[Federal Register Volume 60, Number 119 (Wednesday, June 21, 1995)]
[Notices]
[Pages 32324-32327]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15191]
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FEDERAL TRADE COMMISSION
[File No. 942-3263]
WLAR Co., 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
prohibit, among other things, a Falls Church, Virginia weight-loss
company from making false or unsubstantiated representations for their
weight-loss booklets or other weight-loss products or program, and
would require respondent and its owner to disclose in future ads making
weight-related claims for these or similar booklets that the products
consist solely of booklets or pamphlets.
DATES: Comments must be received on or before August 21, 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 L. Cleland, FTC/S-4002,
Washington, DC 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)).
Agreement Containing Consent Order to Cease and Desist
In the matter of WLAR Co., a corporation, and Michael K. Craig,
individually and as an officer of said corporation. File No. 942
3263.
The Federal Trade Commission, having initiated an investigation of
certain acts and practices of WLAR Co., a corporation, and Michael K.
Craig, individually and as an officer of said corporation, hereinafter
sometimes referred to as proposed respondents, and it now appears 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 WLAR Co., by its authorized
officer, and Michael K. Craig, individually and as an officer of said
corporation, and their attorney, and counsel for the Federal Trade
Commission that:
1. Proposed respondent WLAR Co. is a corporation organized,
existing, and doing business under and by virtue of the laws of the
State of Delaware, with its office and principal place of business
located at 5622 Columbia Pike #106, in the City of Falls Church, State
of Virginia, 22041.
Proposed respondent Michael K. Craig is or was at relevant times
herein the sole owner, officer, and employee of said corporation.
Individually or in concert with others, he participated in and/or
formulated, directed, and controlled the acts and practices of said
corporation and his 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 into 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, addressed to Arnold & Porter, 1200 New Hampshire Avenue,
N.W., Washington, D.C. 20036-6885, 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 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 purposes of this Order: [[Page 32325]]
1. ``Clearly and prominently'' shall mean as follows:
(a) In a television or videotape advertisement, the disclosure
shall be presented simultaneously in both the audio and video portions
of the advertisement. The audio disclosure shall be delivered in a
volume and cadence and for a duration 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 print advertisement, the disclosure shall be in close
proximity to the representation that triggers the disclosure and given
in at least twelve (12) point type.
(c) In a radio advertisement, the disclosure shall be delivered in
a volume and cadence sufficient for an ordinary consumer to hear and
comprehend it.
2. ``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.
3. ``Weight-loss product'' shall mean any product or program
designed or used to prevent weight gain or to produce weight loss,
reduction or elimination of fat, slimming, or caloric deficit in a user
of the product or program.
I
It is ordered that respondents, WLAR Co., a corporation, its
successors and assigns, and its officers; and Michael K. Craig,
individually and as an officer of WLAR Co.; and respondents' agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the manufacturing, advertising, packaging, labeling, promotion,
offering for sale, sale, or distribution of Swedish 19, Swedish System,
BM Program, New Shape, Body Maker, 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:
A. Such product is new or is a new weight-loss discovery; or
B. Such product does not require dieting.
II
It is further ordered that respondents, WLAR Co., a corporation,
its successors and assigns, and its officers; and Michael K. Craig,
individually and as an officer of WLAR Co.; and respondents' agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the manufacturing, advertising, packaging, labeling, promotion,
offering for sale, sale, or distribution of any weight-loss 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:
A. Such product causes fast or easy weight loss;
B. Such product is more effective than other products or programs
in controlling appetite or causing weight loss;
C. Purchasers of such products are successful in controlling
appetite, losing weight, or reducing body fat;
D. Such product causes users to develop a new set of eating habits,
thereby reducing caloric intake and causing significant and long-term
or permanent weight loss; or
E. Such product has any effect on users' weight, body size or
shape, body measurements, or appetite,
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, WLAR Co., a corporation,
its successors and assigns, and its officers; and Michael K. Craig,
individually and as an officer of WLAR Co.; and respondents' agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the manufacturing, advertising, packaging, labeling, promotion,
offering for sale, sale, or distribution of any weight-loss 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 has been used
successfully by any number of persons unless, at the time of making
such representation, respondents possess and rely upon competent and
reliable evidence, which when appropriate must be competent and
reliable scientific evidence, that substantiates the representation.
IV
Nothing in Parts I through III of this Order shall prohibit
respondents from making representations which promote the sale of books
and other publications, provided that, the advertising only purports to
express the opinion of the author or to quote the contents of the
publication; the advertising discloses the source of the statements
quoted or derived from the contents of the publication; and the
advertising discloses the author to be the source of the opinions
expressed about the publication. This Part shall not apply, however, if
the publication or its advertising is used to promote the sale of some
other product as part of a commercial scheme.
V
It is further ordered that respondents, WLAR Co., a corporation,
its successors and assigns, and its officers; and Michael K. Craig,
individually and as an officer of WLAR Co.; and respondents' agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the manufacturing, advertising, packaging, labeling, promotion,
offering for sale, sale, or distribution of Swedish 19, Swedish System,
BM Program, New Shape, Body Maker, 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 making
any representation, in any manner, directly or by implication, that any
such product has any effect on weight or body size, unless respondents
disclose, clearly and prominently, and in close proximity to such
representation, that such product consists solely of a booklet or
pamphlet containing information and advice on weight loss.
VI
It is further ordered that respondents, WLAR Co., a corporation,
its successors and assigns, and its officers; and Michael K. Craig,
individually and as an officer of WLAR Co.; and respondents' agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the manufacturing, advertising, packaging, labeling, promotion,
offering for sale, sale, or distribution of any weight-loss product, in
or affecting commerce, as ``commerce'' is defined in the Federal Trade
Commission Act, do forthwith cease and desist from making any
[[Page 32326]] representation, in any manner, directly or by
implication, that any such weight-loss product has any effect on weight
or body size, unless they disclose, clearly and prominently, and in
close proximity to such representation, that diet and/or increasing
exercise is required to lose weight; provided however, that this
disclosure shall not be required if respondents possess and rely upon
competent and reliable scientific evidence demonstrating that the
weight-loss product is effective without either dieting or increasing
exercise.
VII
It is further ordered that respondent, WLAR Co., shall:
A. Within thirty (30) days after 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 five (5) days from the date of issuance of this
Order, provide a copy of this Order to each of respondent's 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 respondent or any subsidiary, successor, or assign,
within three (3) days after the person assumes his or her
responsibilities.
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 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 respondent, WLAR Co., shall notify the
Federal Trade Commission at least thirty (30) days prior to any
proposed change in its 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, the planned filing of a bankruptcy petition, or any other
corporate change that may affect compliance obligations arising out of
this Order.
X
It is further ordered that respondent, Michael K. Craig, shall, for
a period of three (3) 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 involving the advertising, offering for sale,
sale, or distribution of any weight-loss product. 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 duties and responsibilities.
XI
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's
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 an agreement, subject to
final approval, to a proposed consent order from proposed respondents
WLAR Co. and Michael K. Craig.
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 for five weight-loss products,
marketed under the names ``Swedish 19,'' ``Body Maker,'' ``BM
Program,'' ``New Shape,'' and `'Swedish System'' (collectively referred
to herein as `'the Swedish 19 products''). These products are booklets
or pamphlets containing advice on dieting and exercise.
The Commission's Complaint charges that proposed respondents WLAR
Co. and Michael K. Craig falsely represented that users of the Swedish
19 products are not required to consciously diet to lose weight and
that BM Program, New Shape, and Body Maker are new weight-loss
discoveries. The Complaint also alleges that the proposed respondents
falsely represented that they possessed a reasonable basis when they
made the following claims: (1) the Swedish 19 products cause fast and
easy weight loss; (2) the Swedish 19 products are more effective than
other products or programs in controlling appetite and causing weight
loss; (3) purchasers of the Swedish 19 products are successful in
controlling appetite, losing weight, and reducing body fat; (4) Swedish
19, Swedish System, BM Program, and Body Maker cause users to develop a
new set of eating habits, thereby reducing caloric intake and causing
significant and long-term or permanent weight loss; and (5) thousands
of girls have successfully lost weight by using Swedish 19, Swedish
System, New Shape, and Body Maker. Finally, the Complaint alleges that
respondents' failure to disclose in advertisements that the Swedish 19
products consist only of booklets or pamphlets containing advice
concerning techniques for reducing caloric intake and/or exercise, and
that reducing caloric intake and/or increasing exercise is required to
lose weight was a deceptive practice.
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 Swedish 19 products, or substantially similar
products, are new or are a new weight-loss discovery, or that such
products do not require dieting. Part II requires proposed respondents
to possess competent and reliable scientific evidence before making
representations that any weight-loss product causes fast or easy weight
loss; is more effective than other products or programs in controlling
appetite or causing weight loss; causes users to develop a new set of
eating habits, thereby reducing caloric intake and causing significant
and long-term or permanent weight loss; or has any effect on users'
weight, body size or shape, body measurements, or appetite; or that
purchasers of such products are successful in controlling appetite,
losing weight, or reducing body fat. Part III requires proposed
respondents to have substantiation for any representation that any
weight-loss product has been used successfully by any number of
persons.
Part IV of the proposed order provides that nothing in Parts I
through III [[Page 32327]] prohibits proposed respondents from making
representations which promote the sale of books and other publications,
provided that, the advertising only purports to express the opinion of
the author or to quote the contents of the publication; the advertising
discloses the source of the statements quoted or derived from the
contents of the publication; and the advertising discloses the author
to be the source of the opinions expressed about the publication. The
proposed order further provides that Part IV does not apply to any
publication or its advertising that is used to promote the sale of some
other product as part of a commercial scheme.
Part V prohibits proposed respondents from representing that the
Swedish 19 products, or any substantially similar product, has any
effect on weight or body size, unless respondents disclose prominently
that the product consists solely of a booklet or pamphlet containing
information and advice on weight loss. Part VI requires proposed
respondents to disclose that diet or exercise are required to lose
weight in connection with any representation about the effect of a
weight-loss product on weight or body size, unless they have competent
and reliable scientific evidence to the contrary.
Part VII requires WLAR Co. to distribute a copy of the order to
certain current and future company personnel. 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 that are covered by the proposed order. Under
Part IX of the proposed order, WLAR Co. is required to notify the
Federal Trade Commission at least thirty (30) days prior to any
proposed change in its corporate structure that may affect compliance
with the order's obligations. Part X requires that Michael K. Craig,
for a period of three (3) years, notify the Commission of any change in
his business or employment or of his affiliation with any new business
or employment involving the advertising, offering for sale, sale, or
distribution of any weight-loss product. Part XI obligates 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 intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 95-15191 Filed 6-20-95; 8:45 am]
BILLING CODE 6750-01-M
