NEW YORK - Visa U.S.A. agreed to change its latest television commercial after a judge said he was inclined to agree with American Express Co. that the ad was "false and misleading."
The 30-second spot, which began airing nationwide Oct. 11, says the Telluride ski facility in Colorado will "let you take |The Plunge,' but they won't take American Express."
After a hearing in U.S. district court here, Visa agreed to delete scenes and language that seemed to suggest that the American Express card couldn't be used anywhere in the ski resort town. In fact, a number of merchants shown in the commercial do take the charge card.
The settlement marks a victory for American Express in a long dispute over a highly successful ad campaign that touts Visa's more widespread acceptance.
The victory is only a partial one, however. The settlement does not address American Express' complaints about what it perceives to be Visa's strategy of wooing new merchants by promising them free advertising.
The campaign will be continued in December with new spots featuring a well-known Los Angeles restaurant "that does not take American Express."
In its complaint, American Express pointed out that "consumers can use the American Express card at more than 115 shops, restaurants, galleries, hotels, and other locations in Telluride, including about a dozen establishments expressly depicted in the commercial."
After reviewing the ad and storyboards and hearing arguments, U.S. District Judge Robert J. Ward said his personal reaction was to agree. "It's my feeling that the ad in its present form is indeed false and misleading."
Visa agreed to delete one scene depicting the village of Telluride and another one showing the New Sheraton, a hotel that does accept American Express.
Deletions to Be Made
Also, Visa agreed to delete verbal references to Telluride and the Telluride Resort, and to replace them with references to "Telluride Mountain."
Though Visa made those allowances, Jan Soderstrom, senior vice president of advertising, said the message Visa wanted to convey was not harmed. "Otherwise we wouldn't have settled," she said.
Visa will pull the original television ad by Friday and thereafter air the revised version. The ad is scheduled to run through March.
American Express and Visa have clashed over advertising in the past, most recently over Visa's U.S. Open advertising, and before that over the Olympic Games campaign. In both cases, American Express responded to Visa ads with advertising of its own.
"In this case we think there are lies in the Visa ad, so we decided to take it to the courts," an American Express spokesman said when the complaint was filed.
The ad in question is part of a series of similar ads, which is due to be continued with a new spot in December featuring a Wolfgang Puck restaurant in Los Angeles.
American Express claimed the thrust of the Telluride television ad was to convince consumers that the reason the Telluride ski resort won't take American Express "is due to some unarticulated dissatisfaction the resort town has with the American Express card."
Quid Pro Quo
In fact, the suit claimed, American Express is accepted throughout Telluride. The Telluride Ski Area Inc., the operator of the resort's ski concession. dropped Amex after Visa offered to feature it in a commercial "worth millions of dollars."
Judge Ward made it clear to both parties Thursday morning that he believed the matter could be settled. When American Express declined Visa's first offer - to white out the New Sheraton Hotel in one scene - the judge allowed the preliminary hearing to continue.
But he let Visa officials know that he was not pleased with the two scenes depicting Telluride.
"If the purpose of the ad is to describe the benefits derived from your special deal," he asked a Visa lawyer, "why do you need to include shots of the town of Telluride, including shots of shops that accept the American Express card?"
Visa's lawyer said the ad was consistent with previous ads in Visa's ad campaign, which set the scene and put the featured location in context. But he was interrupted by the judge.
"The town has nothing to do with it except for misleading the person seeing the advertisement." Judge Ward said in a raised voice. "I think your argument is disingenuous."
As for American Express' complaints about the strategy of wooing retailers with promises of advertising, the judge told Amex lawyers they should be satisfied to get the offending material in the Telluride ad off the air quickly. "I must say, if you're catching this on the front side. I think you've achieved one of your purposes."
Visa has given no indication that it will change its advertising strategy. American Express. meanwhile, will keep a close eye on the content of future Visa ads.
* Replace current version of commercial by Oct. 29
* Change voice-over to say "Telluride Ski Mountain," not "Telluride Ski Resort"
* Delete two scenes that depict the town of Telluride, Colo.