[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