[Federal Register Volume 59, Number 230 (Thursday, December 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29576]
[[Page Unknown]]
[Federal Register: December 1, 1994]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 932 3316]
Olsen Laboratories, Inc., et al.; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
-----------------------------------------------------------------------
SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, two Kansas-based firms and an official
from making false claims for Eez-Away, an arthritis pain treatment, or
similar products. The consent agreement would require the responses to
possess scientific substantiation before making any health or medical
benefit claim for any personal or household product or service they
market in the future, would require that they clearly identify any
future infomercial they disseminate is paid advertising, and would
prohibit misusing endorsements or testimonials.
DATES: Comments must be received on or before January 30, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Beth Grossman or Lesley Fair, FTC/S-4002, Washngton, DC 20580. (202)
326-3019 or 326-3081.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's rules of practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
In the Matter of Olsen Laboratories, Inc., and Richfield
Distributors, Inc., corporations, and Peter F. Olsen, individually
and as an officer and director of said corporations; Agreement
Containing Consent Order to Cease and Desist
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Olsen Laboratories, Inc. and Richfield
Distributors, Inc., corporations, and Peter F. Olsen, individually and
as an officer and director of said corporations, hereinafter sometimes
referred to as proposed respondents, and it now appearing that proposed
respondents are willing to enter into an agreement containing an order
to cease and desist from the use of the acts and practices being
investigated,
It is hereby agreed by and between Olsen Laboratories, Inc. and
Richfield Distributors, Inc., by their duly authorized officers, and
Peter F. Olsen, individually and as an officer and director of said
corporations, and counsel for the Federal Trade commission that:
1. Proposed respondent Olsen Laboratories, Inc. is a corporation
organized, existing and doing business under and by virtue of the laws
of the State of Delaware with its principal office and place of
business located at 11088 Alhambra Street, Leawood, Kansas 66211.
Proposed respondent Richfield Distributors, Inc. is a corporation
organized, existing and doing business under and by virtue of the laws
of the State of New York with its principal office and place of
business located at 11088 Alhambra Street, Leawood, Kansas 66211.
Proposed respondent Peter F. Olsen is an officer and director of
Olsen Laboratories, Inc. and Richfield Distributors, Inc. He
formulates, directs and controls the acts and practices of Olsen
laboratories, Inc., and Richfield Distributors, Inc., and his address
is the same as that of said corporations.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft complaint.
3. Proposed respondents waive:
(a) Any procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondents, in which
event it will take such action as it may consider appropriate, or issue
and serve its complaint (in such form as the circumstances may require)
and decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft of complaint, or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
6. The agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
rules, the Commission may, without further notice to proposed
respondents: (1) Issue its complaint corresponding in form and
substance with the draft complaint and its decision containing the
following order to cease and desist in disposition of the proceeding;
and (2) make information public in respect thereto. When so entered,
the order to cease and desist shall have the same force and effect and
may be altered, modified or set aside in the same manner and within the
same time provided by statute for other orders. The order shall become
final upon service. Delivery by the U.S. Postal Service of the
complaint and decision containing the agreed-to order to proposed
respondents' address as stated in this agreement shall constitute
service. Proposed respondents waive any rights they may have to any
other manner of service. The complaint may be used in construing the
terms of the order, and no agreement, understanding, representation, or
interpretation not contained in the order or the agreement may be used
to vary or contradict the terms of the order.
7. Proposed respondents have read the proposed complaint and order
contemplated hereby. Proposed respondents understand that once the
order has been issued, they will be required to file one or more
compliance reports showing that they have fully complied with the
order. Proposed respondents further understand that they may be liable
for civil penalties in the amount provided by law for each violation of
the order after it becomes final.
Order
I
It is ordered that respondents, Olsen Laboratories, Inc. and
Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of Eez-Away Relief or any substantially similar
product, in or affecting commerce, as ``commerce'' is defined in the
Federal Trade Commission Act, do forthwith cease and desist from
representing, in any manner, directly or by implication, that the
product is a new or unique method of treatment for arthritis pain or is
a breakthrough in the treatment of arthritis pain.
For purposes of this provision, ``substantially similar product''
shall mean any external analgesic that contains menthol as the active
ingredient.
II
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any drug in or affecting commerce, as ``drug''
and ``commerce'' are defined in the Federal Trade Commission Act, do
forthwith cease and desist from representing, in any manner, directly
or by implication, that:
A. The product rapidly eliminates severe pain and physical
disabilities suffered by those persons with arthritis or other similar
conditions; or
B. The product provides long-term pain relief; or
C. The product increases the range of motion in the affected joints
of those persons with arthritis or other similar conditions; or
D. The product is more effective than other products in relieving
pain or in treating the symptoms of those persons with arthritis or
other similar conditions; or
E. The product relieves the pain of those persons with arthritis or
other similar conditions by penetrating through the skin to the
affected joint; unless, at the time of making such representation,
respondents possess and rely upon competent and reliable scientific
evidence that substantiates the representation. For purposes of this
provision, ``competent and reliable scientific evidence'' shall mean
tests, analyses, research, studies, or other evidence based on the
expertise of professionals in the relevant area, that has been
conducted and evaluated in an objective manner by persons qualified to
do so, using procedures generally accepted in the profession to yield
accurate and reliable results.
Provided that, with respect to any representation covered by
subparts A, B and D of this part and any representation covered by
subpart C of this part other than a representation that the product may
temporarily increase the range of motion in the affected joints of
people with arthritis by temporarily relieving minor pain in those
joints, ``competent and reliable scientific evidence'' shall mean
adequate and well-controlled, double-blind clinical testing conforming
to acceptable designs and protocols and conducted by a person or
persons qualified by training and experience to conduct such testing.
III
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product or service for personal or
household use in affecting commerce, as ``commerce'' is defined in the
Federal Trade Commission Act, do forthwith cease and desist from making
any representation, in any manner, directly or by implication, about
the health or medical benefits of any such product or service unless,
at the time of making such representation, respondents possess and rely
upon competent and reliable scientific evidence that substantiates the
representation. For purposes of this provision, ``competent and
reliable scientific evidence'' shall mean tests, analyses, research,
studies, or other evidence based on the expertise of professionals in
the relevant area, that has been conducted and evaluated in an
objective manner by persons qualified to do so, using procedures
generally accepted in the profession to yield accurate and reliable
results.
IV
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product or service for personal or
household use, in or affecting commerce, as ``commerce'' is defined in
the Federal Trade Commission Act, do forthwith cease and desist from
misrepresenting, in any manner, directly or by implication, that such
product or service is a new or unique method of treatment for any
disease or condition, or is a breakthrough in the treatment of any
disease or condition.
V
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product or service for personal or
household use, in or affecting commerce, as ``commerce'' is defined in
this Federal Trade Commission Act, do forthwith cease and desist from
misrepresenting, in any manner, directly or by implication, the
existence, contents, validity, results, conclusions or interpretations
of any test or study.
VI
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield Distributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any product or service for personal or
household use, in or affecting commerce, as ``commerce'' is defined in
the Federal Trade Commission Act, do forthwith cease and desist from
representing, in any manner, directly or by implication, that any
endorsement (as ``endorsement'' is defined in 16 CFR 255.0(b)) of such
product or service represents the typical or ordinary experience of
members of the public who use such product or service, unless
respondents, at the time of making such representation, possess and
rely upon competent and reliable evidence,, which when appropriate must
be competent and reliable scientific evidence, that substantiates the
representation. For purposes of this provision, ``competent and
reliable scientific evidence'' shall mean tests, analyses, research,
studies, or other evidence based on the expertise of professionals in
the relevant area, that has been conducted and evaluated in an
objective manner by persons qualified to do so, using procedures
generally accepted in the profession to yield accurate and reliable
results. Provided, however, that respondents may use such endorsements
if the statements or depictions that comprise the endorsements are true
and accurate, and if respondents disclose clearly and prominently and
in close proximity to the endorsement what the generally expected
performance would be in the depicted circumstances or the limited
applicability of the endorser's experience to what consumers may
generally expect to achieve, that is, that consumers should not expect
to experience similar results.
VII
It is further ordered that respondents, Olsen Laboratories, Inc.
and Richfield DIstributors, Inc., corporations, their successors and
assigns, and their officers; and Peter F. Olsen, individually and as an
officer and director of said corporations; and respondents' agents,
representatives and employees, directly or through any corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale, or
distribution of any product or service in or affecting commerce, as
``commerce'' is defined in the Federal Trade Commission Act, do
forthwith cease and desist from creating, producing, selling, or
disseminating:
A. Any advertisement that misrepresents, directly or by
implication, that it is not a paid advertisement;
B. Any commercial or video advertisement fifteen (15) minutes in
length or longer or intended to fill a broadcasting or cablecasting
time slot of fifteen (15) minutes in length or longer that does not
display visually, in a clear and prominent manner and for a length of
time sufficient for an ordinary consumer to read, within the first
thirty (30) seconds of the commercial and immediately before each
presentation of ordering instructions for the product or service, the
following disclosure:
``THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE
PRODUCT OR SERVICE].''
Provided that, for the purposes of this provision, the oral or
visual presentation of a telephone number or address for viewers to
contact to place an order for the product or service shall be deemed to
be a presentation of ordering instructions so as to require the display
of the disclosure provided herein.
VIII
Nothing in this Order shall prohibit respondent from making any
representation for any drug that is permitted in labeling for any such
drug under any tentative final or final standard promulgated by the
Food and Drug Administration, or under any new drug application
approved by the Food and Drug Administration.
IX
It is further ordered that for five (5) years after the last date
of dissemination of any representation covered by this Order,
respondents, or their successors and assigns, shall maintain and upon
request make available to the Federal Trade Commission for inspection
and copying:
A. All materials that were relied upon in disseminating such
representation; and
B. All tests, reports, studies, surveys, demonstrations or other
evidence in their possession or control that contradict, qualify, or
call into question such representation, or the basis relied upon for
such representation, including complaints from consumers.
X
It is further ordered that respondents Olsen Laboratories, Inc. and
Richfield Distributors, Inc. shall notify the Commission at least
thirty (30) days prior to any proposed change in their corporate
structure, including but not limited to dissolution, assignment or sale
resulting in the emergence of a successor corporation, the creation or
dissolution of subsidiaries or affiliates, or any other corporate
change that may affect compliance obligations arising out of this
Order.
XI
It is further ordered that respondents Olsen Laboratories, Inc. and
Richfield Distributors, Inc. shall:
A. Within thirty (30) days of service of this Order, provide a copy
of this Order to each of their current principals, officers, directors
and managers, and to all personnel, agents, and representatives having
sales, advertising, or policy responsibility with respect to the
subject matter of this Order; and
B. For a period of five (5) years from the date of entry of this
Order, provide a copy of this Order to each of their principals,
officers, directors, and managers, and to all personnel, agents, and
representatives having sales, advertising, or policy responsibility
with respect to the subject matter of this Order who are associated
with it or any subsidiary, successor, or assign, within three (3) days
after the person assumes his or her position.
XII
It is further ordered that respondent Peter F. Olsen shall, for a
period of seven (7) years from the date of entry of this Order, notify
the Commission within thirty (30) days of the discontinuance of his
present business or employment and of his affiliation with any new
business or employment. Each notice of affiliation with any new
business or employment shall include the respondent's new business
address and telephone number, current home address, and a statement
describing the nature of the business or employment and his duties and
responsibilities.
XIII
It is further ordered that respondents shall, within sixty (60)
days after service of this Order, and at such other times as the
Federal Trade Commission may require, file with the Commission a
report, in writing, setting forth in detail the manner and form in
which they have complied with this Order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, an agreement containing a consent order from Olsen
Laboratories, Inc., Richfield Distributors, Inc., and Peter F. Olsen
(``respondents''). Peter F. Olsen is an officer and director of the two
corporate respondents.
The proposed order has been placed on the public record for sixty
(60) days for reception of comments by interested persons. Comments
received during this period will become part of the public record.
After sixty (60) days, the Commission will again review the agreement
and the comments received and will decide whether it should withdraw
from the agreement or make final the agreement's proposed order.
This matter concerns claims made by the respondents for Eez-Away
Relief, and external analgesic, in program-length advertisements (or
``infomercials'') and other advertising and promotional materials.
The Commission's proposed complaint in this matter alleges that the
respondents falsely represented that Eez-Away Relief is a major
breakthrough in the treatment of arthritis pain and that scientific
research proves that Eez-Away Relief is effective for the rapid
elimination of severe pain and physical disabilities caused by
arthritis.
The proposed complaint further alleges that the respondents falsely
represented that they possessed and relied upon a reasonable basis for
their representations that Eez-Away Relief rapidly eliminates severe
pain and physical disabilities caused by arthritis; that Eez-Away
Relief provides long-term pain relief; that Eez-Away Relief
significantly increases the range of motion in the affected joints of
people with arthritis, including those with rheumatoid arthritis; that
Eez-Away Relief is more effective than other over-the-counter
medications in relieving arthritis pain; and that Eez-Away Relief
relieves arthritis pain by penetrating through the skin to the affected
joint.
The proposed complaint also charges that the respondents falsely
represented that they possessed and relied upon a reasonable basis for
their representation that the testimonials or endorsements from
consumers appearing in advertisements for Eez-Away Relief reflect the
typical or ordinary experience of members of the public who use Eez-
Away Relief. Finally, the proposed complaint alleges that respondents
falsely represented that the informercial ``30 Minutes'' is an
independent television program and is not paid commercial advertising.
The proposed consent order contains provisions designed to prevent
the respondents from engaging in similar acts and practices in the
future.
Part I of the proposed order prohibits respondents from
representing that Eez-Away Relief or any substantially similar product
is a new or unique method of treatment for arthritis pain or is a
breakthrough in the treatment of arthritis pain. A ``substantially
similar product'' is defined to mean any external analgesic that
contains menthol as an active ingredient.
Part II of the proposed order prohibits respondents from
representing that any drug: (A) Rapidly eliminates severe pain and
physical disabilities suffered by those persons with arthritis or other
similar conditions; (B) provides long-term paid relief; (C) increases
the range of motion in the affected joints of those persons with
arthritis or other similar conditions; (D) is more effective than other
products in relieving pain or in treating the symptoms of those persons
with arthritis or other similar conditions; or (E) relieves the pain of
those persons with arthritis or other similar conditions by penetrating
through the skin to the affected joint, unless respondents possess and
rely upon competent and reliable scientific evidence to support the
representation. Part II of the order further provides that for
representations covered by II.A, II.B and II.D, and for representations
covered by II.C. other than a representation that the product may
temporarily increase the range of motion in the affected joints of
people with arthritis by temporarily relieving minor pain in those
joints, the substantiation must include adequate and well-controlled,
double-blind clinical testing.
Part III of the proposed order prohibits respondents from making
any representation about the health or medical benefits of any product
or service for personal or household use unless respondents possess
competent and reliable scientific evidence to support the
representation.
Part IV of the proposed order prohibits respondents from
misrepresenting that any product or service for personal or household
use is a new or unique method of treatment for any disease or
condition, or is a breakthrough in the treatment of any disease or
condition.
Part V of the proposed order prohibits respondents, in connection
with the promotion or sale of any product or service for personal or
household use, from misrepresenting the existence, contents, validity,
results, conclusions or interpretations of any test or study.
Part VI of the proposed order prohibits respondents from
representing that any endorsement of any product or service for
personal or household use represents that typical or ordinary
experience of members of the public who use such product or service,
unless the representation is substantiated. Part VI provides, however,
that respondents may use such endorsements if the statements or
depictions that comprise the endorsements are true and accurate, and if
respondents disclose clearly and prominently and in close proximity to
the endorsement what the generally expected performance would be in the
depicted circumstances or the limited applicability of the endorser's
experience to what consumers may generally expect to achieve, that is,
that consumers should not expect to experience similar results.
Part VII of the proposed order prohibits respondents from creating,
producing, selling, or disseminating any advertisement that
misrepresents that it is not a paid advertisement; or any video
advertisement fifteen (15) minutes in length or longer that does not
display visually, in a clear and prominent manner and for a length of
time sufficient for an ordinary consumer to read, within the first
thirty (30) seconds of the commercial and immediately before each
presentation of ordering instructions for the product or service, the
following disclosure:
``THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE
PRODUCT OR SERVICE].''
Part VIII of the proposed order provides that nothing in the
proposed order prohibits respondents from making any representation for
any drug that is permitted in labeling for any such drug under any
tentative final or final standard promulgated by the Food and Drug
Administration, or under any new drug application approved by the Food
and Drug Administration.
Part IX of the proposed order requires the respondents to maintain
copies of all materials relied upon in making any representation
covered by the order, and all materials that contradict, qualify, or
call into question such representations.
Part X of the proposed order requires that Olsen Laboratories, Inc.
and Richfield Distributors, Inc. notify the Commission at least thirty
(30) days prior to certain proposed changes in their corporate
structure.
Part XI of the proposed order requires that Olsen Laboratories,
Inc. and Richfield Distributors, Inc. distribute copies of the order to
certain personnel.
Part XII of the proposed order requires that Peter F. Olsen, for a
period of seven (7) years, notify the Commission within thirty (30)
days of the discontinuance of his present business or employment and of
his affiliation with any new business or employment.
Part XIII of the proposed order requires that respondents file with
the Commission one or more reports detailing their compliance with the
order.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order, or to modify any of
their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 94-29576 Filed 12-1-94; 8:45 am]
BILLING CODE 6750-01-M
