[Federal Register Volume 60, Number 99 (Tuesday, May 23, 1995)]
[Notices]
[Pages 27309-27314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12588]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 932-3234]
Original Marketing Inc.; 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, the Florida-based
[[Page 27310]] corporation, two of its officers and an affiliated
advertising agency from making performance or benefit claims for any
weight-loss or weight-control product or program or acupressure device
unless the claims are true and substantiated by competent and reliable
scientific evidence. Also, the proposed consent agreement would
prohibit the respondents from misrepresenting any endorsement or
testimonial for any weight-loss or weight-control product or program or
any acupressure device as representing the typical or ordinary
experience of users. In addition, the individual respondents would be
required to post a $300,000 performance bond, or to pay that amount
into an escrow account, before marketing any weight-loss or weight-
control product or program or any acupressure device.
DATES: Comments must be received on or before July 24, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th Street and Pennsylvania Avenue, NW., Washington, DC
20580.
FOR FURTHER INFORMATION CONTACT:
Richard Cleland, FTC/S-4002, Washington, D.C. 20580, (202) 326-3088.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 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 Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
In the matter of Original Marketing, Inc., d/b/a ACU-STOP 2000,
and Franklin & Joseph, Inc., corporations, Barry A. Weiss,
individually and as an officer and director of Original Marketing,
Inc., and Roger Franklin, individually and as an officer and
director of Original Marketing, Inc. and Franklin & Joseph, Inc.,
File No. 932-3234.
Agreement Containing Consent Order To Cease and Desist
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Original Marketing, Inc. d/b/a Acu-Stop
2000 (``OMI'') and Franklin & Joseph, Inc., corporations; Barry A.
Weiss, individually and as an officer and director of Original
Marketing, Inc.; and Roger Franklin, individually and as an officer and
director of Original Marketing, Inc. and Franklin & Joseph, Inc.,
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 Original Marketing, Inc. d/b/a
Acu-Stop 2000 and Franklin & Joseph, Inc., by their duly authorized
officers; Barry A. Weiss, individually and as an officer and director
of Original Marketing, Inc.; and Roger Franklin, individually and as an
officer and director of Original Marketing, Inc. and Franklin & Joseph,
Inc., and their attorney and counsel for the Federal Trade Commission
that:
1. Proposed respondent OMI is a corporation organized, existing and
doing business under and by virtue of the laws of the State of Florida,
with its office and principal place of business located at 11570 Wiles
Road, in the City of Pompano Beach, State of Florida.
Proposed respondent Franklin & Joseph, Inc. is a corporation
organized, existing and doing business under and by virtue of the laws
of the State of New York, with its office and principal place of
business located at 237 Mamaroneck Avenue, in the City of White Plains,
State of New York.
Proposed respondent Barry A. Weiss is an officer and director of
OMI. He formulates, directs and controls the policies, acts and
practices of OMI. He resides at 22471 Vista Wood Way, Boca Raton,
Florida.
Proposed respondent Roger Franklin is an officer and director of
OMI and Franklin & Joseph, Inc. He formulates, directs and controls the
acts and practices of said corporations. He resides at 33 Maplemoor
Lane, White Plains, New York.
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 of facts, other than
jurisdictional facts, or of violations of law as alleged in the draft
of complaint.
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 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' addresses as stated in this agreement shall constitute
service. Proposed respondents waive any right they might 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
For the purposes of this Order: [[Page 27311]]
1. ``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 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.
2. ``Acupressure device'' shall mean any product, program, or
service that is intended to function by means of the principles of
acupressure.
I
It is ordered That respondents, Original Marketing, Inc. and
Franklin & Joseph, Inc., corporations, their successors and assigns,
and their officers; Barry A. Weiss, individually and as an officer and
director of Original Marketing, Inc.; Roger Franklin, individually and
as an officer and director of Original Marketing, Inc. and Franklin &
Joseph, Inc.; and respondents' agents, representatives and employees,
directly or through any partnership, corporation, subsidiary, division
or other device, in connection with the advertising, packaging,
labeling, promotion, offering for sale, sale, or distribution of the
AcuStop 2000 or any other acupressure device 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
a. Such product causes significant weight loss;
B. Such product causes significant weight loss without the need to
diet or exercise;
C. Such product controls appetite or eliminates a person's craving
for food; or
D. Such product is scientifically proven to cause significant
weight loss or control appetite.
II
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., corporations, their successors and
assigns, and their officers; Barry A. Weiss, individually and as an
officer and director of Original Marketing, Inc.; Roger Franklin,
individually and as an officer and director of Original Marketing, Inc.
and Franklin & Joseph, Inc.; and respondents' agents, representatives
and employees, directly or through any partnership, corporation,
subsidiary, division or other device in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale,
or distribution of any weight-loss or weight-control product or program
or any acupressure device in or affecting commerce, as ``commerce'' is
defined in the Federal Trade Commission Act, do forthwith cease and
desist from making any representation, directly or by implication,
regarding the performance, benefits, efficacy, or safety of such
product, program, or device unless such representation is true and
unless, at the time of making such representation, respondents possess
and rely upon competent and reliable scientific evidence that
substantiates the representation.
III
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., corporations, their successors and
assigns, and their officers; Barry A. Weiss, individually and as an
officer and director of Original Marketing, Inc.; Roger Franklin,
individually and as an officer and director of Original Marketing, Inc.
and Franklin & Joseph, Inc.; and respondents' agents, representatives
and employees, directly or through any partnership, corporation,
subsidiary, division or other device, in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale,
or distribution of any weight-loss or weight-control product or program
or any acupressure device 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 C.F.R. Sec. 255.0(b))
of the product, program, or device represents the typical or ordinary
experience of members of the public who use the product, program, or
device unless this is the case.
IV
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., corporations, their successors and
assigns, and their officers; Barry A. Weiss, individually and as an
officer and director of Original Marketing, Inc.; Roger Franklin,
individually and as an officer and director of Original Marketing, Inc.
and Franklin & Joseph, Inc.; and respondents' agents, representatives
and employees, directly or through any partnership, corporation,
subsidiary, division or other device, in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale,
or distribution of any weight-loss or weight-control product or program
or any acupressure device 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,
the contents, validity, results, conclusions, or interpretations of any
test or study.
V
It is further ordered That respondents, and their successors and
assigns, are jointly and severally liable for, and shall pay refunds to
eligible consumers of Acu-Stop 2000 as provided herein. ``Eligible
consumer'' shall mean any person who purchases, or has purchased, an
Acu-Stop 2000 from respondents; who returns, or has returned, the
device to respondents requesting a refund prior to ninety (90) days
after the date this Order becomes final; and who has not previously
received a refund. ``Eligible consumer'' shall not include persons who
request a credit from a credit card issuer and who do not otherwise
request a credit or refund from respondents. Respondents shall provide
to the Commission all information necessary to identify eligible
consumers and to verify their eligibility.
A. Not later than the date this Order becomes final, respondents
shall deposit into an escrow account, to be established by the
Commission for the purpose of receiving payments due under the
provisions of this Order (``escrow account''), the sum of fifty
thousand dollars ($50,000.00). These funds, together with accrued
interest, less any amount necessary to pay the costs of administering
the escrow account and refund program provided herein, shall be used by
the Commission or its representative to pay refunds to those eligible
consumers who purchased an Acu-Stop 2000 from respondents prior to
January 1, 1995. Any funds remaining in the escrow account after all
refunds to consumers under this subparagraph have been paid shall be
paid to the United States Treasury.
At any time after this Order becomes final, the Commission may
direct the escrow agent to transfer funds from the escrow account,
including accrued interest, to the Commission to be distributed as
herein provided. Respondents 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. The Commission, or its
representative, shall, in its sole discretion, select the escrow agent.
Costs associated with the administration of the escrow account and
refund program provided herein, if any, shall be paid from funds in the
escrow account. [[Page 27312]]
Respondents relinquish all dominion, control and title to the funds
paid into the escrow account, and all legal and equitable title to the
funds shall vest in the Treasurer of the United States and in the
designated consumers. Respondents shall make no claim to or demand for
the return of the funds, directly or indirectly, through counsel or
otherwise; and in the event of bankruptcy of respondents, respondents
acknowledge that the funds are not part of the debtor's estate, nor
does the estate have any claim or interest therein.
B. Respondents shall pay from their own funds refunds to all
eligible consumers who are not paid from the escrow account provided
herein. This requirement shall include:
(1) all refund requests from eligible consumers who purchased an
Acu-Stop 2000 after January 1, 1995, and
(2) all refund requests under subparagraph A that exceed the amount
available in the escrow account.
All refunds required in subparagraph B.1 shall be paid within
thirty (30) days after the receipt of the request, or within thirty
(30) days after the date this Order becomes final, whichever is later.
All refunds required in subparagraph B.2 shall be paid within thirty
(30) days after notification to respondents that the funds available in
the escrow account to pay refunds have been depleted.
VI
It is further ordered That for three (3) years after this Order
becomes final, respondents, and their successors and assigns, shall
maintain documents and records demonstrating the manner and form of
respondents' compliance with Part V of this Order, and upon request
make available to the Commission, at a place it designates for
inspection and copying, copies of:
A. All documents and records evidencing the refunds respondents
paid, or charge card credits issued, to eligible consumers, as that
term is defined in Part V;
B. A list containing the name, mailing address, and purchase price
for each eligible consumer who requested a refund;
C. The name and last known address of each consumer who requested a
refund but was refused and the reason for each refusal to refund; and
D. Copies of all correspondence and other communications to, or
from, any consumers regarding a refund.
VII
It is further ordered the respondents Barry A. Weiss, Roger
Franklin, and their agents, representatives, and employees, directly or
through any partnership, corporation, subsidiary, division, joint
venture or other device, do forthwith cease and desist from
advertising, promoting, offering for sale, selling, or distributing any
weight-loss or weight-control product or program or any acupressure
device to the general public, unless, prior to advertising, promoting,
offering for sale, selling, or distributing to the general public any
such product, respondents Weiss and Franklin first obtain a performance
bond in the principal sum of three hundred thousand dollars ($300,000).
Said bond shall be conditioned upon compliance by respondents Weiss and
Franklin with the provisions of the Federal Trade Commission Act, and
with the provisions of this Order. The bond shall be deemed continuous
and remain in full force and effect as long as respondents Weiss and
Franklin continue to advertise, promote, offer for sale, sell, or
distribute any weight-loss or weight-control product or program or any
acupressure device, directly or indirectly, to the general public, and
for at least five (5) years after they have ceased any such activity.
The bond shall cite this Order as the subject matter of the bond and
provide surety against respondents' failure to pay consumer redress or
disgorgement as set forth herein. Such performance bond shall be an
influence agreement providing surety issued by a surety company that is
admitted to do business in a state in which respondents Weiss and
Franklin are doing business and that holds a Federal Certificate of
Authority as Acceptable Surety on Federal Bonding and Reinsuring.
Respondents Weiss and Franklin shall provide a copy of such
performance bond to the associate director of the Federal Trade
Commission's Division of Enforcement, 6th Street & Pennsylvania Avenue,
N.W., Washington, D.C. 20580, prior to the commencement of any business
for which such bond is required.
Provided, however, in lieu of a performance bond, respondents Weiss
and Franklin may establish and fund, pursuant to the terms set forth
herein, an escrow account in the principal sum of three hundred
thousand dollars ($300,000) in cash, or such other assets of equivalent
value, which the Commission, or its representative, in its sole
discretion may approve. Respondents Weiss and Franklin shall maintain
such amount in that account for as long as they continue to advertise,
promote, offer for sale, sell, or distribute any weight-loss or weight-
control product or program or any acupressure device, directly or
indirectly, to the general public, and for at least five (5) years
after they have ceased any such activity. Respondents Weiss and
Franklin shall pay all costs associated with the creation, funding,
operation, and administration of the escrow account. The Commission, or
its representative, shall, in its sole discretion, select the escrow
agent. The escrow agreement shall be in substantially the form attached
to this Order as Exhibit A.
The performance bond or escrow agreement shall provide that the
surety company or escrow agent, within thirty (30) days following
receipt of notice that a final judgment or an order of the Commission
against respondent Weiss and/or respondent Franklin for consumer
redress or disgorgement in an action brought under the provisions of
the Federal Trade Commission Act has been entered, or, in the case of
an order of the Commission, has become final, finding that Weiss and/or
Franklin has violated the terms of this Order or the Federal Trade
Commission Act, and determining the amount of consumer redress or
disgorgement to be paid, shall pay to the Commission so much of the
performance bond or funds of the escrow account as does not exceed the
amount of consumer redress or disgorgement ordered, and which remains
unsatisfied at the time notice is provided to the surety company or
escrow agent, provided that, if respondents have agreed to the entry of
a court order or an order of the Commission, a specific finding that
respondents violated the terms of this Order or the provisions of the
Federal Trade Commission Act shall not be necessary. A copy of the
notice provided for herein shall be mailed to respondent Weiss and/or
respondent Franklin at their last known address.
Respondents Weiss and Franklin may not disclose the existence of
the performance bond or escrow account to any consumer, or other
purchaser or prospective purchaser, to whom a covered product, program,
or device is advertised, promoted, offered for sale, sold, or
distributed, without also disclosing at the same time and in a like
manner that the performance bond or escrow account is required by order
of the Federal Trade Commission in settlement of changes that
respondents engaged in false and misleading representations.
VIII
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 [[Page 27313]] Trade Commission
or its staff 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.
IX
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., shall:
A. Within thirty (30) days after service of this Order, provide a
copy of this Order to each of respondents' 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 issuance of this
Order, provide a copy of this Order to each of respondents' future
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 respondents or any subsidiary, successor, or assign,
within three (3) days after the person assumes his or her position.
X
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., shall notify the Federal Trade Commission
at least thirty (30) days prior to any proposed change in their
corporate structures, 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,
the planned filing of a bankruptcy petition, or any other corporate
change that may affect compliance obligations arising out of this
Order.
XI
It is further ordered That respondents, Barry A. Weiss and Roger
Franklin, shall, for a period of five (5) years from the date of
issuance 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
respondents' 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.
XII
It is further ordered That respondents, Original Marketing, Inc.
and Franklin & Joseph, Inc., corporations, their successors and
assigns, and their officers; Barry A. Weiss, individually and as an
officer and director of Original Marketing, Inc.; and Roger Franklin,
individually and as an officer and director of Original Marketing, Inc.
and Franklin & Joseph, Inc., 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.
Exhibit A
This Escrow Agreement, made and entered into this ______ day of
__________, ____, by and between __________________ (hereinafter
``__________''); and the Federal Trade Commission, an agency of the
Government of the United States of America, by and through
________________ (hereinafter ``FTC''); and ____________________
(hereinafter ``Escrow Agent'');
Witnesseth:
Whereas, the FTC and ____________ have entered into an Agreement
Containing Consent Order to Cease and Desist (hereinafter ``Consent
Order''), a copy of which is attached hereto as Exhibit A; and
Whereas, the Consent Order requires that __________ cease and
desist from advertising, promoting, offering for sale, selling, or
distributing any weight-loss or weight-control product or program or
any acupressure device to the general public unless ______ first
establishes and maintains an escrow account, under the terms and
conditions specified in the Consent Order;
Now, Wherefore, in accordance with the terms of the Consent Order,
which are incorporated herein by reference, the parties covenant and
agree as follows:
1. ________ shall establish an Escrow Account at
__________________, to be styled __________ Escrow Account,
________________, Escrow Agent. __________ shall deposit into the
Escrow Account an initial sum of at least three hundred thousand
dollars ($300,000.00) in cash, or other approved assets of equivalent
value. Thereafter, __________ shall deposit such additional amounts
into the Escrow Account as are necessary to maintain the total amount
in the Escrow Account at three hundred thousand dollars ($300,000.00).
2. The Escrow Agent shall be the sole signatory on the Escrow
Account and access to the funds held in that account shall be solely
through the Escrow Agent. It is understood by the parties to this
Escrow Agreement that upon the signing of this Agreement, ____________
relinquishes to the Escrow Agent, all legal title to the escrow funds,
except as to such amounts in the Escrow Account that are in excess of
three hundred thousand dollars ($300,000.00). Until and unless the
Escrow Account is terminated as provided for herein, ____________
agrees to make no claim to or demand for return of the funds, directly
or indirectly, through counsel or otherwise; and, in the event of
bankruptcy, ____________ acknowledges that the funds are not part of
____________'s estate, nor does the estate have any claim or interest
therein.
3. The Escrow Agent and the parties hereto agree that the escrow
funds shall be held only in accordance with the terms of the Consent
Order and the Escrow Agreement. __________ shall pay all costs
associated with the creation, funding, operation, and administration of
the Escrow Account as they become due. In the event that ____________
fails to pay such costs as they become due, the Escrow Agent shall pay
the costs from the interest earned on the escrow funds.
4. The Escrow Agent, within thirty days following receipt of notice
that a final judgment or an order of the Commission against
____________ for consumer redress or disgorgement in an action brought
under the provisions of the Federal Trade Commission Act has been
entered, or, in the case of an order of the Commission, has become
final, finding that ____ has violated the terms of the Consent Order or
the provisions of the Federal Trade Commission Act, and determining the
amount of consumer redress or disgorgement to be paid, which notice
shall also be mailed to ____________ at his last known address, shall
pay to the Commission so much of the funds of the Escrow Account as
does not exceed the amount of consumer redress or disgorgement ordered,
and which remains unsatisfied at the time notice is provided to the
Escrow Agent, provided that, If ____________ has agreed to the entry of
a court order or an order of the Commission, a specific finding that
____________ violated the terms of the Consent Order or the provisions
of the Federal Trade Commission Act shall not be necessary. The Escrow
Agent shall have the power to convert to cash so [[Page 27314]] much of
the Escrow Account assets as are necessary to satisfy the obligations
of the judgment or order .
5. The Escrow Account shall continue until at least five years
after ____________ last advertises, promotes, offers for sale, sells,
or distributes any product specified in the Consent Order, at which
time, if there are no pending FTC investigations, legal or
administrative actions by the FTC against ____________, or unsatisfied
obligations pursuant to a judgment or order described in paragraph 4
herein, for which a claim could be made against the escrow funds under
the terms of the Consent Order, the FTC shall, upon ____________'s
request, instruct the Escrow Agent to terminate the Escrow Account and
return the balance of the Escrow Account to ____________. At such time,
the Escrow Agent shall be fully and completely released from its agency
as herein described. The legal title to the escrow funds shall vest in
____________ at such time as the Escrow Agent, pursuant to instructions
from the FTC, returns the funds to ____________.
Witness the signatures of the parties, the day and year first above
written.
Date:
Signatures
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission has accepted an agreement, subject to
final approval, to a proposed consent order from proposed respondents
Original Marketing, Inc. d/b/a Acu-Stop 2000; Franklin & Joseph, Inc.;
Barry A. Weiss; and Roger Franklin.
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 and take other appropriate action or make
final the agreement's proposed order.
This matter concerns advertising related to the sale of an ear-mold
acupressure device, marketed under the name Acu-Stop 2000, which nests
in the ear. The Commission's Complaint charges that proposed
respondents Original Marketing, Inc. d/b/a Acu-Stop 2000; Franklin &
Joseph, Inc.; Barry A. Weiss; and Roger Franklin falsely represented
that the Acu-Stop 2000: (1) Causes significant weight loss; (2) causes
significant weight loss without the need to diet or exercise; and (3)
controls appetite or eliminates a person's craving for food.
The Complaint also alleges that proposed respondents falsely and
misleadingly represented that they possessed and relied upon a
reasonable basis when they made those claims. The Complaint further
alleges that proposed respondents falsely represented that the Acu-Stop
2000 is scientifically proven to cause significant weight loss and
control appetite. Finally, the Complaint alleges that proposed
respondents falsely represented that testimonials from consumers
appearing in advertisements for the Acu-Stop 2000 reflect the typical
or ordinary experience of members of the public who have used the
device.
The proposed consent order contains provisions designed to remedy
the violations charged and to prevent proposed respondents from
engaging in similar acts in the future.
Part I of the proposed order prohibits proposed respondents from
representing that the Acu-Stop 2000 or any other acupressure device:
(1) Causes significant weight loss; (2) causes significant weight loss
without the need to diet or exercise; (3) controls appetite or
eliminates a person's craving for food; or (4) is scientifically proven
to cause significant weight loss and control appetite. The order
defines ``acupressure device'' as ``any product, program, or service
that is intended to function by means of the principles of
acupressure.'' Part II requires proposed respondents to possess
competent and reliable scientific evidence before making
representations regarding the performance, benefits, efficacy, or
safety of any weight-loss or weight-control product or program or any
acupressure device. Part III prohibits proposed respondents from
falsely claiming that endorsements or testimonials for any weight-loss
or weight-control product or program or any acupressure device
represent the typical or ordinary experience of members of the public
who use the product, program, or device. Part IV prohibits proposed
respondents from misrepresenting the results of tests or studies for
any weight-loss or weight-control product or program or any acupressure
device.
Part V holds proposed respondents jointly and severally liable for,
and requires them to pay, refunds to all purchasers of the Acu-Stop
2000 who return or have returned the device for a refund. Part V.A.
requires respondents to deposit $50,000 into an escrow account for
payment of refunds to eligible consumers who purchased the device prior
to January 1, 1995, and who previously have requested a refund or do so
within ninety days after the proposed order becomes final. Part V.B.
requires proposed respondents to pay, out of their own funds, all
refund requests from eligible consumers that exceed $50,000 and all
such requests for purchases made after January 1, 1995. Together, these
two provisions require proposed respondents to pay all existing refund
requests and future requests made up to ninety days after the proposed
order becomes final. Part VI requires that proposed respondents
maintain records demonstrating the manner and form of their compliance
with the requirement that they make refunds.
Part VII requires that proposed respondents Weiss and Franklin post
a bond or fund an escrow account in the amount of $300,000 prior to the
future marketing any weight-loss or weight-control product or program
or any acupressure device.
Part VIII requires proposed respondents to maintain, for five (5)
years, all materials that support, contradict, qualify, or call into
question any representations they make which are covered by the
proposed order. Part IX requires proposed respondents Original
Marketing, Inc. and Franklin & Joseph, Inc. to distribute a copy of the
order to current and future principals, officers, directors, and
managers, as well as to any employees having sales, advertising, or
policy responsibility with respect to the subject matter of the order.
Under Part X of the proposed order, proposed respondents Original
Marketing, Inc. and Franklin & Joseph, Inc. shall notify the Federal
Trade Commission at least thirty (30) days prior to any proposed change
in their corporate structures that may affect compliance with the
order's obligations. Part XI requires that proposed respondents Weiss
and Franklin, for a period of five (5) years, notify the Commission of
any change in their business or employment. Part XII obliges proposed
respondents to file compliance reports with the Commission.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not to constitute an official interpretation
of the agreement and proposed order or to modify in any way their
terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-12588 Filed 5-22-95; 8:45 am]
BILLING CODE 6750-01-M
