NOVEMBER 1995 · VOLUME 16 · NUMBER 11
N A M E S I N T H E N E W S
NOVEMBER 1995 · VOLUME 16 · NUMBER 11
N A M E S I N T H E N E W S
The Federal Trade Commission (FTC) alleged in early October that a spermicidal jelly company falsely claimed that one out of six condoms fail.
The charges arise from an advertising campaign for K-Y PLUS Nonoxynol-9 Spermicidal Lubricant, a product of Skillman, New Jersey-based Johnson & Johnson Consumer Products, Inc. The disputed claims were derived from a report that estimated that 18.5 percent of high-risk couples -- who use condoms but who are less prone to use them correctly -- will experience an accidental pregnancy over a one-year period.
FTC staff members charged that the statistics cited in K-Y ads do not represent a per-condom failure rate. This and similar claims were included in a 1994 advertising campaign. The FTC has obtained a settlement agreement from the company to resolve charges stemming from the campaign. Corporate officers of Johnson & Johnson entered an agreement to settle the allegations, pledging to have competent and reliable scientific evidence for any future claims.
"There was no intent to imply that condoms are defective," a company statement says.
In fact, 12 percent of women in typical couples who use condoms for birth control will become pregnant within a year. Assuming perfect, consistent use, the per-couple failure rate drops to 3 percent.
NationsBank Sued for Bias
Lawyers for 11 African-Americans in the Washington, D.C. area filed a class action suit in federal court in September 1995, charging that NationsBank intentionally discriminated against African-American applicants for mortgage loans.
The suit alleges that the bank applied underwriting standards differently to white and black loan applicants, requiring black applicants to meet higher standards.
A NationsBank spokesperson calls the allegations baseless and says the bank has a sterling record of lending to African-Americans. The suit paints a different picture.
Plaintiffs Ronald and Bridgette Lathern both held good jobs with the federal government. Although they qualified for a $140,000 loan, the complaint alleges that NationsBank refused to approve a loan because Mrs. Lathern had a handful of late payments on her credit report. The bank refused to listen when Mrs. Lathern tried to explain the late payments, despite bank underwriting guidelines that say that adequately explained late payments need not disqualify an applicant. The Latherns obtained a loan from another bank, but not before they had lost the chance to buy the house they wanted.
The Lawyers' Committee for Civil Rights (LCCR), which brought the complaint, argues that such cases documented in the suit are supported by statistical evidence showing that -- even controlling for income levels -- NationsBank is five times more likely to reject black applicants for home mortgage loans than whites.
"This complaint puts the banking world on notice that enforcement of our nation's fair lending laws will be pursued just as vigorously by private plaintiffs as by the Department of Justice," says LCCR's John Relman.
Facsimile Pricing
Two Japanese paper companies, Mitsubishi Paper Mills Ltd. and New Oji Paper Co. Ltd., plead guilty in late September 1995 to involvement in a fax paper price-fixing conspiracy. The companies agreed to pay fines totaling more than $3.5 million.
The charges, which must be approved by the court, are part of a U.S. Justice Department ongoing antitrust investigation into international cartel practices in the thermal fax paper industry. So far, the investigation has led to more than $10 million in fines. "This prosecution shows that the Department will not tolerate price fixing by either domestic or foreign firms," says Anne K. Bingaman, assistant attorney general in charge of the Antitrust Division.
Mistubishi and Oji representatives did not respond to requests for comment.
The Justice Department charged in U.S. District Court in Boston that Mitsubishi Paper Mills and New Oji Paper Co., both based in Tokyo, conspired to fix prices of thermal fax paper sold in the United States in the early 1990s, raising prices by approximately 10 percent.
Herculean Asbestos Fine
Hercules Inc., the Wilmington, Delaware-based chemical manufacturer, will pay a record fine to settle allegations that it improperly handled asbestos during demolition of a building near Roanoke, Virginia in 1992 and 1993.
Hercules agreed to pay $1.2 million, the largest settlement ever under the Clean Air Act's asbestos regulations, according to an October 1995 consent agreement.
Federal officials alleged that Hercules and contractor Carver Massie Carver failed to follow asbestos removal rules while demolishing a Hercules building in Covington, Virginia. Officials charged that Hercules failed to notify the Environmental Protection Agency about the demolition, adequately wet the asbestos and dispose of asbestos waste in a timely manner.
Exposure to asbestos fibers can lead to cancer and asbestosis, a disease marked by scarring of the lungs. To prevent the spread of fibers, federal standards require asbestos to be wet during removal.
"We are going to pay the fine and move forward to redouble our efforts in asbestos compliance," says Hercules spokesperson Amy Binder.
-- Russell Mokhiber