STP Corp. has agreed to pay $700,000 to settle Federal Trade Commission charges that it made false, deceptive and unsubstantiated claims in advertising STP Oil Treatment and STP Double Oil Filters, the agency said yesterday.
The settlement, approved yesterday by U.S. District Court Judge Constance Baker Motley in New York City, terminates a civil penalty suit filed by the Government charging STP with violating a 1976 consent order, which itself had settled a false advertising complaint.
Under the terms of these settlement announced yesterday, STP will pay a civil penalty of $500,000, the largest such penalty the FTC said it had ever imposed for allegedly false and deceptive advertisements.
STP also must spend $200,000 to place "notices" in three newspapers and 11 magazines telling readers that it had agreed to a $700,000 settlement because of an FTC investigation into "certain allegedly inaccurate past advertisements for STP's oil additive."
The company is to place quarter or third-of-a-page "notices" in The New York Times, The Wall Street Journal, and The Washington Post, and full page ads in this magazines, which include People, Newsweek, Esquire, Guns and Ammo and National Geographic.
However, none of the "notices" will be placed the magazines the FTC told the court contained the alleged illigal ads, such as Car & Driver, Motor Trend, Hot Rod, Popular Mechanics, and Playboy, nor will any ads be place on television. The agency's civil penalty suit cited ads appearing in 30 magazines and commercials on 20 different television programs.
Albert H. Kramer, director of the FTC's bureau of consumer protection, said the "notice" required was a step forward in the concept of corrective advertising, where an advertiser is required to "undo the harm" caused by past deceptive ads by communicating to the public the corrected facts.
"We believe that the notice, by also communicating the fact that prior statements were made in violation of law, goes a long way toward correcting any lingering misimpressions caused by the original advertisements," he said.
He said the device would be used again in appropriate cases but added, "we view it as only one of a range of options we will attempt to explore to remedy false and deceptive advertising."
The FTC has been looking into STP's advertising since 1971.The 1976 consent order, under which STP agreed to cease making certain claims, to avoid making false claims in future advertising, and to support all future claims for STP Oil Treatment with reliable evidence, had been opposed by some staff and two commission members who said it was "to weak."
The FTC's suit charged that STP had violated the 1976 order in two respects:
STP Oil Treatment ads in 1976 and 1977 cited road tests showing a reduction in oil consumption in cars by more than 20 percent with the use of STP. In fact, the agency charged, there may have been no reduction in oil consumption at all in the tests, and the 20 percent claim was apparently due to incorrect methods of computation.