Editorial: Targeting deceptive advertising

Monday, March 6, 2000 | 9:01 a.m.

Many television commercials from long-distance telephone companies imply that consumers can realize a windfall in savings if they just sign on the dotted line. This advertising, though, often omits hidden charges or neglects to mention that the low-cost rates only apply to a narrow window of time on a specific day. In response, the Federal Communications Commission and the Federal Trade Commission announced last week truth-in-advertising guidelines that they want these companies to follow.

"As the phone business becomes more and more competitive, we get more and more complaints from consumers," FCC Commission Chairman William Kennard said. For instance, between Jan. 1, 1998, to June 30, 1999, the federal government received almost 3,000 complaints about deceptive advertising by long-distance phone companies. Both consumer groups and trade organizations agreed that the guidelines were a positive step.

Essentially the new policy will require that all claims, including costs, be truthful. In addition, all costs borne by consumers must be provided, including monthly fees, minimum charges per call and universal service charges. Also, the information has to be disclosed plainly so that the customer can't miss it.

Still, Rep. Nita Lowey, D-N.Y., isn't pleased with just guidelines, she wants strict regulation over advertising. Lowey told Gannett News Service that the FCC and FTC guidelines "are merely roadmaps" while her bill would give federal regulators a "hammer." Federal regulators, though, should be careful not to use a hammer, especially in a deregulated market. After all, the deregulation of the telecommunications industry created an incentive for companies to offer a wide variety of new phone services -- such as cellular phones -- that may not have taken hold in a highly regulated market. A hammer sometimes can do more harm than good.

Federal regulators admittedly have taken a middle ground, but members of Congress should wait and see if it works. This isn't to suggest that government should be a bystander. In fact, federal regulators do have some authority currently to oversee advertising. For instance, the FCC last week imposed a $100,000 penalty on MCI WorldCom over questions regarding its advertising. If the complaints continue to persist, however, then legislation should be sought giving federal regulators more teeth over long-distance companies. But for now, at least, let's give the guidelines a chance.