[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37581-37583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18616]


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FEDERAL TRADE COMMISSION

[File No. 972-3255]


TrendMark Inc., et al.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before September 11, 1998.

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: Michael Bloom or Ronald Waldman, New 
York Regional Office, Federal Trade Commission, 150 William Street, 
13th Floor, New York, N.Y. 10038-2603. (212) 264-1242.

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

[[Page 37582]]

of sixty (60) days. The following Analysis to Aid Public Comment 
describes the terms of the consent agreement, and the allegations in 
the complaint. An electronic copy of the full text of the consent 
agreement package can be obtained from the FTC Home Page (for June 25, 
1998), on the World Wide Web, at ``http://www.ftc.gov/os/
actions97.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, subject to fine 
approval, an agreement to a proposed consent order (``proposed order'') 
from TrendMark Inc., also doing business as TrendMark International 
(``TrendMark''), and its principals, William McCormack and E. Robert 
Gates.
    The proposed 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 comments received and will decide whether it should withdraw from 
the agreement or make final the agreement's proposed order.
    This matter concerns weight loss products which were marketed by 
the proposed respondents via unsolicited commercial e-mail sent to 
users of America Online. The e-mail directed recipients to click on a 
hyperlink that would then take them to TrendMark's website on the 
Internet. Both the e-mail and Internet website made various weight loss 
and health-related claims about respondents' Thin-Thin 
DietTM which consisted of two products--Neuro-
ThinTM and Lipo-ThinTM.
    The Commission's complaint alleges that proposed respondents 
engaged in deceptive advertising in violation of Sections 5 and 12 of 
the FTC Act by making unsubstantiated claims that: (1) Neuro-
ThinTM controls appetite; (2) taking Neuro-ThinTM 
and Lipo-ThinTM in combination causes significant weight 
loss without a change in diet; (3) taking Neuro-ThinTM and 
Lipo-ThinTM in combination causes long-term or permanent 
weight loss; (4) Lipo-ThinTM helps prevent the absorption of 
ingested fat; (5) Lipo-ThinTM lowers LDL cholesterol and 
boosts HDL cholesterol; (6) Lipo-ThinTM promotes healing of 
ulcers and lesions; (7) Lipo-ThinTM helps prevent irritable 
bowel syndrome; (8) Lipo-ThinTM reduces levels of uric acid 
in the blood; (9) Lipo-ThinTM helps improve cardiovascular 
health; and (10) testimonials from consumers appearing in 
advertisements for the Thin-Thin DietTM reflect the typical 
or ordinary experience of members of the public who use Neuro-
ThinTM and Lipo-ThinTM. The complaint alleges 
that the proposed respondents did not have a reasonable basis for these 
weight loss and health-related claims. In addition, the complaint 
alleges that testimonials given by individuals on respondents' website 
failed to disclose adequately that these individuals had material 
connections with individuals marketing and profiting from the sales off 
Neuro-ThinTM and Lipo-ThinTM.
    The proposed respondents indicated that they neither possessed nor 
were aware of any studies relating specifically to the Neuro-
ThinTM or Lipo-ThinTM products. Moreover, the 
purported support which proposed respondents did rely upon for the 
above claims--studies on individual components of Neuro-
ThinTM or Lipo-ThinTM--did not relate adequately 
to their advertising claims. For example, most of the studies that were 
submitted by the proposed respondents as support were test tube studies 
and studies of rats. These studies cannot be used as adequate support 
for the therapeutic effects of Neuro-ThinTM and Lipo-
ThinTM in human beings.
    The complaint further alleges that proposed respondents made a 
false claim that clinical evidence proves that Neuro-ThinTM 
and Lipo-ThinTM cause users to lose significant weight.
    The proposed order contains provisions designed to remedy the 
violations charged and to prevent proposed respondents from engaging in 
similar acts in the future.
    Paragraph I of the proposed order prohibits proposed respondents 
from claiming that Neuro-ThinTM and Lipo-ThinTM 
or any other product or program: (1) controls appetite; (2) causes 
significant weight loss without a change in diet; (3) causes long-term 
or permanent weight loss; (4) prevents or helps prevent the absorption 
of ingested fat; (5) lowers LDL cholesterol or boosts HDL cholesterol; 
(6) promotes healing of ulcers or lesions; (7) helps prevent irritable 
bowel syndrome; (8) reduces levels of uric acid in the blood; and (9) 
helps improve cardiovascular health, unless, at the time the 
representation is made, proposed respondents possess and rely upon 
competent and reliable scientific evidence that substantiates the 
representation.
    Paragraph II of the proposed order states that the proposed 
respondents shall not represent, in any manner, expressly or by 
implication, that the experience represented by any user who gives a 
testimonial or endorsement of the product represents the typical or 
ordinary experience of members of the public who use the product, 
unless: (a) at the time it is made, the proposed respondents possess 
and rely upon competent and reliable scientific evidence that 
substantiates the representation; or (b) the proposed respondents 
disclose, clearly and prominently, and in close proximity to the 
testimonial or endorsement, either: (1) what the generally expected 
results would be for users of the product, 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 experience similar results.
    Paragraph III of the proposed order prohibits proposed respondents 
from making any representation for Neuro-ThinTM and Lipo-
ThinTM or any other food, drug, dietary supplement, drug, or 
device, about the health benefits, performance, or efficacy of such 
product unless, at the time the representation is made, proposed 
respondents possess and rely upon competent and reliable scientific 
evidence that substantiates the representation.
    Paragraph IV of the proposed order prohibits proposed respondents 
from misrepresenting the existence, contents, validity, results, 
conclusions, or interpretations of any test, study, or study.
    Paragraph V of the proposed order requires the proposed respondents 
to disclose, clearly and prominently, a material connection, when one 
exists, between a person providing an endorsement for any product or 
program and any respondent, or any individual or entity labeling, 
advertising, promoting, offering for sale, selling, or distributing 
such product or program.
    Paragraph VI of the proposed order provides that nothing in this 
order shall prohibit proposed respondents from making any 
representation about any drug permitted by the Food and Drug 
Administration.
    Paragraph VII of the proposed order provides that nothing in this 
order shall prohibit proposed 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

[[Page 37583]]

Administration pursuant to the Nutrition Labeling and Education Act of 
1990.
    Paragraph VIII of the proposed order contains record keeping 
requirements for materials that substantiate, qualify, or contradict 
covered claims and requires the proposed respondents to keep and 
maintain all advertisements and promotional materials containing any 
representation covered by the proposed order. In addition, paragraph IX 
requires distribution of a copy of the consent order to current and 
future officers and agents having responsibility with respect to the 
subject matter of the order. Further, Paragraph X provides for 
Commission notification upon a change in the corporate respondent. 
Paragraph XI requires proposed respondents William McCormack and E. 
Robert Gates to notify the Commission when either of them discontinues 
his current business or employment and of an affiliation by either of 
them with any new businesses or employment. Paragraph XII of the 
proposed order requires the proposed respondents to file a compliance 
report. Finally, paragraph XIII of the proposed order provides for the 
termination of the order after twenty years under specified conditions.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-18616 Filed 7-10-98; 8:45 am]
BILLING CODE 6750-01-M