[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