01-19724. Natural Organics, Inc., et al.; Analysis To Aid Public Comment

AGENCY:

Federal Trade Commission.

ACTION:

Proposed consent agreement.

SUMMARY:

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the complaint previously issued and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.

DATES:

Comments must be received on or before August 30, 2001.

ADDRESSES:

Comments should be directed to: FTC/Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Matthew Gold or Kerry O'Brien, Federal Trade Commission, Western Region—San Francisco Office, 901 Market St., Suite 570, San Francisco, CA 94103. [phone] or 848-5189.

SUPPLEMENTARY INFORMATION:

Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and § 3.25(f) of the Commission's rules of practice (16 CFR 3.25(f), notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for July 31, 2001), on the World Wide Web, at “http://www.ftc.gov/​os/​2001/​07/​index.htm.” A paper copy can be obtained from the FTC Public Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., Washington, DC 20580, either in person or by calling [phone].

Public comment is invited. Comments should be directed to: FTC/Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW., Washington, DC 20580. Two paper copies of each comment should be filed, and should be accompanied, if possible, by a 31/2-inch diskette containing an electronic copy of the comment. 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 § 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a proposed consent order with Natural Organics, Inc. and Gerald A. Kessler, the principal who controlled this corporation (referred to collectively as “Respondents”). The agreement would settle a complain by the Federal Trade Commission that Respondents engaged in unfair or deceptive acts or practices in violation of sections 5 and 12 of the Federal Trade Commission Act.

The proposed consent order has been placed on the public record for thirty (30) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) 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 advertising representations made about Pedi-Active A.D.D., a dietary supplement. The administrative complain alleged that Respondents violated the FTC Act by disseminating advertisements that made unsubstantiated efficacy claims about the ability of Pedi-Active A.D.D. to treat Attention Deficit Hyperactivity Disorder (“ADHD”) or certain symptoms of that disorder. Specifically, the complaint alleged that Respondents made unsubstantiated claims that Pedi-Active A.D.D. will: (1) Improve the attention span of children who have difficulty focusing on school work; (2) improve the scholastic performance of children who have difficulty focusing on school work; (3) improve the attention span of children who suffer from ADHD; (4) improve the scholastic performance of children who suffer from ADHD; and (5) treat or mitigate ADHD or its symptoms.

The proposed consent order contains provisions designed to prevent Respondents from engaging in acts and practices similar to those alleged in the complain in the future. Part I of the proposed consent order prohibits Respondents from claiming that Pedi-Active A.D.D. or any other food, drug, or dietary supplement (1) will improve the attention span of children who have difficulty focusing on school work, (2) will improve the scholastic performance of children who have difficulty focusing on school work, (30 will improve the attention span of children who suffer from ADHD, (4) will improve the scholastic performance of children who suffer from ADHD, or (5) can treat or mitigate ADHD in children, unless they posses competent and reliable scientific evidence substantiating the claim. In addition, Part II of the proposed consent order requires Respondents to possess competent and reliable scientific evidence before they market a product for children using the name “A.D.D.” or any other name that represents that the product can treat or mitigate ADHD. Finally, Part III of the proposed order prohibits Respondents from making any representation about the ability of any food, drug or dietary supplement marketed for children to treat or cure any disease or mental disorder, unless they possess competent and reliable scientific evidence.

Part IV of the proposed order states that Respondents will be permitted to make claims that the FDA has approved pursuant to the Nutrition Labeling and Education Act of 1990, or pursuant to sections 303-304 of the Food and Drug Administration Modernization Act of 1997.

Part V of the proposed order states that nothing in the order constitutes a waiver of Respondents' First Amendment rights.

As set out in Part VI of the proposed order, the proposed consent order will not apply to any product sold or distributed to consumers by third parties under private labeling agreements with Respondents, provided Respondents do not participate in any manner in the funding, preparation or dissemination of the product's advertising.

The remainder of the proposed consent order contains provisions regarding distribution of the order, record-keeping, notification of changes in corporate status or employment, termination of the order, and the filing of a compliance report.

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.

By direction of the Commission.

Benjamin I. Berman,

Acting Secretary.