[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4046]


[[Page Unknown]]

[Federal Register: February 23, 1994]


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FEDERAL TRADE COMMISSION
[Dkt. 9251]

 

Synchronal Corporation, 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, Thomas L. Fenton, a former officer of 
Synchronal Corporation, from disseminating a purported baldness cure 
infomerical, for a product called Omexin; from misrepresenting that any 
commercial is an independent program; and from making unsubstantiated 
claims for any food, drug or device in the future.

dates: Comments must be received on or before April 25, 1994.

addresses: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

for further information contact: Lisa Kopchik, FTC/S-4002, Washington, 
DC 20580. (202) 326-3139.

supplementary information: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 3.25(f) of 
the Commission's Rules of Practice (16 CFR 3.25(f)), 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)).

Agreement Containing Consent Order To Cease and Desist

    In the matter of:

Synchronal Corporation, Synchronal Group, Inc., Smoothline 
Corporation, and Omexin Corporation, corporations,
Ira Smolev, individually and as a former officer and director of 
Synchronal Corporation and Synchronal Group, Inc.,
Richard E. Kaylor, individually and as a former officer and director 
of Synchronal Corporation, Synchronal Group, Inc., Smoothline 
Corporation, and Omexin Corporation,
Thomas L. Fenton, individually and as a former officer and director 
of Synchronal Corporation and Synchronal Group, Inc., and
Ana Blau a/k/a Anushka, and Steven Victor, M.D. individually.

    The agreement herein, by and between Thomas L. Fenton, individually 
and as a former officer and director of Synchronal Corporation and 
Synchronal Group, Inc., hereinafter sometimes referred to as 
respondent, and his attorneys, and counsel for the Federal Trade 
Commission, is entered into in accordance with the Commission's Rule 
governing consent order procedures. In accordance therewith the parties 
hereby agree that:
    1. Respondent Thomas L. Fenton is or was at relevant times herein 
an officer and director of Synchronal Corporation and Synchronal Group, 
Inc. He formulated, directed, and controlled the policies, acts and 
practices of said corporations. His home address is 160 East 38th 
Street, New York, New York 10036.
    2. Respondent has been served with copies of the complaint and the 
amended complaint issued by the Federal Trade Commission charging him 
with violations of Sections 5(a) and 12 of the Federal Trade Commission 
Act and the provisions of the Postal Reorganization Act, 39 U.S.C. 
3009, and has filed an answer to said complaint denying said charges.
    3. Respondent admits all the jurisdictional facts set forth in the 
Commission's complaint and amended complaint in this proceeding.
    4. Respondent waives:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) Any claim under the Equal Access to Justice Act.
    5. This agreement shall not become a 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 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 respondent, 
in which event it will take such action as it may consider appropriate, 
or issue and serve its decision, in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by respondent of facts, other than 
jurisdictional facts, or of violations of law as alleged in the 
complaint and the amended complaint issued by the Commission.
    7. 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 3.25(f) of the Commission's 
Rules, the Commission may without further notice to respondent, (1) 
issue 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 decision containing the agreed-to 
order to respondent's address as stated in this agreement shall 
constitute service. Respondent waives any right he might have to any 
other manner of service. The complaint and the amended 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.
    8. Respondent has read the complaint, the amended complaint and the 
order contemplated hereby. He understands that once the order has been 
issued, he will be required to file one or more compliance reports 
showing that he has fully complied with the order. Respondent further 
understands that he 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:
    1. ``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 by others in the profession to yield 
accurate and reliable results.
    2. ``Video advertisement'' shall mean any advertisement intended 
for dissemination through television broadcast, cablecast, home video, 
or theatrical release.
I
    It is ordered, That respondent Thomas L. Fenton, individually and 
as a former officer and director of Synchronal Corporation and 
Synchronal Group, Inc., and respondent's 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 product or service in or affecting commerce, as 
``commerce'' is defined in the Federal Trade Commission Act, do 
forthwith cease and desist from selling, broadcasting or otherwise 
disseminating, or assisting others to sell, broadcast or otherwise 
disseminate, in part or in while, the program-length television 
advertisement for Omexin described and identified in the Complaint as 
``Can You Beat Baldness?''
II
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., and respondent's agents, 
representatives and employees, directly or through any partnership, 
corporation, subsidiary, division or other device, do forthwith cease 
and desist from:
    A. Representing, directly or by implication, in connection with the 
advertising, packaging, labeling, promotion, offering for sale, sale or 
distribution of Omexin or any other substantially similar hair loss 
treatment product or service in or affecting commerce, as ``commerce'' 
is defined in the Federal Trade Commission Act, that:
    1. Such product or service contains an ingredient that can or will 
curtail hair loss for a large majority of balding men and women;
    2. Such product or service contains an ingredient that can or will 
promote the growth of significant numbers of new, pigmented terminal 
hairs where hair has previously been lost for a large majority of men 
and women;
    3. Such product or service contains an ingredient that has been 
scientifically proven to curtail hair loss for a large majority of men 
and women;
    4. Such product or service contains an ingredient that has been 
scientifically proven to promote the growth of new, pigmented terminal 
hairs where hair has previously been lost for a large majority of men 
and women; or
    5. Such product or service has successfully curtailed hair loss and 
promoted new hair growth for thousands of balding men and women.
    For purposes of this Order a ``substantially similar hair loss 
treatment product or service'' shall be defined as any product or 
service that is advertised or intended for sale over-the-counter to 
treat, cure or curtail hair loss and which contains omentum or any 
extract thereof.
    B. Representing, directly or by implication, in connection with the 
advertising, packaging, labeling, promotion, offering for sale, sale or 
distribution of any other product or service in or affecting commerce, 
as ``commerce'' is defined in The Federal Trade Commission Act, that:
    1. The use of the product or service can or will prevent, cure, 
relieve, reverse, or reduce loss of hair;
    2. The use of the product or service can or will promote the growth 
of hair where hair has already been lost;
    3. The product or service is an effective remedy for hair loss in a 
substantial number of cases; or
    4. Any test or study establishes that the product or service 
relieves, cures, prevents or reverses hair loss,

unless such representation is true and unless, at the time of making 
such representation, respondent possesses and relies upon competent and 
reliable scientific evidence that substantiates the representation.
    C. Advertising, packaging, labeling, promoting, offering for sale, 
selling, or distributing any product that is represented as promoting 
hair growth or preventing hair loss, unless the product is the subject 
of an approved new drug application for such purpose under the Federal 
Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq., provided that, 
this subpart shall not limit the requirements of Part II.A and B 
herein.
III
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., and respondent's 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 product or service 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.
IV
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., and respondent's 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 product or service 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 any food, drug or device, as those terms are 
defined in Section 15 of the Federal Trade Commission Act, 15 U.S.C. 
55, unless, at the time of making such representation, respondent 
possesses and relies upon competent and reliable scientific evidence 
that substantiates the representation.
V
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., and respondent's 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 product or service in or affecting 
commerce, as ``commerce'' is defined in the Federal Trade Commission 
Act, do forthwith cease and desist from creating, producing, selling, 
or disseminating:
    A. Any advertisement that misrepresents, directly or by 
implication, that it is not a paid advertisement;
    B. Any commercial or other video advertisement fifteen (15) minutes 
in length or longer or intended to fill a broadcasting or cablecasting 
time slot of fifteen (15) minutes in length or longer that does not 
display visually, in a clear and prominent manner and for a length of 
time sufficient for an ordinary consumer to read, within the first 
thirty (30) seconds of the commercial and immediately before each 
presentation of ordering instructions for the product or service, the 
following disclosure:

The program you are watching is a paid advertisement for [the 
product or service].

Provided that, for the purposes of this provision, the oral or visual 
presentation of a telephone number or address for viewers to contact to 
place an order for the product or service shall be deemed a 
presentation of ordering instructions so as to require the display of 
the disclosure provided herein.
VI
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., and respondent's 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 product or service 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 the product or service represents the typical or 
ordinary experience of members of the public who use the product or 
service, unless such is the fact.
VII
    It is further ordered, That respondent Thomas L. Fenton, 
individually and as a former officer and director of Synchronal 
Corporation and Synchronal Group, Inc., shall, for three (3) years 
after the date of the last dissemination to which they pertain, 
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 by respondent in 
disseminating any representation covered by this order; and
    (B) All reports, tests, studies, surveys, demonstrations or other 
evidence in respondent's possession or control that contradict, 
qualify, or call into question such representation, or the basis upon 
which respondent relied upon for such representation, including 
complaints from consumers.
VIII
    It is further ordered, That respondent Thomas L. Fenton shall, for 
a period of ten (10) years from the date of entry of this Order, notify 
the Commission within thirty (30) days of the discontinuance of his 
present business or employment and of his affiliation with any new 
business or employment. Each notice of affiliation with any new 
business or employment shall include the respondent's new business 
address and telephone number, current home address, and a statement 
describing the nature of the business or employment and his duties and 
responsibilities. The expiration of the notice provision of this Part 
VIII shall not affect any other obligation arising under this Order.
IX
    It is further ordered, That respondent 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 he has complied with this Order.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Thomas L. Fenton.
    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 and promotional practices related 
to the sale of the Omexin System for Hair (``Omexin''), which was 
advertised on the ``Can You Beat Baldness?'' infomercial.
    The Commission's Amended Complaint, issued on October 13, 1993, 
charges that respondent Fenton falsely represented that Omexin will 
curtail hair loss, will promote hair growth, is scientifically proven 
to curtail hair loss and promote hair growth, and has successfully 
curtailed hair loss and promoted hair growth for thousands of balding 
men and women.
    According to the allegations of the Amended Complaint, the 
infomercial was falsely represented to be independent programming, 
rather than a paid advertisement. The Amended Complaint further charges 
that consumer testimonials on the infomercial were falsely represented 
to reflect the typical experience of members of the public who used the 
product.
    The proposed consent order contains provisions which are designed 
to remedy the advertising violations charged and to prevent the 
respondent from engaging in similar acts and practices in the future. 
Part I of the proposed order prohibits respondent from disseminating 
the ``Can You Beat Baldness?'' infomercial.
    With regard to Omexin or any substantially similar product, Part 
II.A prohibits Fenton from making the claims alleged in the Complaint 
to be false. Part II.B prohibits him from representing that any product 
or service will prevent or reduce hair loss, will promote hair growth, 
is an effective remedy for hair loss, or is proven through any test or 
study to relieve hair loss unless the claim is true and substantiated 
by competent and reliable scientific evidence. Part II.C forbids this 
respondent from advertising or promoting any hair loss product unless 
it is the subject of an approved New Drug Application by the Food and 
Drug Administration.
    Part III of the proposed order prohibits respondent from 
misrepresenting the validity, results, conclusions, or interpretations 
of any test or study. Part IV prohibits him from making any 
representation about the performance, benefits, efficacy, or safety of 
any food, drug, or device unless he possesses competent and reliable 
scientific evidence that substantiates the representation.
    Part V.A of the proposed order prohibits Fenton from disseminating 
any advertisement that misrepresents that it is not a paid 
advertisement. Part V.B requires that any advertisement fifteen minutes 
or longer display visually, in a clear and prominent manner and for a 
length of time sufficient for an ordinary consumer to read, within the 
first thirty seconds of the commercial and immediately before each 
presentation of ordering instructions, the following disclosure: ``The 
program you are watching is a paid advertisement for [the product or 
service].'' Part V.B specifies that an oral or visual presentation of 
an ordering address or telephone number shall also require the display 
of this disclosure.
    Under the terms of Part VI, Fenton may not represent that any 
endorsement of a product or service represents the typical or ordinary 
experience of members of the public, unless such is the fact.
    Parts VII, VIII, and IX relate to respondent's obligation to 
maintain records, notify the Commission of changes in business or 
employment status, and file compliance reports with the Commission.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. 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.
[FR Doc. 94-4046 Filed 2-22-94; 8:45 am]
BILLING CODE 6750-01-M