FTC STUDY: RETAILERS SELLING 'R' MOVIES TO TEENS 2004-09-06 (2)

LIZA CASABONA / Additional reporting: Dan Alaimo

WASHINGTON -- DVD and video game retailers need to study more to pass their next exam on age-restricted movie titles, according to a report released by the Federal Trade Commission here.

The agency released its first report card on the marketing practices of sell-through retailers for age-restricted products in the entertainment industries recently, using mystery shoppers to test how often underage kids are able to purchase R-rated DVDs.

"We've been looking across the country at how well people actually enforce these programs and enforce age restrictions," said Mark Eichorn, attorney with the FTC's Bureau of Consumer Protection.

The report said 81% of teen shoppers who were part of the mystery shopper test were able to buy R-rated movies at a DVD retailer. By contrast, the report noted significant compliance on the part of theaters to limit youth access to R-rated movies: Only 36% of teen movie-goers were able to purchase tickets to see R-rated films.

Currently, the FTC is not considering regulations regarding the issue, in spite of rumblings in Congress, said Eichorn, choosing instead to rely on retailers to regulate their own behavior.

"We've been suggesting and encouraging the self-regulatory system to work and prodding It to work a little better."

As a result of the findings, the FTC Commission recommended that retailers practice more widespread implementation and enforcement of sales policies, such as register prompts on age-restricted items at the point of sale, according to an FTC release.

Retailers contacted by SN said stores with video rental departments have systems that flag titles by rating; front-end POS systems usually do not.

"That doesn't surprise me a bit," said Carl Day, owner, Day's Market Place, Heber City, Utah. "We ID for alcohol and tobacco, but there is no federal inspector who comes into stores to check if they are selling R-rated videos to minors." However, Day noted that he carries very few titles rated R.

"I'm not particularly surprised," said Greg Rediske, president, Video Management Co., Tacoma, Wash., which supplies rental and sell-through programs to supermarkets. Rentals of R-rated movies are relatively easy to control, but sell-through is another matter. "It's a different process entirely. The checkers are grabbing it, scanning it, and bagging it."

Bashas', Chandler, Ariz., has strict controls over who can rent or buy an R-rated movie, said Ray Wolsieffer, video specialist. Even if parents give permission for their kids to rent or buy such a title, Bashas' will not do it, he said.

"It would just be simpler if there was something that was law. Theaters are bound to make sure no one under 17 gets in. Why not continue it out further when it comes to the purchase?" asked Bob Gettner, video buyer and coordinator, B&R Stores, Lincoln, Neb.

B&R is able to address underage rental issues through its membership database, Gettner said, but it is more difficult to address the issue in sell-through without clear-cut, regulated guidelines.

Regulations could have far-reaching implications for supermarket retailers, even if the report itself does not have an immediate effect since retailers were not identified by channel, said one outside source.

"Supermarkets may not escape the implications of this study. Some of the proposed rules, and some of the lines of thinking with respect to the proposed rules, would intervene in normal marketing decision making because there would be penalties. Nobody wants those," said Bob Alexander, president, Alexander & Associates, New York.

The real issue for supermarkets would be what kind of rules might be established, he said. If laws were enacted or penalties initiated, the effect on supermarkets could be broad, although they might fare better than some music and video specialty retailers, he said.

"This has the opportunity to cause more trouble for the stores than not."

Gettner said he doesn't think laws would affect his business very much, but concedes the effect on other merchants who deal with a higher volume of sell-through video could be greater. He said the issue would be easier to resolve, however, if there was a law in place that definitively outlined the guidelines.

"There's too much gray area. They need to say one way or another to make it easier for us as the retailer to determine that either you can buy it or you can't," Gettner said.