[Federal Register Volume 64, Number 126 (Thursday, July 1, 1999)]
[Notices]
[Pages 35666-35668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16706]


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FEDERAL TRADE COMMISSION

[File No. 9823182]


Melinda R. Sneed 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 receive on or before August 30, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Judith A. Shepherd, Dallas Regional 
Office, Federal Trade Commission, 1999 Bryan Street, Suite 2150, 
Dallas, TX 75201, (214) 979-9383.

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 field 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 complaint. An

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electronic copy of the full text of the consent agreement package can 
be obtained from the FTC Home Page (for June 24, 1999), 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, 600 
Pennsylvania Avenue, NW, Washington, DC. 20580, either in person or by 
calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW, 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. 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 final 
approval, an agreement to a proposed Consent Order (``proposed order'') 
from Melinda Sneed and John Sneed, doing business as Arthritis Pain 
Care Center.
    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.
    This matter concerns advertisements on the Internet, audio 
cassettes, and print advertisements provided to consumers and 
prospective distributors, for a product called ``CMO,'' described as a 
form of cetylmyristoleate, purportedly useful in the treatment of cure 
of arthritis and other diseases. CMO is said to be a fatty acid ester, 
extracted from beef tallow, which regulates the immune system. 
Purportedly, the substance, in one or two courses of treatment, each 
lasting less than three weeks, permanently relives the symptoms of 
osteoarthritis and rheumatoid arthritis and reverses the effects of the 
disease. CMO is also claimed to be useful for the treatment, 
mitigation, prevention, and cure of most forms of arthritis and a 
number of other diseases.
    The Commission's complaint charges that the proposed respondents 
engaged in deceptive advertising in violation of Sections 5 and 12 of 
the FTC Act by making unsubstantiated claims that their CMO products: 
(1) Are effective in the mitigation, treatment, prevention, and cure of 
most forms of arthritis, including rheumatoid arthritis and 
osteoarthritis; (2) provide permanent relief from symptoms of 
arthritis, including pain, impaired mobility, swelling, and joint 
deformities; (3) are as effective as or superior to prescription 
medications in the treatment of arthritis and the relief of arthritis 
symptoms; (4) are completely safe and without adverse side effects; and 
(5) are effective in the treatment of multiple sclerosis, lupus, 
emphysema, chronic bronchitis, silicone breast disease, cancer, benign 
prostate hyperplasia, hypertention, hypotension, and cardiac 
arrhythmia.
    The complaint further alleges that the proposed respondents made 
false claims that (1) clinical studies prove that their CMO products 
are a safe and effective treatment for arthritis; and that (2) studies 
were conducted at the national Institutes of Health that prove that CMO 
reverses the effects of arthritis.
    The complaint further alleges that proposed respondents engaged in 
a deceptive practice by representing that John Sneed is an endorser of 
their CMO products, without adequately disclosing that Mr. Sneed, at 
the time of his endorsement, had a material connection with 
respondents' CMO products in that he had a financial interest in 
Arthritis Pain Care Center and received a financial benefit from 
respondents' sales of the product.
    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 1 of the proposed order prohibits proposed respondents 
from making any representation that CMO or any similar product: (1) Is 
effective in the mitigation, treatment, prevention, or cure of 
arthritis, including rheumatoid arthritis and osteoarthritis; (2) 
provides permanent relief from symptoms of arthritis, including pain, 
impaired mobility, swelling, or joint deformities; (3) is as effective 
or as superior to prescription medications in the treatment of 
arthritis or the relief or arthritis symptoms; (4) is completely safe 
or has no adverse side effects; or (5) is effective in the treatment of 
multiple sclerosis, lupus, emphysema, chronic bronchitis, silicone 
breast disease, cancer, benign prostate hyperplasia, hypertension, 
hypotension, or cardiac arrhythmia, unless, at the time the 
representation is made, respondents possess and rely upon competent and 
reliable scientific evidence that substantiates the representation.
    Paragraph II of the proposed order prohibits proposed respondents 
from making any representations about the performance, safety, 
efficacy, or health benefits of CMO or any other food, drug, dietary 
supplement, or program, unless the claims are substantiated by 
competent and reliable scientific evidence.
    Paragraph III of the proposed order provides that proposed 
respondents are not prohibited from making representations which are 
specifically permitted by regulations of the Food and Drug 
Administration pursuant to the Nutrition Labeling and Education Act of 
1990. Paragraph IV of the proposed order provides that proposed 
respondents are not prohibited from making representations for a drug 
that are permitted under tentative final or final standards issued by 
the Food and Drug Administration or under any new drug application 
approved by that agency.
    Paragraph V of the proposed order prohibits proposed respondents 
from misrepresenting the existence, contents, validity, results, 
conclusions, or interpretations of any test, study, or research.
    Paragraph VI of the proposed order prohibits proposed respondents 
from representing that the experience represented by any user 
testimonial or endorsement of any product or program represents the 
typical or ordinary experience of members of the public who use the 
product or program, unless the representation is true, 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 users or the product or 
program; 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 VII of the proposed order requires proposed respondents 
to disclose clearly and prominently, and in close proximity to the 
endorsement, any material connection between a person providing an 
endorsement of any product or program and any respondent or other 
individual or entity manufacturing, labeling, advertising, promoting, 
offering for sale, selling, or distributing such product or program. A 
``material connection'' is a relationship that might materially affect 
the weight or credibility of the endorsement and

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would not reasonably be expected by consumers.
    Paragraph VIII of the proposed order requires that proposed 
respondents: (1) Not disseminate to any distributor any material 
containing any representations prohibited by the order; (2) not 
authorize any distributor to make any representations prohibited by the 
order; (3) send a required notice to each distributor with whom 
proposed respondents have done business since January 1, 1996, 
requesting that the distributor cease using any advertising or 
promotional materials containing unsubstantiated claims for CMO, 
requesting distributors not to make unsubstantiated oral 
representations, informing the distributor of this settlement, 
attaching a copy of this proposed complaint and order, and not 
including any other documents in the mailing; (4) for a period of three 
(3) years following service of the order, send the required notice to 
each distributor who has not previously received the notice; the 
notices shall be sent within one week of the first shipment of 
respondents' products to the distributor; (5) require distributors to 
submit to proposed respondents all advertising and promotional 
materials and claims for any products or programs covered by the order 
for review prior to their dissemination and publication, and not 
authorize distributors to disseminate materials and claims unless they 
comply with the order, or furnishing to distributors marketing 
materials that do not contain representations prohibited by the order 
and requiring the distributors to submit for review all advertising and 
promotional materials for a particular product covered by the order 
that contain representations that are not substantially similar to the 
materials most recently provided by proposed respondents; and (6) 
monitor distributors' advertising and promotional activities, 
immediately terminate the right of any distributor who disseminates 
advertisements or marketing material or makes oral representations 
prohibited by the order, and immediately provide information to the 
Federal Trade Commission about any such distributor and the materials 
used. ``Distributor'' is defined in the proposed order to mean any 
purchaser or transferee of a product covered by the order who acquires 
product from proposed respondents, with or without consideration, and 
who sells, or who has sold, such product to other sellers or to 
consumers, including individuals, retail stores, or catalogs. Paragraph 
IX of the proposed order requires proposed respondents to retain for 
five (5) years after the last correspondence to which they pertain and 
to make available to the Federal Trade Commission on request, copies of 
all notification letters and other communications with distributors 
relating to the requirements of Paragraph VIII.
    Paragraph X of the proposed order contains record keeping 
requirements for materials that substantiate, qualify, or contradict 
covered claims and requires proposed respondents to keep and maintain 
all advertisements and promotional materials containing any 
representation covered by the proposed order. In addition, Paragraph XI 
requires distribution of a copy of the consent decree to current and 
future officers and agents. Further, Paragraph XII requires the filing 
of a compliance report.
    Finally, Paragraph XIII of the proposed order provides for the 
termination of the order after twenty 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.

    By direction of the Commission.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 99-16706 Filed 6-30-99; 8:45 am]
BILLING CODE 6750-01-M