TV Firm to Pay $1.5 Million to Settle Ad Claims

An Arizona television marketing company agreed last week to pay $1.5 million to settle claims by the Federal Trade Commission that three of its half-hour TV commercials were deceptive.

Local promoter Tony Hoffman, once a television proponent of no-money-down real estate deals, “was involved in” producing one of the TV commercials--for the “EuroTrym Diet Patch”--according to an affidavit he filed in a separate lawsuit. But Hoffman was not a target of the FTC action or a party to the settlement.

Under the settlement, Twin Star Productions, Inc., based in Scottsdale, and five of its officers agreed to pay $1.5 million into a fund for possible consumer refunds for products sold in three commercials that the FTC said were deceptive. The company also agreed to stop running the commercials and to alter the format of future ads. Twin Star did not admit to any violations of law.

Twin Star also reached a similar settlement with the state of Texas. Under that agreement, Twin Star agreed to pay about $95,000 in legal costs, make refunds to consumers, and stop selling those products in Texas, said Craig Jordan, a Texas assistant attorney general.

The FTC claimed the half-hour ad for the diet patch--as well as others for alleged treatments for baldness and impotence looked too much like ordinary television programs instead of paid advertising.

“Infomercials” have proliferated since the federal government in the early 1980s lifted restrictions on how many minutes of ads can be run during an hour of television. The infomercials, often in the format of talk shows or news programs, mostly appear late at night on independent or cable television channels.

Hoffman was one of many TV real estate promoters in the mid-1980s, but he had to liquidate his company to pay off creditors in 1988, after being battered by problems that included thousands of customers asking for refunds on home study courses they bought. Hoffman could not be reached for comment.