Hooked on Phonics Agrees to FTC Advertising Rules : Regulation: The O.C.-based company is barred from making unsubstantiated claims about the program’s ability to teach reading.

Under an agreement disclosed this week between the makers of the reading program Hooked on Phonics and the Federal Trade Commission, the manufacturer must abandon its advertising campaign or conduct far more research into the program’s effectiveness--and disclose any evidence of failure.

Orange County-based Gateway Educational Products, maker of Hooked on Phonics, agreed to a settlement that bars the parent company from making unsubstantiated claims about the program’s ability to teach people to read. The settlement, which was signed Aug. 29, was made public Wednesday by the commission.

The FTC had charged that Gateway was making sweeping, unproven promises that the program could teach anyone to read, regardless of their limitations. Gateway admitted no wrongdoing in the settlement, and will pay no penalty, said Christian S. White, acting director of the commission’s bureau of consumer protection.

“They offered a one-size-fits-all solution--you have reading problems, this is the product,” White said. “Gateway’s evidence just doesn’t back up these broad, sweeping claims.”

The claims, according to the commission, included: Hooked on Phonics can teach even those with reading problems, such as dyslexia; that the product will improve users’ reading levels and classroom grades significantly; that Hooked on Phonics can teach reading at home, without a tutor; that the product teaches the comprehension of the meaning of words, and that Hooked on Phonics has helped almost 1 millionpeople learn to read at home.

The commission also said that testimonials by people who have taken the program are used misleadingly in commercials, not proving the experiences of these users were typical of the average user, which is a violation of federal law.

Neither the commission nor Gateway would discuss specific steps that the company must take if it wants to continue its highly successful sales pitch. Gateway spent $35 million on advertising in 1993 and recorded $60 million in sales.

On Wednesday, Gateway released the results of a yearlong study of several first-grade classrooms in the Inglewood Unified School District. Although the results showed vast improvement in the students’ reading skills, the FTC apparently did not find the results adequate to support Gateway’s broad claims of success.

In addition to calling for more research to back up Gateway’s marketing campaign, the settlement requires the company to make available to FTC officials all research findings, including complaints from consumers, “that contradict, qualify or call into question” its claims.

Hooked on Phonics emphasizes identifying sounds with letter symbols. It is made up of coordinated workbooks, cassette tapes and flash cards. The learner listens to the tape while following in the book to hear the correct pronunciation of letters and words. The program kit costs about $230.

Some reading experts are not so sure that the program is as effective as testimonials claim.

Alan Farstrup, executive director of the International Reading Assn. in Newark, Del.--a not-for-profit education group--said he is concerned that the program overstates its benefits as it makes its money from illiterate people who tend to be poor. He said the members of his organization are concerned that Hooked on Phonics “will give a black eye” to groups promoting reading ability.

Gateway officials released a statement Wednesday, refusing further comment.

“The Federal Trade Commission has not challenged the effectiveness of the Hooked on Phonics program in helping large numbers of consumers, including those appearing in its advertisements,” read the statement. “Gateway has worked out advertising ground rules with the FTC to which we are strongly committed.”

Candace Poindexter, who runs a reading master’s degree program at Loyola Marymount University, said that although Hooked on Phonics may be effective in helping adults to read, it goes against California Department of Education reading framework for learning to read. Children should have a literature-based approach to reading that emphasizes meaning rather than just sounding out words, Poindexter said.