FTC Accepts Settlements of Charges that "Alternative" Cigarette Ads Are Deceptive

Santa Fe Natural Tobacco Company, Inc., based in Santa Fe, New Mexico, and Alternative Cigarettes, Inc., based in Buffalo, New York, have agreed to settle Federal Trade Commission charges that ads for their cigarettes are deceptive. Santa Fe markets "Natural American Spirit" tobacco cigarettes, and also sold tobacco-free herbal cigarettes. Alternative Cigarettes markets "Pure" and "Gold" tobacco cigarettes, as well as "Herbal Gold" and "Magic" herbal cigarettes. The FTC alleged that the two companies implied in their advertisements, without a reasonable basis, that their tobacco-containing cigarettes are safer to smoke than other cigarettes because they contain no additives. The Commission also alleged that Alternative Cigarettes falsely implied that smoking its herbal cigarettes did not pose the health risks associated with smoking tobacco cigarettes. Under separate settlements, which the FTC has accepted for public comment, the companies have agreed to disclose prominently in future ads that make a "no additives" claim: "No additives in our tobacco does NOT mean a safer cigarette." Both companies have also agreed to disclose prominently on packages and in ads for herbal cigarettes that: "Herbal cigarettes are dangerous to your health. They produce tar and carbon monoxide."

According to Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, "These cigarettes are marketed with a 'natural' aura, but they're neither healthy nor safe. The new disclosures should make it clear that herbal cigarettes and cigarettes without additives are not safe to smoke. The fact is, there's no such thing as a safe smoke."

According to the FTC's complaints, Santa Fe and Alternative Cigarettes represented that because their tobacco cigarettes contain no additives, they are less hazardous than otherwise comparable cigarettes that contain additives. They did this through a variety of statements, including Alternative Cigarettes' assertion that "Native Americans smoked all-natural tobacco without the ills that are associated with smoking today." The complaints allege that the two companies did not have a reasonable basis for the representations at the time they were made. Among other reasons, the FTC alleged, the smoke from the Pure, Gold and Natural American Spirit cigarettes, like the smoke from all cigarettes, contains numerous carcinogens and toxins, including tar and carbon monoxide.

The complaint against Alternative Cigarettes also charged that the company falsely represented that smoking its Herbal Gold and Magic herbal cigarettes does not pose the health risks associated with smoking tobacco cigarettes. According to the complaint, Herbal Gold and Magic cigarette smoke, like smoke from tobacco cigarettes, contains numerous carcinogens and toxins, including tar and carbon monoxide. Herbal cigarettes, because they do not contain tobacco, are not statutorily required to bear a Surgeon General's warning and, in all but a few states, are not subject to laws that bar tobacco sales to minors.

The proposed consent orders address the deceptive "no additive" claim by requiring that both companies include a clear and prominent disclosure that: "No additives in our tobacco does NOT mean a safer cigarette" in advertisements that make a "no additives" claim. The disclosure is not required if the companies have scientific evidence demonstrating that their "no additives" cigarettes pose materially lower health risks than other cigarettes.

In addition, the proposed settlements would require both companies, on packaging and in advertisements that represent that an herbal smoking product has no tobacco, to include a clear and prominent disclosure that: "Herbal cigarettes are dangerous to your health. They produce tar and carbon monoxide." The disclosure is not required if the companies have scientific evidence demonstrating that their herbal smoking products do not pose any health risks.

The Alternative Cigarettes order also prohibits it from claiming that any herbal smoking product does not present the health risks associated with smoking tobacco cigarettes, or from making any other claim about the health risks associated with the use of any herbal smoking product unless the claims are true and the company has scientific evidence demonstrating its claims.

The proposed settlements would also require Santa Fe and Alternative Cigarettes to notify distributors and retailers that they should stop using existing ads and promotional materials that make the challenged claims and would require the companies to stop doing business with them if they do not do so.

The Commission vote to accept the two separate proposed consent agreements for public comment was 5-0. Announcements regarding the proposed consent agreements will be published in the Federal Register shortly. The agreements will be subject to public comment for 30 days, (until May 30, 2000) after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent agreements and analyses of the proposed order to aid public comment in the Santa Fe Natural Tobacco Company and the Alternative Cigarettes matters are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No.: 992-3026 -- Santa Fe Natural Tobacco Company, Inc.)
(FTC File No.: 992-3022 -- Alternative Cigarettes, Inc.)