[Federal Register Volume 65, Number 71 (Wednesday, April 12, 2000)]
[Notices]
[Pages 19768-19770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-9075]


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FEDERAL TRADE COMMISSION

[File No. 982 3181]


EHP Products, 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 May 5, 2000.

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

FOR FURTHER INFORMATION CONTACT: Tom Carter, Federal Trade Commission, 
Southwest Region, 1999 Bryan St., Suite 2150, Dallas, TX. 75201-6803. 
(214) 979-9372.

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

[[Page 19769]]

approved, by the Commission, has been placed on the public record for a 
period of thirty (30) 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 April 5, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 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. Ave., NW, 
Washington, D.C. 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 EHP Products, Inc., and Elaine H. Parrish, individually and as an 
officer of EHP Products, Inc.
    The proposed consent order has been placed on the public record for 
thirty (30) days for the reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) 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 and print 
advertisements provided to consumers and prospective distributors, for 
a product called cetyl myristoleate (``CMO''), purportedly useful in 
the treatment, prevention, or cure of arthritis and other diseases. 
Purportedly, the substance, in one or two courses of treatment, each 
lasting four weeks or less, provides long term relief from the symptoms 
of osteoarthritis and rheumatoid arthritis. 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 safe and effective in the mitigation, treatment, prevention, 
and cure of most forms of arthritic conditions, including rheumatoid 
arthritis and osteoarthritis; (2) significantly relieve pain, swelling, 
and tenderness caused by arthritis; (3) are effective in the 
mitigation, treatment, and cure of hepatitis C, emphysema, obstructive 
lung disease, spinal stenosis, eczema, psoriasis, aches and pains of 
the back and extremities, fibromyalgia, tendonitis, systemic lupus 
erythematosus, scleroderma, bursitis, temperomandibular joint disease, 
gout, arthropathy, osteitis, osteochondritis, osteomalacia, 
osteomyelitis; (4) are effective in the prevention of fever blisters, 
colds, flu, and allergy symptoms; and (5) effectively lower 
cholesterol, blood pressure, and blood sugar levels.
    The complaint further alleges that the proposed respondents made 
false claims that (1) the issuance of two patents proves that the 
respondents' products are effective in treating and alleviating the 
symptoms of rheumatoid arthritis and osteoarthritis; and that (2) 
laboratory tests prove that respondents' CMO products promote 
resistance to pain, swelling, and tenderness caused by arthritis.
    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 making any representation that CMO or any similar product: (1) Is 
safe or effective in the mitigation, treatment, prevention, or cure of 
arthritic conditions, including rheumatoid arthritis and 
osteoarthritis; (2) significantly relieves pain, swelling, or 
tenderness caused by arthritis; (3) is effective in the mitigation, 
treatment, or cure of hepatitis C, emphysema, obstructive lung disease, 
spinal stenosis, eczema, psoriasis, aches and pains of the back and 
extremities, fibromyalgia, tendonitis, systemic lupus erythematosus, 
scleroderma, bursitis, temperomandibular joint disease, gout, 
arthropathy, rheumatism, osteitis, osteochondritis, osteomalacia, or 
osteomyelitis; (4) is effective in the prevention of fever blisters, 
colds, flu, or allergy symptoms; or (5) effectively lowers cholesterol, 
blood pressure, or blood sugar levels, 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 prohibits proposed respondents 
from misrepresenting that the issuance of a patent proves the safety or 
efficacy of any product or program. Additionally, Paragraph IV of the 
proposed order prohibits proposed respondents from misrepresenting the 
existence, contents, validity, results, conclusions, or interpretations 
of any test, study, or research.
    Paragraph V 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 VI 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 VII 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 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

[[Page 19770]]

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, 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 with 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; 
alternatively, proposed respondents must furnish to distributors 
marketing materials that comply with the order and require 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 
representations for the same product or program contained in the 
marketing materials most recently provided to the distributors by 
proposed respondents; and (6) use reasonable efforts to monitor 
distributors' advertising and promotional activities, immediately 
terminate the right of any distributor who disseminates advertisements 
or making 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 person who 
purchased a product covered by the order from proposed respondents for 
resale or at a discounted or wholesale price unavailable to the general 
public as the time of the purchase, or who has purchased more than 
twelve bottles or packages of a covered product from respondents within 
a twelve-month period.
    Paragraph IX of the proposed order requires proposed respondents to 
send a prescribed notice to each person, other than a distributor, who 
purchased respondents' CMO products and can be identified through a 
diligent search of respondents' records. The notice offers a refund of 
the purchase price of the CMO products and an allowance for shipping 
and handing charges to customers who purchased respondents' CMO product 
for personal use or the use of a family member and who make an initial 
request for a refund within ninety days of the date of this notice. The 
notice further provides that, if any refund request from a single 
purchaser is for greater than three bottles of a product covered by the 
order, the purchaser may be required to return all unopened bottles of 
the product, at the expense of respondents, to receive a refund. 
Paragraph X of the proposed order requires proposed respondents to 
submit a report to the Federal Trade Commission specifying the actions 
they have taken to comply with the provisions of Paragraph IX. 
Paragraph XI of the proposed order requires proposed respondents to 
retain for five years after the last correspondence to which they 
pertain and to make available to the Federal Trade Commission on 
request, copies of notification letters, communications with 
distributors, and other materials relating to the requirements of 
Paragraph VIII and Paragraph IX.
    Paragraph XII 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 
XIII requires distribution of a copy of the consent decree to current 
and future officers and agents. Paragraph XIV of the proposed order 
requires the respondents to notify the Federal Trade Commission in 
advance of any change in the corporation that may affect compliance 
obligations arising under the order. Further, Paragraph XV requires the 
filing of a compliance report.
    Finally, Paragraph XVI 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,
Donald S. Clark,
Secretary.
[FR Doc. 00-9075 Filed 4-11-00; 8:45 am]
BILLING CODE 6750-01-M