hamway, owners and principal officers of Azrak-Hamway, and Les Towne, President of Starwood, also are named in the FTC case. The challenged ads ran in 1993 and 1994 on dozens of broadcast affiliates and independent stations nationwide.

"Consumers have won a real victory with this settlement," said Jodie Bernstein, Director of the FTC Bureau of Consumer Protection. "Consumers who bought toys based on deceptive ads can get a full refund. And the larger goal of nondeceptive advertising will be served by assisting more television stations in getting useful industry guidance about how better to screen ads aimed at children in the future. This case employs innovative industry-government cooperation to help reduce deceptive ads directed to a young, but influential, audience."

According to the complaint detailing the FTC allegations, Azrak-Hamway and Starwood Advertising developed television commercials for the Steel Tec Construction System vehicles showing them moving independently in dramatic action sequences: propellers and rotors spin on a hovering helicopter; the sport vehicle peels out of a pile of sand and speeds away; the hypersonic fighter plane flies across the screen; and the dump truck backs up and dumps its cargo. Packaging for the vehicles tout battery-powered motors included with the toys.

The ads appeared to be unaltered depictions of the vehicles performing under their own power, according to the FTC complaint. In fact, the vehicles in the ads were controlled by hidden wires or tubes and were manipulated off- screen to give the appearance of independent action. In actual use, the vehicles could not perform as they had in the ads, even with the motorized components, the FTC alleged. Thus, the ads were deceptive and misleading, according to the complaint.

In addition, several vehicles, including the "Sand Buggy," the "Harley- Davidson Electra Glide" motorcycle, the "Dozer" and the dump truck were shown in use on dirt or sand. According to the complaint, this representation that the toys could be used on such surfaces was false. The "Helpful Hints Manual" contained in the toy packages states: "NEVER OPERATE YOUR VEHICLE ON GRASS, DIRT, SAND, CARPET OR WATER AS THIS MAY RESULT IN DAMAGE TO YOUR VEHICLE."

The FTC also charged that Steel Tec packaging was deceptive. Steel Tec Construction System vehicles come in "kits" containing small metal parts used to assemble or construct the vehicles. According to the Commission complaint, the Steel Tec packages showing various vehicles side-by-side and stating, for example, "Build 9 or more models individually with this set," misrepresented that the packages contained enough pieces to construct the total number of vehicles shown on the box without having to disassemble one before constructing another.

Under the proposed settlement, announced today for public comment, Azrak-Hamway would refund the purchase price of Steel Tec toy vehicles, plus postage, to consumers who return the toys to Azrak-Hamway and request a refund, for up to 180 days after the agreement is final.

The toys range in price from about $9 to about $40. The company will mail a letter to all Steel Tec purchasers that it can identify, notifying them of the Commission's action and of the availability of refunds. Azrak-Hamway also would be required to send a letter to every television station that aired the commercials, disclosing the FTC settlement and advising them of the availability of the Guidelines on Children's Advertising, published by CARU. These guidelines are used by many industry members to screen child- directed advertising.

In addition, Azrak-Hamway, Starwood, Marvin Azrak, Ezra Hamway and Les Towne would be prohibited from misrepresenting the performance of any toy, including through the use of mock-ups, props, alterations or any other undisclosed technique. The settlement with Azrak-Hamway and its officers also contains provisions that would prohibit them from misrepresenting the number of toys contained in, or that can be constructed from, parts in toy packages.

NOTE: A consent agreement is for settlement purposes only and does 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 $10,000.

The Commission vote to announce the proposed consent for public comment was 5-0. The complaint and proposed consent will be published in the Federal Register and will be subject to public comment for 60 days, after which the Commission will decide whether to make them final. Comments should be addressed to the Office of the Secretary, FTC, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

The Federal Trade Commission has developed a brochure for consumers and their children, "Toy Ads on TV," and a guide for pre-teen consumers, "The Real Deal -- Playing the Buying Game." Free copies of the brochures and copies of the complaints and proposed consent agreements in this case are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY 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. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at:

(FTC File No. 952 3188)