June 4th, 2010
01:04 PM ET

Kellogg settles Rice Krispies false ad case

By Saundra Young
CNN Senior Medical Producer

For the second time in a year, cereal giant Kellogg is settling false advertising charges from the Federal Trade Commission. The FTC announced that the leading cereal maker's claims that Rice Krispies boosts a child's immunity with "25 percent Daily Value of Antioxidants and Nutrients – Vitamins A, B, C and E" were "dubious" and ordered the company to discontinue all advertising stating such. Kellogg has agreed to the order.

Last April, the Kellogg Company settled FTC charges over false advertising claims for another popular breakfast cereal Frosted Mini-Wheats. The national ad campaign claimed the cereal was clinically shown to improve kids' attentiveness by nearly 20 percent. The FTC found the clinical studies actually showed that only half the children who ate the cereal had improved attentiveness and that very few–only 1 in 9 - were 20 percent more attentive. That settlement barred Kellogg from making these claims, and from misrepresenting test results in any breakfast or snack food products.

"We expect more from a great American company than making dubious claims – not once, but twice – that its cereals improve children's health," said FTC Chairman Jon Leibowitz. "Next time, Kellogg needs to stop and think twice about the claims it's making before rolling out a new ad campaign, so parents can make the best choices for their children."

Now the FTC's is modifying its original order and barring Kellogg from making any misleading or unsubstantiated health-related claims about any of the food products the company  sells –unless there is scientific evidence to back those claims.

"What is particularly disconcerting to us," said FTC Commissioner Julie Brill, "Is that at the same time Kellogg was making promises to the commission regarding Frosted Mini-Wheats, the company was preparing to make problematic claims about Rice Krispies"

Kellogg released a statement: "Kellogg Company has a long history of responsible advertising. We stand behind the validity of our product claims and research, so we agreed to an order that covers those claims. We believe that the revisions to the existing consent agreement satisfied any remaining concerns."

The company has signed the FTC order, which is just like a court order and is legally binding. If the order is violated in any way, the company could be fined up to $16,000 per violation. The definition of violation can vary, for example, from every time a commercial airs touting these claims, to every box of cereal that remains of the shelf containing the potentially misleading wording. The FTC says violations can often lead to hundreds of millions of dollars in penalties. Companies are required to provide information on how they are complying with the Agency's Bureau of Consumer Protection's Enforcement Division, which is constantly checking to see whether companies are complying with FTC orders.

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