[Federal Register Volume 61, Number 144 (Thursday, July 25, 1996)]
[Notices]
[Pages 38738-38741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18858]


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FEDERAL TRADE COMMISSION

[File No. D09272]


Home Shopping Network, Inc.; Home Shopping Club, Inc.; HSN 
Lifeway Health Products, Inc.; 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 or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would require, among other things, the St. 
Petersburg, Florida-based television advertiser and two of its 
subsidiaries to have competent and reliable scientific evidence before 
making any claim that a food, dietary supplement, or drug can cure, 
treat, or prevent any disease or has any effect on the structure or 
function of the human body and before making any claims about the 
performance, benefits, or efficacy of any smoking-cessation program, 
product, or service. The consent agreement settles allegations that the 
respondents made a number of health-related claims about four mouth 
sprays without having the necessary evidence to back them up. The stop-
smoking spray and three vitamin sprays were marketed during an 
advertising program called ``Spotlight on Ruta Lee'' which was produced 
and disseminated by Home Shopping Club.

DATES: Comments must be received on or before September 23, 1996.

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: Lisa B. Kopchik, Federal Trade 
Commission, 6th and Pennsylvania Avenue, NW, S-4002, Washington, DC 
20580. (202) 326-3139. Joel Winston, Federal Trade Commission, 6th and 
Pennsylvania Avenue, NW., S-4002, Washington, DC 20580, (202) 326-3153.

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)).
    This agreement herein, by and between Home Shopping Network, Inc., 
Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
corporations, hereinafter sometimes

[[Page 38739]]

referred to as respondents, and their 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.a. Respondent Home Shopping Network, Inc. is a Delaware 
corporation, with its principal office or place of business at 11831 
30th Court North, St. Petersburg, Florida 34618-9090.
    1.b. Respondent Home Shopping Club, Inc. is a Delaware corporation, 
with its principal office or place of business at 11831 30th Court 
North, St. Petersburg, Florida 34618-9090. Home Shopping Club, Inc. is 
a wholly-owned subsidiary of Home Shopping Network, Inc.
    1.c. Respondent HSN Lifeway Health Products, Inc. is a Delaware 
corporation, with its principal office or place of business at 11831 
30th Court North, St. Petersburg, Florida 34618-9090. HSN Lifeway 
Health Products, Inc. is a wholly-owned second tier subsidiary of Home 
Shopping Network, Inc.
    2. Respondents have been served with a copy of the complaint issued 
by the Federal Trade Commission charging them with violations of 
Sections 5(a) and 12 of the Federal Trade Commission Act, and have 
filed an answer to the complaint denying said charges.
    3. Respondents admit all the jurisdictional facts set forth in the 
Commission's complaint in this proceeding.
    4. 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;
    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 
respondents, 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 respondents of facts, other than 
jurisdictional facts, or of violations of law as alleged in the 
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 Section 3.25(f) of the 
Commission's Rules, the Commission may, without further notice to 
respondents, (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 respondents' address as stated in 
this agreement shall constitute service. 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 in the 
agreement may be used to vary or contradict the terms of the order.
    8. Respondents have read the complaint and the 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. 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

Definitions

    For the purposes of this order, ``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 have 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.
I
    It is ordered that respondents Home Shopping Network, Inc., Home 
Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
corporations, their successors and assigns, by and through their 
officers, 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 Life Way Vitamin 
C and Zinc Spray, Life Way Antioxidant Spray, Life Way Vitamin B-12 
Spray, or any other food, food or dietary supplement, or drug, as 
``food'' and ``drug'' are defined in Section 15 of the Federal Trade 
Commission Act, 15 U.S.C. Sec. 55, 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:
    A. That such product:
    1. Is more fully absorbed by the human body than any other product;
    2. Heals lesions in the mouth, cold sores on the mouth, or cracking 
of the corners of the lips;
    3. Prevents common colds;
    4. Effectively treats symptoms related to hangovers;
    5. Increases energy;
    6. Ensures the proper functioning of the immune system;
    7. Reduces the risk of contracting infectious diseases;
    8. Prevents facial lines; or
    B. That use of the product can or will cure, treat, or prevent any 
disease, or have any effect on the structure or function of the human 
body,

unless, at the time of making such representation, respondents possess 
and rely upon competent and reliable scientific evidence that 
substantiates the representation.
II
    It is further ordered that respondents Home Shopping Network, Inc., 
Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
corporations, their successors and assigns, by and through their 
officers, 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 Life Way Smoke-
Less Nutrient Spray or any other smoking cessation product, program, 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, in any manner, directly or by implication:
    A. That such product, program, or service enables smokers, 
regardless of how long they have smoked or how

[[Page 38740]]

much they smoke, to stop smoking easily;
    B. That such product, program, or service satisfies the 
physiological urge to smoke a cigarette, or eliminates the quivering, 
anxiety and weight gain attendant with quitting smoking; or
    C. Regarding the performance, benefits or efficacy of any such 
product, program, or service,

unless, at the time of making such representation, respondents possess 
and rely upon competent and reliable scientific evidence that 
substantiates the representation.
III
    Nothing in this order shall prohibit respondents from making any 
representation for any product that is specifically permitted in 
labeling for such product by regulations promulgated by the Food and 
Drug Administration pursuant to the Nutrition Labeling and Education 
Act of 1990.
IV
    Nothing in this order shall prohibit respondents from making any 
representation for any drug that is permitted in labeling for any such 
drug under any tentative final or final standard promulgated by the 
Food and Drug Administration, or under any new drug application 
approved by the Food and Drug Administration.
V
    It is further ordered that, for three (3) years after the last date 
of dissemination of any representation covered by this order, 
respondents Home Shopping Network, Inc., Home Shopping Club, Inc., and 
HSN Lifeway Health Products, Inc., corporations, or their successors 
and assigns, shall maintain and upon request make available to the 
Federal Trade Commission for inspection and copying copies of all 
advertisements which contain any such representation, including 
videotape recordings of all such broadcast advertisements.
VI
    It is further ordered that, for five (5) years after the last date 
of dissemination of any representation covered by this order, 
respondents Home Shopping Network, Inc., Home Shopping Club, Inc., and 
HSN Lifeway Health Products, Inc., corporations, 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.
VII
    It is further ordered that respondents Home Shopping Network, Inc., 
Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
corporations, shall, within thirty (30) days after service of this 
order, provide a copy of this order to each of respondents' 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.
VIII
    It is further ordered that the respondents Home Shopping Network, 
Inc., Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
their successors and assigns, shall notify the Commission at least 
thirty (30) days prior to any change in the corporations that may 
affect compliance obligations arising under this order, including but 
not limited to a dissolution, assignment, sale, merger, or other action 
that would result in the emergence of a successor corporation; the 
creation or dissolution of a subsidiary, parent, or affiliate that 
engages in the acts or practices subject to this order; the proposed 
filing of a bankruptcy petition; or a change in the corporate name or 
address. Provided, however, that, with respect to any proposed change 
in the corporation about which the respondents learn less than thirty 
(30) days prior to the date such action is to take place, respondents 
shall notify the Commission as soon as practicable after obtaining such 
knowledge. All notices required by this Part shall be sent by certified 
mail to the Associate Director, Division of Enforcement, Bureau of 
Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.
IX
    It is further ordered that respondents Home Shopping Network, Inc., 
Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., 
corporations, 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 they have complied with this 
order.
X
    This order will terminate twenty (20) years from the date of its 
issuance, or twenty (20) years from the most recent date that the 
United States or the Federal Trade Commission files a complaint (with 
or without an accompanying consent decree) in federal court alleging 
any violation of the order, whichever comes later; provided, however, 
that the filing of such a complaint will not affect the duration of:
    A. Any Part in this order that terminates in less than twenty (20) 
years;
    B. This order's application to any respondent that is not named as 
a defendant in such complaint; and
    C. This order if such complaint is filed after the order has 
terminated pursuant to this Part.
    Provided, further, that if such complaint is dismissed or a Federal 
court rules that the respondent did not violate any provision of the 
order, and the dismissal or ruling is either not appealed or upheld on 
appeal, then the order will terminate according to this Part as though 
the complaint had never been filed, except that the order will not 
terminate between the date such complaint is filed and the later of the 
deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Home Shopping Network, Inc. (``HSN''), Home 
Shopping Club, Inc. (``HSC''), and HSN Lifeway Health Products, Inc. 
(``Lifeway'').
    The proposed consent order has been placed on the public record for 
sixty (60) days for receipt 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 or make final the agreement's proposed order.
    This matter involves alleged deceptive representations for three 
spray vitamin products and a spray smoking cessation product. The 
products at issue are Life Way Vitamin C and Zinc Spray, Life Way 
Antioxidant Spray, Life Way Vitamin B-12 Spray, and Life Way Smoke-Less 
Nutrient Spray. The Commission issued a complaint on March 2, 1995 
charging that HSN, HSC and Lifeway created and disseminated a series of 
television

[[Page 38741]]

advertisements called ``Spotlight on Ruta Lee'' on which the Life Way 
Spray Products were sold. These advertisements featured Ruta Lee as a 
celebrity show host and were seen on the Home Shopping Club, commercial 
programming shown on the Home Shopping Network's cable and broadcast 
channels.
    The Commission's complaint against HSN, HSC, and Lifeway was 
withdrawn from adjudication on May 14, 1996, prior to commencement of 
the administrative hearing, so that the Commission can consider the 
proposed order. Previously, the Commission had issued a consent order 
against Ruta Lee and Live-Lee Productions, Inc. to settle charges 
against Ruta Lee for her role in making and disseminating these 
advertisements (Live-Lee Prods, Inc., Docket No. C-3620, Oct. 10, 
1995).
    HSN is a holding company for numerous subsidiaries which are 
engaged primarily in the marketing, advertising, sale and distribution 
of consumer products through broadcast and cable television. HSC, a 
wholly-owned subsidiary of HSN, produces commercial television 
programming. Lifeway is a wholly-owned ``second tier'' subsidiary of 
HSN which sells vitamins and other health-related products.
    According to the FTC complaint, the respondents made claims 1) that 
the vitamins in the Life Way Spray Products are more fully absorbed by 
the human body than vitamins taken in pill form; 2) that the Vitamin C 
and Zinc Spray would heal mouth lesions, cold sores, and cracking of 
the corners of the lips, and prevent common colds; 3) that the Vitamin 
B-12 Spray would treat hangover symptoms and increase users' energy; 
and 4) that the Antioxidant Spray would ensure the proper functioning 
of the immune system, reduce the risk of contracting infectious 
diseases, and prevent facial lines. The complaint also alleges that the 
respondents made claims that the Smoke-Less Nutrient Spray would enable 
smokers, regardless of how long they have smoked or how much they 
smoke, to stop smoking easily; and would satisfy the physiological urge 
to smoke a cigarette and eliminate the quivering, anxiety and weight 
gain that go along with quitting smoking. The complaint alleges that 
the respondents did not have a reasonable basis for these 
representations at the time they were made.
    The proposed consent order contains provisions designed to prevent 
the respondents from engaging in similar acts and practices in the 
future.
    Part I of the proposed order prohibits the respondents from 
representing that any food, food or dietary supplement, or drug can or 
will cure, treat, or prevent any disease or have any effect on the 
structure or function of the human body, unless, at the time they make 
the representation, they possess and rely upon competent and reliable 
scientific evidence that substantiates the representation.
    Part II of the proposed order prohibits respondents from making any 
representation about the performance, benefits or efficacy of any 
smoking cessation product, program, or service, unless, at the time 
they make the representation, they possess and rely upon competent and 
reliable scientific evidence that substantiates the representation.
    Part III allows the respondents to make representations for any 
product that are specifically permitted in labeling for that product by 
regulations issued by the Food and Drug Administration (``FDA'') under 
the Nutrition Labeling and Education Act of 1990. Part IV allows the 
respondents to make representations for any drug that are permitted in 
labeling for that drug under any tentative final or final FDA standard 
or under any new drug application approved by the FDA.
    Parts V through IX require the respondents to keep copies of 
advertisements making representations covered by the order; to keep 
records concerning those representations, including materials that they 
relied upon when making the representations; to provide copies of the 
order to certain of respondents' personnel; to notify the Commission of 
changes in corporate structure; and to file compliance reports with the 
Commission. Part X provides that the order will terminate after twenty 
(20) years under certain circumstances.
    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.
Donald S. Clark,
Secretary.
[FR Doc. 96-18858 Filed 7-24-96; 8:45 am]
BILLING CODE 6750-01-U