[Federal Register Volume 59, Number 150 (Friday, August 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19134]


[[Page Unknown]]

[Federal Register: August 5, 1994]


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FEDERAL TRADE COMMISSION
[File No. 932 3253]

 

American Institute of Smoking Cessation, 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, an Illinois-based company and its two 
officers from making any representation about the relative or absolute 
performance or efficacy of any smoking cessation or weight loss 
program, unless they possess and rely upon competent and reliable 
scientific evidence to substantiate the representation, and would 
prohibit the respondents from misrepresenting the contents, results or 
validity of any study, test, survey or report.

DATES: Comments must be received on or before October 4, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:Matthew Daynard, FTC/H-200, Washington, 
D.C. 20580. (202) 326-3291.

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)).

Agreement Containing Consent Order To Cease and Desist

    In the matter of American Institute of Smoking Cessation, Inc., 
a corporation, Kenneth C. Grossman, individually and as an officer 
of said corporation, and Jane A. Grossman, individually and as an 
officer of said corporation.

    4The Federal Trade Commission having initiated an investigation of 
certain acts and practices of American Institute of Smoking Cessation, 
Inc. (``AISC''), a corporation, Kenneth C. Grossman, individually and 
as an officer of said corporation, and Jane A. Grossman, individually 
and as an officer of said corporation (``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 American Institute of Smoking 
Cessation, Inc., Kenneth C. Grossman, individually and as an officer of 
said corporation, and Jane A. Grossman, individually and as an officer 
of said corporation, and counsel for the Federal Trade Commission that:
    1. Proposed respondent AISC is an Illinois corporation, with its 
principal office or place of business at 318 South Garfield, Hinsdale, 
Illinois, 60521.
    2. Proposed respondent Kenneth C. Grossman is the President and 
Treasurer of said corporation. Respondent Jane A. Grossman is the Vice-
President and Secretary of said corporation. Together, they formulate, 
direct, and control the acts and practices of said corporation. Their 
address is the same as that of said corporation.
    3. Proposed respondents admit all the jurisdictional facts set 
forth in the attached draft complaint.
    4. 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; 
and
    (d) Any claim under the Equal Access to Justice Act, 5 U.S.C. 
Sec. 504.
    5. 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 attached 
draft complaint, 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.
    6. 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 the complaint here attached.
    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 Sec. 2.34 of the Commission's 
Rules, the Commission may, without further notice to the proposed 
respondents: (a) issue its complaint corresponding in form and 
substance with the attached draft complaint and its decision containing 
the following Order to cease and desist in disposition of the 
proceeding; and (b) 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' address as stated in this agreement shall constitute 
service. Proposed respondents waive any right they may have to any 
other manner of service. The compliant may be used in construing the 
terms of the Order, and no agreement, understanding, representation, or 
interpretation not contained in the Order may be used to vary or 
contradict the terms of the Order.
    8. Proposed respondents have read the attached draft complaint and 
the following Order. Proposed respondents 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

Definition
    For the purposes of this Order, ``competent and reliable scientific 
evidence'' shall mean those 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. Survey evidence may 
be appropriate depending on the representation made.
I
    It is ordered, That respondents American Institute of Smoking 
Cessation, Inc., a corporation, its successors and assigns, and its 
officers, Kenneth C. Grossman, individually and as an officer of said 
corporation, and Jane A. Grossman, 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 advertising, promotion, 
offering for sale, or sale of any smoking cessation or weight loss 
program, including any such program that uses hypnosis, in or affecting 
commerce, as ``commerce'' is defined in the Federal Trade Commission 
Act, do forthwith cease and desist from:
    A. Making any representation, directly or by implication, that 
participants who attend respondents' single-session group hypnosis 
seminar are cured of smoking addiction without experiencing 
irritability, anxiety, weight gain, or other side effects, unless, at 
the time of making any such representation, respondents possess and 
rely upon competent and reliable scientific evidence substantiating the 
representation.
    B. Making any representation, directly or by implication, about the 
relative or absolute performance or efficacy of any smoking cessation 
program or weight loss program, unless, at the time of making any such 
representation, respondents possess and rely upon competent and 
reliable scientific evidence substantiating the representation.
    C. Representing through any endorsement or testimonial that any 
participant(s) of respondents' smoking cessation program or weight loss 
program have achieved success in smoking abstinence or weight loss 
unless:
    (1) at the time of making such representation, the success claimed 
is representative of the typical or ordinary experience of all 
participants of such program, and respondents possess and rely upon 
competent and reliable scientific evidence that substantiates such 
representation, or
    (2) respondents disclose, clearly and prominently, and in close 
proximity to the endorsement or testimonial, either:
    (a) what the generally expected results would be for participants 
in such program, or
    (b) the limited applicability of the endorser's experience to what 
consumers may generally expect to achieve, that is, that consumers 
should not expect to experience similar results.
    D. Misrepresenting, directly or by implication, the existence, 
contents, validity, results, conclusions, or interpretations of any 
test, study, survey or report.
    E. Misrepresenting, directly or by implication, the performance or 
efficacy of any smoking cessation program or weight loss program.
II
    It is further ordered, That for three (3) 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. 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.
III
    It is further ordered, That respondents shall notify the Commission 
at least thirty (30) days prior to the effective date of any proposed 
change in the corporate respondent such as dissolution, assignment, or 
sale resulting in the emergence of a successor corporation(s), the 
creation or dissolution of subsidiaries, or any other change in the 
corporation that may affect compliance obligations arising out of this 
Order.
IV
    It is further ordered, That the individual respondents named herein 
shall promptly notify the Commission of the discontinuance of their 
present business or of their affiliation with the corporate respondent. 
In addition, for a period of three (3) years from the date of service 
of this Order, each respondent shall promptly notify the Commission of 
each affiliation with a new business or employment that involves a 
smoking cessation program or a weight loss program. Each such notice 
shall include the respondent's new business address and a statement of 
the nature of the business or employment in which the respondent is 
newly engaged as well as a description of the respondent's duties and 
responsibilities in connection with the business or employment. The 
expiration of the notice provision of this paragraph shall not affect 
any other obligation arising under this Order.
V
    It is further ordered, That respondents shall distribute a copy of 
this Order to each of their officers, agents, representatives, 
independent contractors, and employees who are involved in the 
preparation and placement of advertisements or promotional materials; 
and, for a period of three (3) years from the date of entry of this 
Order, distribute same to all future such officers, agents, 
representatives, independent contractors, and employees.
VI
    It is further ordered, That respondents shall, within sixty (60) 
days after the date of service of this Order, file with the Commission 
a 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 to a 
proposed consent order from American Institute of Smoking Cessation, 
Inc. (hereinafter ``AISC''), its President, Kenneth C. Grossman, and 
its Vice-President, Jane A. Grossman, marketers of The Grossman Method 
seminar, a single, three-hour, group hypnosis session program for 
smoking cessation and weight loss. The Grossman Method seminar is 
offered to the public nationwide by Kenneth C. Grossman at hotel 
locales.
    The proposed consent order has been placed on the public record for 
sixty (60) days for the 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 will decide whether it should withdraw from the agreement 
or make final the agreement's proposed order.
    The Commission's complaint charges that the proposed respondents 
deceptively advertised: (1) The likelihood of seminar participants' 
success in achieving abstinence from smoking cigarettes and weight 
loss; and (2) the effectiveness of proposed respondents' smoking 
cessation methods in leading consumers to achieve smoking abstinence 
compared to other stop-smoking methods.

Success

    The complaint against AISC, Kenneth C. Grossman and Jane A. 
Grossman alleges that the proposed respondents failed to possess a 
reasonable basis for claims they made regarding the success of their 
seminar participants in quitting smoking and quickly achieving weight 
loss, and made a false claim about smoking abstinence success. Through 
advertisements placed in various media in advance of their seminars, 
proposed respondents represented that surveys prove that 97 to 100 
percent of their seminar participants permanently abstain from smoking 
after attending those seminars. The complaint alleges that this claim 
is false.
    Proposed respondents further represented through their 
advertisements, including the use of consumer endorsements, that 
seminar participants: (1) Typically are cured of smoking addiction and 
permanently abstain from smoking cigarettes; (2) are cured of smoking 
addiction without experiencing irritability, anxiety or weight gain; 
and (3) typically achieve weight loss quickly. Finally, proposed 
respondents represented that over 300,000 seminar participants have 
permanently quit smoking as a result of attending the Grossman Method 
seminar over the last fifteen years, and that up to or over 98% of 
consumers attending The Grossman Method seminar have quit smoking.
    The Commission believes that these success claims for seminar 
attendees' smoking cessation and weight loss are deceptive because 
proposed respondents did not posses adequate substantiation for those 
claims at the time they made the claims.
    The proposed consent order seeks to address the alleged success 
misrepresentations cited in the accompanying complaint in five ways. 
First, the order (Part I.B.) requires proposed respondents to possess a 
reasonable basis consisting of competent and reliable scientific 
evidence substantiating any claim about the performance or efficacy of 
any smoking cessation or weight loss program.
    Second, the proposed order (Part I.A.) prohibits proposed 
respondents from representing that seminar participants are cured of 
smoking addiction without experiencing side effects, such as 
irritability, anxiety or weight gain, unless the claim is substantiated 
by competent and reliable scientific evidence.
    Third, the proposed order (Part I.C.) prohibits proposed 
respondents from representing through any endorsements that seminar 
participants have achieved success in smoking abstinence or weight loss 
unless the claimed success is representative of the typical or ordinary 
experience of all such participants, and competent and reliable 
scientific evidence substantiates that claim, or respondents clearly 
and prominently disclose either: (1) What the generally expected 
results would be for program participants, or (2) the limited 
applicability of the endorser's experience to what consumers may 
generally expect to achieve, that is, that consumers should not expect 
to achieve similar results.
    Fourth, the proposed order (Part I.D.) generally prohibits proposed 
respondents from misrepresenting the existence, contents, validity, 
results, conclusions, or interpretations of any test, study, survey or 
report.
    Finally, the proposed order (Part I.E.) generally prohibits 
proposed respondents from misrepresenting the performance or efficacy 
of any smoking cessation or weight loss program.

Efficacy

    The Commission's complaint further alleges that proposed 
respondents failed to possess a reasonable basis for a claim they made 
regarding the relative ability of their hypnosis program to lead 
consumers to quit smoking. AISC, Kenneth C. Grossman and Jane A. 
Grossman represented through their advertising that their single-
session, group hypnosis seminar is more efficacious for smoking 
cessation than other stop-smoking methods. The Commission believes that 
this comparative efficacy claim for proposed respondents' hypnosis 
program is deceptive because proposed respondents at the time they made 
the claim did not possess adequate substantiation for the claim.
    To address this efficacy misrepresentation, the proposed order 
(Part I.B.) requires proposed respondents to possess and rely upon 
competent and reliable scientific evidence substantiating any 
representation about the relative (or absolute) performance or efficacy 
of any smoking cessation (or weight loss) program, before they make 
such a claim. The proposed order (Part I.E.) further generally 
prohibits proposed respondents from misrepresenting the performance or 
efficacy of any smoking cessation program (or weight loss program).
    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. 94-19134 Filed 8-4-94; 8:45 am]
BILLING CODE 6750-01-M