[Federal Register Volume 61, Number 235 (Thursday, December 5, 1996)]
[Notices]
[Pages 64526-64527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30943]


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FEDERAL TRADE COMMISSION
[File No. 932-3180]


Phaseout of America, Inc.; Products & Patents, Ltd.; 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 Lynbrook, 
New York-based company to possess competent and reliable scientific 
evidence to substantiate all claims about the performance, efficacy, or 
benefits of any smoking-cessation or cigarette-modification product. 
The agreement also prohibits the company from making claims challenged 
as false in the future. The agreement settles allegations that 
advertising claims for PhaseOut, a device marketed as helping smokers 
to stop smoking and making cigarettes less harmful are unsubstantiated.

DATES: Comments must be received on or before February 3, 1997.

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: Lesley Anne Fair, Federal Trade 
Commission, S-4002, 6th and Pennsylvania Ave., NW, Washington, DC 
20580. (202) 326-3081. Shira Modell, Federal Trade Commission, S-4002, 
6th and Pennsylvania Ave., NW, Washington, DC 20580. (202) 326-3116.

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 above-captioned 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. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the accompanying complaint. An electronic copy of the 
full text of the consent agreement package can be obtained from the 
Commission Actions section of the FTC Home page (for November 14, 
1996), on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.'' 
A paper copy can be obtained from the FTC Public Reference Room, Room 
H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C. 
20580, either in person or by calling (202) 326-3627. 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)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Phaseout of America, Inc. and Products & 
Patents, Ltd. This matter concerns advertising for PhaseOut, a device 
which punches one or more small holes in cigarettes and which was 
advertised as both aiding in smoking cessation and making cigarettes 
less harmful.
    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 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.
    The Commission's complaint in this matter challenges three sets of 
representations made by respondents regarding the performance of 
PhaseOut: its ability to reduce smokers' intake of smoke constituents, 
allow smokers to quit smoking, and reduce health risks for smokers who 
continue smoking.
    According to the Commission's complaint, the respondents made 
unsubstantiated representations that PhaseOut reduces by certain 
specified percentages the amount of nicotine, tar, and carbon monoxide 
that smokers, get, and does so without changing a cigarette's taste or 
draw; and that smokers using PhaseOut will not compensate for its 
effects by increasing the number of cigarettes they smoke per day. The 
complaint also alleges that the respondents misrepresented that a 
particular study conducted at The Johns Hopkins University proves that 
PhaseOut significantly reduces the amount of tar, nicotine, and carbon 
monoxide smokers get under normal smoking conditions. According to the 
complaint, the study was conducted under carefully controlled 
conditions that did not reflect how smokers actually smoke. The 
complaint explains that the study did not take into account 
compensatory smoking--the tendency of some smokers who switch to lower 
yield cigarettes to smoke more cigarettes or to smoke each one more 
intensively (e.g., taking bigger or more frequent puffs), often without 
realizing it.
    The complaint further alleges that the respondents made 
unsubstantiated representations that PhaseOut enables smokers to quit 
and to do so without withdrawal symptoms; and that the respondents 
falsely claimed that PhaseOut's effectiveness in enabling smokers to 
quit smoking is proven by the Johns Hopkins study.
    The complaint also alleges that the respondents made 
unsubstantiated representations that PhaseOut significantly reduces the 
risk of smoking-related health problems, including lung cancer and 
heart disease, for smokers who continue to smoke and that it also 
provides immediate health benefits including reduced congestion, 
coughing or windedness. The complaint further challenges the related 
misrepresentation that the Johns Hopkins study proves that smokers who 
use PhaseOut and continue to smoke significantly reduce their risk of 
smoking-related health problems.
    In addition, the complaint alleges that the respondents represented 
without substantiation that testimonials contained in advertisements 
for PhaseOut reflect the typical or ordinary experience of consumers 
who use the product.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondents from engaging in 
similar acts and practices in the future.
    Part I of the order prohibits the respondents from making the 
representations challenged as false in the proposed complaint about the 
Johns Hopkins study's findings concerning PhaseOut.

[[Page 64527]]

    Part II requires respondents to possess competent and reliable 
scientific evidence to substantiate claims that any smoking-cessation 
or cigarette-modification product: (A) reduces the amount of nicotine, 
tar, carbon monoxide, or any other component of cigarette smoke that 
smokers get from smoking a cigarette; (B) is effective in enabling or 
helping smokers to quit smoking; (C) reduces the risk of smoking-
related health problems for smokers who continue to smoke; (D) reduces 
the amount of nicotine, tar, carbon monoxide, or any other component of 
cigarette smoke that smokers get without changing a cigarette's taste 
or draw; (E) is effective in enabling or helping smokers to quit 
smoking without withdrawal symptoms; or (F) provides immediate health 
benefits, such as reduced congestion, coughing or windedness, for 
smokers who continue to smoke. Part II also requires respondents to 
possess competent and reliable scientific evidence to substantiate 
claims that smokers using any such product will not compensate for the 
product's effects by increasing the number of cigarettes they smoke per 
day.
    Part III requires respondents to possess competent and reliable 
scientific evidence to substantiate any performance, benefit or 
efficacy claims for smoking-cessation or cigarette- modification 
products.
    Part IV prohibits the respondents from misrepresenting the 
existence, contents, validity, results, conclusions, or interpretations 
of any test or study.
    Part V requires respondents either to possess competent and 
reliable scientific evidence to substantiate claims that any 
endorsement reflects the typical or ordinary experience of consumers 
who use the product; or to clearly and prominently disclose either: a) 
what the generally expected results would be, or b) that consumers 
should not expect to experience similar results.
    Part VI requires respondents to send a postcard to identifiable 
past purchasers of PhaseOut notifying them of the Commission's action 
in this case and advising them that PhaseOut has not been proven to 
reduce the risk of smoking-related diseases or to make cigarettes 
``safer.'' Part VI also requires respondents to send a letter to their 
purchasers for resale requesting the names and addresses of their 
customers and notifying them that if the purchasers for resale do not 
stop using advertising and promotional materials containing claims 
covered by this order, the respondents are required to stop doing 
business with them. Part VII requires the respondents to maintain for 
five years copies of all communications with consumers and purchasers 
for resale pursuant to the terms of Part VI.
    The proposed order also requires respondents to maintain materials 
relied upon to substantiate the claims covered by the order, to 
distribute copies of the order to certain current officers and 
employees, to notify the Commission of any changes in corporate 
structure that might affect compliance with the order, and to file one 
or more reports detailing compliance with the order. The order also 
contains a provision stating that it will terminate after twenty (20) 
years absent the filing in federal court, by either the United States 
or the FTC, of a complaint against the respondents alleging a violation 
of the order.
    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 any of 
their terms.
Donald S. Clark,
Secretary.
[FR Doc. 96-30943 Filed 12-4-96; 8:45 am]
BILLING CODE 6750-01-P