[Federal Register Volume 60, Number 91 (Thursday, May 11, 1995)]
[Notices]
[Pages 25230-25235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11556]
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FEDERAL TRADE COMMISSION
[File No. 942-3027]
Third Option Laboratories, Inc., et al.; Proposed Consent
Agreement With Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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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
require, among other things, a Muscle Shoals, Alabama company and its
officers to pay $480,000 to be used either for refunds to consumers or
as disgorgement to the U.S. Treasury and to send a notice to consumers
advising them of the consent agreement, which settles allegations that
the respondents made a number of deceptive health claims for their
``Jogging in a Jug'' beverage. In future advertisements for that
beverage or similar products, the respondents would have to clearly and
prominently state that there is no scientific evidence that the product
provides any health benefits.
DATES: Comments must be received on or before July 10, 1995.
ADDRESSES: .Comments should be directed to: FTC/Office of the
Secretary, Room 159, 6th St. and Pa. Ave., NW., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT:
Toby Milgrom Levin or Loren G. Thompson, FTC/S-4002, Washington, D.C.
20580. (202) 326-3156 or (202) 326-2049.
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: Third Option Laboratories, Inc., a
corporation, and William J. McWilliams, Danny Bishop McWilliams, and
Susan McWilliams Bolton, individually and as officers of said
corporation. File No. 942-3027.
Agreement Containing Consent Order to Cease and Desist
The Federal Trade Commission, having initiated an investigation of
certain acts and practices of Third Option Laboratories, Inc., a
corporation, and William J. McWilliams, Danny Bishop McWilliams, and
Susan McWilliams Bolton, individually and as officers of said
corporation (``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 acts and practices being
investigated,
It is hereby agreed by and between Third Option Laboratories, Inc.,
by its duly authorized officer, and William J. McWilliams, Danny Bishop
McWilliams, and Susan McWilliams Bolton, individually and as officers
of said corporation, and their attorney, and counsel for the Federal
Trade Commission that:
1. Proposed respondent Third Option Laboratories, Inc. is a
corporation organized, existing, and doing business
[[Page 25231]] under and by virtue of the laws of the State of Alabama,
with its office and principal place of business at 2806 Avalon Avenue,
Muscle Shoals, Alabama 35661.
Proposed respondents William J. McWilliams, Danny Bishop
McWilliams, and Susan McWilliams Bolton are owners and officers of said
corporation. They formulate, direct, and control the policies, acts and
practices of said corporation and their address is the same as that of
said corporation.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint
3. Proposed respondents waive:
(a) Any further 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 of
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 the jurisdictional facts,
are true.
6. This 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 of complaint here attached 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 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 right 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 in 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. They 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, Third Option Laboratories, Inc., a
corporation, its successors and assigns, and its officers, and William
J. McWilliams, individually and as an officer of said corporation,
Danny Bishop McWilliams, individually and as an officer of said
corporation, and Susan McWilliams Bolton, individually and as an
officer of said corporation, 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 Jogging in a Jug, 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 such product:
A. Cures or alleviates heart disease or its symptoms, including
arterial blockages;
B. Substantially lowers serum cholesterol or triglycerides;
C. Cures or alleviates arthritis or its symptoms;
D. Breaks down or eliminates calcium or other mineral or chemical
deposits in the circulatory system;
E. Improves the condition of the circulatory system;
F. Cleans internal organs;
G. Prevents or reduces the risk of cancer, leukemia, heart disease,
or arthritis;
H. Provides the same health benefits as a jogging regimen;
I. Cures or alleviates lethargy;
J. Cures or alleviates dysentery;
K. Cures or alleviates constipation;
L. Stabilizes blood sugar levels in insulin-dependent diabetics;
M. Aids in the recovery from viral diseases;
N. Cures or alleviates swelling of the legs or muscle spasms; or
O. Is approved by the United States Department of Agriculture.
II
It is further ordered that respondents, Third Option Laboratories,
Inc., a corporation, its successors and assigns, and its officers, and
William J. McWilliams, individually and as an officer of said
corporation, Danny Bishop McWilliams, individually and as an officer of
said corporation, and Susan McWilliams Bolton, individually and as an
officer of said corporation, 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 food, food or dietary supplement, or drug, as
``food'' and ``drug'' are defined in sections 12 and 15 of the Federal
Trade Commission Act, in or 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, regarding the performance, safety, benefits, or efficacy
of such product, unless such representation is true and, at the time of
making such representation, respondents possess and rely upon competent
and reliable scientific evidence that substantiates such
representation.
For purposes of this Order, ``component and reliable scientific
evidence'' shall mean tests, analyses, research, studies, or other
evidence based on the expertise of professionals in the relevant area,
that have 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.
III
It is further ordered that respondents, Third Option Laboratories,
Inc., a [[Page 25232]] corporation, its successor and assigns, and its
officers, and William J. McWilliams, individually and as an officer of
said corporation, Danny Bishop McWilliams, individually and as an
officer of said corporation, and Susan McWilliams Bolton, individually
and as an officer of said corporation, 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 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 has been tested,
approved, or endorsed by any person, firm, organization, or government
agency.
IV
It is further ordered that respondents, Third Option Laboratories,
Inc., a corporation, its successors and assigns, and its officers, and
William J. McWilliams, individually and as an officer of said
corporation, Danny Bishop McWilliams, individually and as an officer of
said corporation, and Susan McWilliams Bolton, individually and as an
officer of said corporation, 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 in or affecting commerce, as ``commerce''
is defined in the Federal Trade Commission Act, do forthwith cease and
desist from representing, directly or by implication, that any
endorsement (as ``endorsement'' is defined in 16 CFR 255.0(b)) of any
such product represents the typical or ordinary experience of members
of the public who use such product, unless such is the fact.
V
Nothing in this Order shall prohibit 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.
VI
Nothing in this Order shall prohibit respondents from making any
representation that is specifically permitted in labeling for any
product by regulations promulgated by the Food and Drug Administration
pursuant to the Nutrition Labeling and Education Act of 1990.
VII
It is further ordered that respondents, Third Option Laboratories,
Inc., a corporation, its successors and assigns, and its officers, and
William J. McWilliams, individually and as an officer of said
corporation, Danny Bishop McWilliams, individually and as an officer of
said corporation, and Susan McWilliams Bolton, individually and as an
officer of said corporation, and respondents' agents, representatives,
and employees, directly or through any partnership, corporation,
subsidiary, division or other device, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale,
sale or distribution of Jogging in a Jug 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
employing the name ``Jogging in a Jug'' or any other name that
communicates the same or similar meaning for such product; provided,
however, that nothing in this Order shall prevent the use of such name
if the material containing the name clearly and prominently contains
the following disclosure:
``THERE IS NO SCIENTIFIC EVIDENCE THAT JOGGING IN A JUG [OR OTHER
NAME] PROVIDES ANY HEALTH BENEFITS.''
For the purposes of this Order, ``clearly and prominently'' shall
mean as follows:
A. In a television or video advertisement less than fifteen (15)
minutes in length, the disclosure shall be presented simultaneously in
both the audio and visual portions of the advertisement, accompanying
the first presentation of the name. When the first presentation of the
name appears in the audio portion of the advertisement, the disclosure
shall immediately follow the name. When the first presentation of the
name appears in the visual portion of the advertisement, the disclosure
shall appear immediately adjacent to the name. The audio disclosure
shall be delivered in a volume and cadence sufficient for an ordinary
consumer to hear and comprehend it. The video disclosure shall be of a
size and shade, and shall appear on the screen for a duration,
sufficient for an ordinary consumer to read and comprehend it;
B. In a video advertisement fifteen (15) minutes in length or
longer, the disclosure shall be presented simultaneously in both the
audio and visual potions of the advertisement, accompanying the first
presentation of the name and immediately before each presentation of
ordering instructions for the product. When the name that triggers the
disclosure appears in the audio portion of the advertisement, the
disclosure shall immediately follow the name. When the name that
triggers the disclosure appears in the visual portion of the
advertisement, the disclosure shall appear immediately adjacent to the
name. The audio disclosure shall be delivered in a volume and cadence
sufficient for an ordinary consumer to hear and comprehend it. The
video disclosure shall be of a size and shade, and shall appear on the
screen for a duration, sufficient for an ordinary consumer to read and
comprehend it. 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 in conjunction
with the name shall be deemed a presentation of ordering instructions
so as to require the presentation of the disclosure provided herein;
C. In a radio advertisement, the disclosure shall immediately
follow the first presentation of the name and shall be delivered in a
volume and cadence sufficient for an ordinary consumer to hear and
comprehend it;
D. In a print advertisement, the disclosure shall be in close
proximity to the largest presentation of the name, in a prominent type
thickness and in a type size that is at least one-half that of the
largest presentation of the name; provided, however, that the type size
of the disclosure shall be no smaller than twelve (12) point type. The
disclosure shall be of a color or shade that readily contrasts with the
background of the advertisement;
E. On a product label, the disclosure shall be in close proximity
to the largest presentation of the name, in a prominent type thickness
and in a type size that is at least one-half that of the largest
presentation of the name; provided, however, that the type size of the
disclosure shall be no smaller than twelve (12) point type. The
disclosure shall be of a color or shade that readily contrasts with the
background of the label; and
F. On any packaging of the product shipped directly to consumers,
the disclosure shall appear on each side of the packaging on which the
name appears, in close proximity to the largest presentation of the
name. The total area of the disclosure shall be at least half that of
the name that triggers the disclosure. The disclosure shall be of a
[[Page 25233]] color or shade that readily contrasts with the
background of the packaging.
Nothing contrary to, inconsistent with, or in mitigation of the
above-required language shall be used in any advertising or labeling.
Nothing in this part shall apply to: (1) Advertising appearing on
items that are sold or given or caused to be sold or given by
respondents to consumers for their personal use and that display the
name ``Jogging in a Jug'' or any other name that communicates the same
or similar meaning; or (2) the use of such name in a nonpromotional
manner and solely for purposes of identification of the respondent
corporation, including the use of such name as part of respondents'
letterhead, on shipping labels, or on crates provided only to
purchasers for resale.
VIII
It is further ordered that respondents, Third Option Laboratories,
Inc., its successors and assigns, William J. McWilliams, Danny Bishop
McWilliams, and Susan McWilliams Bolton, shall pay to the Federal Trade
Commission, by cashier's check or certified check made payable to the
Federal Trade Commission and delivered to the Associate Director for
Enforcement, Bureau of Consumer Protection, Federal Trade Commission,
6th and Pennsylvania Ave., NW, Washington, DC 20580, the sum of four
hundred and eighty thousand dollars ($480,000). Respondent shall make
this payment on or before the tenth day following the date of entry of
this Order. In the event of any default on any obligation to make
payment under this section, interest, computed pursuant to 28 U.S.C.
1961(a), shall accrue from the date of default to the date of payment.
The funds paid by respondents shall, in the discretion of the Federal
Trade Commission, be used by the Commission to provide direct redress
to purchasers of Jogging in a Jug in connection with the acts or
practices alleged in the complaint, and to pay any attendant costs of
administration. If the Federal Trade Commission determines, in its sole
discretion, that redress to purchasers of this product is wholly or
partially impracticable or is otherwise unwarranted, any funds not so
used shall be paid to the United States Treasury. Respondent shall be
notified as to how the funds are distributed, but shall have no right
to contest the manner of distribution chosen by the Commission. No
portion of the payment as herein provided shall be deemed a payment of
any fine, penalty, or punitive assessment.
IX
It is further ordered that respondents, Third Option Laboratories,
Inc., its successors and assigns, William J. McWilliams, Danny Bishop
McWilliams, and Susan McWilliams Bolton, shall, within thirty (30) days
after the date of service of this Order, send by first class mail,
postage prepaid and address correction requested, to the last address
known to respondents of each consumer who purchased Jogging in a Jug in
any manner directly from respondents since January 1, 1993, an exact
copy of the notice attached hereto as Attachment A. The mailing shall
not include any other documents.
X
It is further ordered that respondents, Third Option Laboratories,
Inc., its successors and assigns, William J. McWilliams, Danny Bishop
McWilliams, and Susan McWilliams Bolton, shall:
A. Within thirty (30) days after the date of service of this Order,
send by first class certified mail, return receipt requested, to each
purchaser for resale of Jogging in a Jug with which respondents have
done business since January 1, 1993 an exact copy of the notice
attached hereto as Attachment B. The mailing shall not include any
other documents;
B. In the event that respondents receive any information that
subsequent to its receipt of Attachment B any purchaser for resale is
using or disseminating any advertisement or promotional material that
contains any representation prohibited by this Order, respondents shall
immediately notify the purchaser for resale that respondents will
terminate the use of said purchaser for resale if it continues to use
such advertisements or promotional materials; and
C. Terminate the use of any purchaser for resale about whom
respondents receive any information that such purchaser for resale has
continued to use advertisements or promotional materials that contain
any representation prohibited by this Order after receipt of the notice
required by subparagraph B of this part.
XI
It is further ordered that respondents, Third Option Laboratories,
Inc., its successors and assigns, and William J. McWilliams, Danny
Bishop McWilliams, and Susan McWilliams Bolton, shall, for five (5)
years after the last correspondence to which they pertain, maintain and
upon request make available to the Federal Trade Commission for
inspection and copying:
A. Copies of all notification letters sent to consumers pursuant to
part IX of this Order;
B. Copies of all notification letters sent to purchasers for resale
pursuant to subparagraph A of part X of this Order; and
C. Copies of all communications with purchasers for resale pursuant
to subparagraphs B and C of Part X of this Order.
XII
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. Any advertisement making any representation covered by this
order;
B. All materials that were relied upon in disseminating such
representation; and
C. 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, and
complaints or inquiries from governmental organizations.
XIII
It is further ordered that respondents, Third Option Laboratories,
Inc., its successors and assigns, shall:
A. Within thirty (30) days after the date of service of this Order,
provide a copy of this Order to each of respondent's 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 seven (7) years from the date of service of this
Order, provide a copy of this Order to each of respondent's 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 within three (3) days
after the person assumes his or her position.
XIV
It is further ordered that respondents, William J. McWilliams,
Danny Bishop McWilliams, and Susan McWilliams Bolton, shall, for a
period of seven (7) years after the date of service of this Order,
notify the Commission within thirty (30) days of the discontinuance of
[[Page 25234]] his or her present business or employment and of his or
her affiliation with any new business or employment involving the
manufacturing, labeling, advertising, marketing, promotion, offering
for sale, sale, or distribution of any food, food or dietary
supplement, or drug, as ``food'' and ``drug'' are defined in sections
12 and 15 of the Federal Trade Commission Act. Each notice of
affiliation with any new business or employment shall include
respondent's new business address and telephone number, current home
address, and a statement describing the nature of the business or
employment and his or her duties and responsibilities.
XV
It is further ordered that respondents, shall notify the Commission
at least thirty (30) days prior to any proposed change in the corporate
respondent, such as dissolution, assignment, or sale resulting in the
emergence of a successor corporation, the creation or dissolution of
subsidiaries, or any other change in the corporation which may affect
compliance obligations arising under this order.
XVI
It is further ordered that respondents shall, within sixty (60)
days after service of this Order, and at such other times as the
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.
Attachment A
By First Class Mail, Postage Prepaid and Address Correction
Requested
[To Be Printed on Third Option Laboratories, Inc. Letterhead]
[date]
Dear Consumer: Our records indicate that you purchased Jogging
in a Jug from Third Option Laboratories, Inc. This letter is to
inform you of our settlement of a civil dispute with the Federal
Trade Commission (``FTC'') regarding certain claims made in our
advertising for Jogging in a Jug.
The FTC alleged that advertisements for Jogging in a Jug have
made false and unsubstantiated claims that the product can cure,
treat, or prevent: (1) Heart disease (including arterial blockages);
(2) arthritis; (3) cancer; (4) leukemia; (5) dysentery; (6)
constipation; (6) lethargy; (8) swelling of the legs; and (9) muscle
spasms. The FTC has also alleged that our claims that Jogging in a
Jug can ``clean'' internal organs, break down or eliminate deposits
in the circulatory system, aid in the recovery from viral diseases,
lower serum cholesterol and triglyceride levels, and stabilize blood
sugar levels in diabetics, are false and unsubstantiated. Finally,
the FTC has alleged that we have made false and unsubstantiated
claims that Jogging in a Jug provides the same health benefits as
jogging.
Our settlement with the FTC prohibits us from making these or
other claims for Jogging in a Jug or any other food, drug, or
supplement in the future unless the claims are supported by
competent and reliable scientific evidence. We deny the FTC's
allegations, but have agreed to send this letter as a part of our
settlement with the FTC.
Sincerely,
William J. McWilliams,
President, Third Option Laboratories, Inc.
Attachment B
By Certified Mail, Return Receipt Requested
[To Be Printed on Third Option Laboratories, Inc. letterhead]
[date]
Dear [purchaser for resale]: Third Option Laboratories, Inc.
recently settled a civil dispute with the Federal Trade Commission
(``FTC'') regarding certain claims for our product, Jogging in a
Jug. As a part of the settlement, we are required to make sure that
our distributors and wholesalers stop using or distributing
advertisements or promotional materials containing those claims.
The FTC alleged that the advertisements for Jogging in a Jug
have made false and unsubstantiated claims that the product can
cure, treat, or prevent: (1) Heart disease (including arterial
blockages); (2) arthritis; (3) cancer; (4) leukemia; (5) dysentery;
(6) constipation; (7) lethargy; (8) swelling of the legs; and (9)
muscle spasms. The FTC has also alleged that our claims that Jogging
in a Jug can ``clean'' internal organs, break down or eliminate
deposits in the circulatory system, aid in the recovery from viral
diseases, lower serum cholesterol and triglyceride levels, and
stabilize blood sugar levels in diabetics, are false and
unsubstantiated. Finally, the FTC has alleged that we have made
false and unsubstantiated claims that Jogging in a Jug provides the
same health benefits as jogging.
Our settlement with the FTC prohibits us from making these or
other claims for Jogging in a Jug or any other food, drug, or
supplement in the future unless the claims are supported by
competent and reliable scientific evidence. We deny the FTC's
allegations, but have agreed to send this letter as a part of our
settlement with the FTC.
We request your assistance by asking you to discontinue using,
relying on or distributing any of your current Jogging in a Jug
advertising or promotional material. Please also notify any of your
retail or wholesale customers who may have such materials to
discontinue using them. If you continue to use those materials, we
are required by the FTC settlement to stop doing business with you.
Thank you very much for your assistance.
Sincerely,
William J. McWilliams,
President, Third Option Laboratories, Inc.
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Third Option Laboratories, Inc. (``Third
Option''), and William J. McWilliams, Danny Bishop McWilliams, and
Susan McWilliams Bolton, officers of Third Option.
The proposed consent 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 Jogging in a Jug, a juice and vinegar beverage
marketed by Third Option. The Commission's proposed complaint alleges
that the respondents falsely represented in its advertising and
promotional material that Jogging in a Jug would: (1) Cure or alleviate
heart disease and its symptoms, including arterial blockages; (2)
substantially lower serum cholesterol and triglycerides; (3) cure or
alleviate arthritis and its symptoms; (4) break down or eliminate
calcium or other mineral or chemical deposits in the circulatory
system; (5) improve the condition of the circulatory system; (6) clean
internal organs; (7) prevent or reduce the risk of cancer, leukemia,
heart disease, and arthritis; (8) provide the same health benefits as a
jogging regimen; (9) cure or alleviate lethargy; (10) cure or alleviate
dysentery; (11) cure or alleviate constipation; (12) stabilize blood
sugar levels in insulin-dependent diabetics; (13) aid in the recovery
from viral infections; and (14) cure or alleviate swelling of the legs
and muscle spasms. The proposed complaint further alleges that
respondents falsely represented that they relied on a reasonable basis
for these claims.
In addition, the proposed complaint alleges that respondents
falsely represented that Jogging in a Jug was approved by the United
States Department of Agriculture and that the testimonials or
endorsements from consumers contained in the advertisements and
promotional materials for Jogging in a Jug reflect the typical or
ordinary experiences of members of the public who use the product. The
proposed complaint further alleges that respondents falsely represented
that they relied on a reasonable basis for these claims.
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 the respondents from
making the [[Page 25235]] representations challenged as false in the
proposed complaint for Jogging in a Jug or any substantially similar
product.
Part II of the proposed order prohibits the respondents from making
any representation about the performance, safety, benefits, or efficacy
of any food, food or dietary supplement, or drug, unless the
representation is true and respondents possess competent and reliable
scientific evidence that substantiates it.
Part III of the proposed order prohibits the respondents from
misrepresenting that any product has been tested, approved, or endorsed
by any person, firm, organization, or government agency.
Part IV of the proposed order prohibits the respondents from
misrepresenting that any endorsement for any product reflects the
typical or ordinary experience of members of the public who use the
product.
Parts V and VI of the order are safe harbor provisions. Part V
allows representations for any drug that is permitted in the labeling
for that drug under any tentative final or final standard promulgated
by the Food and Drug Administration (``FDA''), or under any new drug
application approved by the FDA. Part VI allows representations
permitted in labeling for any product by regulations promulgated by FDA
pursuant to the Nutrition Labeling and Education Act of 1990.
Part VII of the order requires that the respondents cease using the
name ``Jogging in a Jug'' or any name that communicates the same or
similar meaning unless the material containing such name clearly and
prominently contains the disclosure ``THERE IS NO SCIENTIFIC EVIDENCE
THAT JOGGING IN A JUG [OR OTHER NAME] PROVIDES ANY HEALTH BENEFITS.''
The terms of Part VII do not apply to: (1) The use of such name on
items that are sold or given or caused to be sold or given to consumers
for their personal use; or (2) the use of such name in a nonpromotional
manner and solely for purposes of identification of the respondent
corporation, including the use of such name as part of corporate
letterhead, on shipping labels, or on crates provided only to
purchasers for resale.
Part VIII of the order requires respondents to pay to the
Commission the sum of four hundred and eighty thousand dollars
($480,000). The Commission will then determine, in its sole discretion,
whether to use the payment to provide direct redress to consumers or to
pay the funds to the United States Treasury if redress is not
practicable.
Part IX of the order requires the respondents to send a letter
describing this settlement to identifiable past purchasers of Jogging
in a Jug. Part X of the order requires the respondents to send a
similar letter to their purchasers for resale. Part X further requires
the respondents to notify their purchasers for resale that if the
purchasers for resale do not stop using promotional materials
containing claims covered by the order, the respondents are required to
stop doing business with them. Part XI of the order requires that the
respondents maintain for five years copies of all communications with
consumers and purchasers for resale pursuant to the terms of Parts IX
and X.
Parts XII, XIII, XIV, XV, and XVI relate to the respondents'
obligation to maintain records, distribute the order to current and
future officers and employees, notify the Commission of changes in
employment or corporate structure, and file compliance reports with the
Commission.
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 in any
way their terms.
Donald S. Clark,
Secretary.
Statement of Commissioner Mary L. Azcuenaga, Concurring in Part and
Dissenting in Part, Third Option Laboratories, Inc., File No. 942 3027
Today, the Commission accepts for public comment a consent
agreement to remedy various misrepresentations concerning the purported
health benefits of a drink called ``Jogging in a Jug.'' The record
shows that the claims are far removed from reality, and there is ample
reason to believe they violated section 5 of the FTC Act. I concur in
the complaint on which the order is based except to the extent that it
alleges as a violation the content of newspaper articles that are
reproduced in the respondents' promotional materials and those
materials accurately identify and reproduce such articles in their
original format without modification. Complaint 7 and Exhibit F.
Second, I dissent from Part VII of the order. Although the
complaint does not challenge as materially misleading the unadorned use
of the product's name, Jogging in a Jug (nor would I, given the absence
of evidence), Part VII of the order prohibits, in connection with the
advertising and sale of Jogging in a Jug (or any similar product), use
of the name Jogging in a Jug, or any other name communicating a similar
meaning, unless the name is accompanied clearly and prominently by a
disclosure stating: ``THERE IS NO SCIENTIFIC EVICENCE THAT JOGGING IN A
JUG [or other name] PROVIDES ANY HEALTH BENEFITS,'' and which includes
six extensive paragraphs minutely detailing what will constitute
``clearly and prominently'' for purposes of compliance with this
requirement.
The Commission in the past has used this form of relief, which can
substantially limit potentially lawful conduct, to remedy health claims
that seem more credible than those likely to be taken by reasonable
consumers here. For example, the Commission imposed a similar
requirement to remedy the pain relief claim it found to have been
conveyed by the name ``Aspercreme'' in Thompson Medical Co., 104 F.T.C.
648 (1984). The likelihood that a consumer would except that a product
named Aspercreme would contain aspirin and would rely on that claim to
his or her detriment seems to me far greater than the likelihood that a
consumer would rely to his or her detriment on an implied message that
a product called Jogging in a Jug would provide the health benefits of
jogging.
[FR Doc. 95-11556 Filed 5-10-95; 8:45 am]
BILLING CODE 6750-01-M
