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 statements that Hooked on Phonics can teach even those with reading problems, such as dyslexia; that the product improves users’ reading levels and classroom grades significantly; that it can teach reading at home, without a tutor; that it teaches comprehension of the meaning of words, and that it has helped almost 1 million people learn to read at home.

The commission also said that testimonials by people who have taken the program are used misleadingly in commercials and do not prove that their experiences 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 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.


Gateway officials released a statement Wednesday.

“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.” The officials refused further comment.