[Federal Register Volume 71, Number 96 (Thursday, May 18, 2006)]
[Notices]
[Pages 28865-28867]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-7533]


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FEDERAL TRADE COMMISSION

[Docket No. 9318]


Basic Research LLC, et al.; Analysis of Agreement Containing 
Consent Order 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 complaint 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 June 12, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Basic Research LLC, Docket No. 9318,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address: Federal Trade 
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Comments containing confidential 
material must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with Commission Rule 4.9(c). 16 CFR 
4.9(c) (2005).\1\ The FTC is requesting that any comment filed in paper 
form be sent by courier or overnight service, if possible, because U.S. 
postal mail in the Washington area and at the Commission is subject to 
delay due to heightened security precautions. Comments that do not 
contain any nonpublic information may instead be filed in electronic 
form as part of or as an attachment to e-mail messages directed to the 
following e-mail box: [email protected].
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the

[[Page 28866]]

Privacy Act, may be found in the FTC's privacy policy, at http://
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www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Laureen Kapin (202-326-3237), Bureau 
of Consumer Protection, 600 Pennsylvania Avenue, NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  3.25(f) 
of the Commission Rules of Practice, 16 CFR 3.25(f), 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 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 May 11, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/05/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission ``) has accepted an 
agreement containing a consent order, subject to final approval, with 
Basic Research L.L.C. (``Basic Research'') and five other limited 
liability companies (``Corporate Respondents''), as well as with Dennis 
Gay, Daniel Mowrey, and Mitchell Friedlander (``Individual 
Respondents''), all of whom were named as Respondents in the Complaint 
issued by the Commission on June 15, 2004.
    The agreement and consent order settle charges that the Corporate 
Respondents and the Individual Respondents (together ``Respondents'') 
violated sections 5 and 12 of the Federal Trade Commission Act, 15 
U.S.C. 45 and 52, by advertising and selling dietary supplements and 
drugs with unsubstantiated claims for fat loss and/or weight loss, 
falsely representing that some of these products were clinically proven 
to be effective, and falsely representing that Respondent Mowrey was a 
medical doctor. On February 27, 2006, the case was withdrawn from 
adjudication, so that the Commission could consider the proposed 
consent order.
    The proposed consent order has been placed on the public record for 
thirty (30) days to receive comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty (30) days, the Commission will review the agreement and 
any comments received, and decide whether to withdraw from the 
agreement or to make final the proposed order.
    The purpose of this analysis is to facilitate comment on the 
proposed consent order. This analysis does not constitute an official 
interpretation of the agreement and proposed order and does not modify 
their terms in any way.

The Complaint Allegations

    According to the Commission's Complaint, Individual Respondents 
Dennis Gay, Daniel Mowrey (also doing business as American 
Phytotheraphy Research Laboratory), and Mitchell K. Friedlander all 
worked from the same Salt Lake City, Utah facility as Corporate 
Respondents Basic Research, L.L.C., A.G. Waterhouse, L.L.C., Klein-
Becker usa, L.L.C., Nutrasport, L.L.C., Sovage Dermalogic Laboratories, 
L.L.C., and BAN, L.L.C., who have operated as a common enterprise to 
advertise and sell a broad line of topical gels and dietary 
supplements.
    The Commission's Complaint alleges that these Respondents engaged 
in deceptive practices in advertising and selling topical fat-loss gels 
(Dermalin-APg, Cutting Gel, and Tummy Flattening Gel), weight-loss and 
fat-loss dietary supplements for ``significantly overweight'' adults 
containing ephedrine, caffeine and aspirin (Anorex and Leptoprin), and 
a weight-loss dietary supplement for children containing glucomannan 
(PediaLean). Specifically, the Commission's Complaint challenges the 
following claims as unsubstantiated:
     That Dermalin-APg, Cutting Gel, and Tummy Flattening Gel 
cause rapid and visibly obvious fat loss in areas of the body to which 
they are applied;
     That Leptoprin and Anorex cause weight loss of more than 
20 pounds in significantly overweight users and that those products 
cause loss of substantial, excess fat in significantly overweight 
users; and
     That PediaLean causes substantial weight loss in 
overweight or obese children. Additionally, the Complaint challenges 
the following claims as false:
     That published, clinical testing proves that Cutting Gel 
and Tummy Flattening Gel cause rapid and visibly obvious fat loss in 
areas of the body to which they are applied;
     That clinical testing proves that Leptoprin causes weight 
loss of more than 20 pounds, including as much as 50, 60, or 147 
pounds, in significantly overweight users; and that clinical testing 
proves that Leptoprin causes loss of substantial, excess fat in 
significantly overweight users;
     That clinical testing proves that PediaLean causes 
substantial weight loss in overweight or obese children; and
     That Respondent Mowrey is a medical doctor.

The Proposed Consent Order

    The proposed consent order contains provisions designed to prevent 
Respondents from continuing the illegal conduct alleged in the 
Complaint, and from engaging in future practices similar to those 
previously alleged. The proposed order's specific provisions are as 
follows:
    The core prohibitions appear in Paragraphs I through IV. Paragraph 
I prohibits Respondents from making any unsubstantiated representations 
that Dermalin-APg, Cutting Gel, Tummy Flattening Gel, Anorex, 
Leptoprin, PediaLean, or any substantially similar product, cause 
weight loss or fat loss. At the time that any Respondents make weight 
loss or fat loss claims for any of those products, Respondents must 
possess and rely upon a reasonable basis for such claims, which shall 
consist of competent and reliable scientific evidence.
    Paragraph II of the proposed order prohibits Respondents from 
making any unsubstantiated representations that any food, drug, or 
dietary supplement has an effect on any disease, on the structure or 
function of the human body, or other health benefits or weight loss 
benefits. At the time that any Respondents make any such claims, 
Respondents must possess and rely upon a reasonable basis for those 
claims, which shall consist of competent and reliable scientific 
evidence.
    The proposed consent order also prohibits the Respondents from 
making misrepresentations concerning any test, study, or research 
(Paragraph III of the proposed order), or concerning the profession, 
expertise, training, education, experience or qualifications of 
Respondent Mowrey or any other endorser (Paragraph IV of the proposed 
order).

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    As defined in the proposed order, ``competent and reliable 
scientific evidence'' means tests, analyses, research, studies, or 
other evidence, based on the expertise of professionals in the relevant 
area, that has 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. A ``substantially 
similar product'' means any product that is substantially similar in 
ingredients, composition, and properties to any of the six products 
challenged in the Complaint.
    Paragraph V provides that Basic Research will pay the sum of three 
million dollars ($3,000,000), on behalf of all Respondents, to the 
Commission. In the discretion of the Commission, these funds may be 
used to provide redress to purchasers of any of the products challenged 
in the Complaint and to pay the attendant administrative costs. If the 
Commission determines, in its sole discretion, that redress to product 
purchasers is wholly or partially impracticable or is otherwise 
unwarranted, any funds not used will be paid to the U.S. Treasury.
    The proposed order allows Respondents to engage in various forms of 
legitimate conduct. The order does not prohibit Respondents from making 
any claim for any drug that is permitted in labeling for that drug 
under any tentative final or final standard established by the Food and 
Drug Administration (``FDA''), or under any new drug application 
approved by the FDA (Paragraph VI of the proposed order). The order 
also does not prohibit Respondents from making any claim for any 
product that is specifically permitted in labeling for that product 
under FDA regulations made under the Nutrition Labeling and Education 
Act of 1990 (Paragraph VII of the proposed order).
    Additionally, Paragraphs VIII, IX, X, and XI provide for various 
compliance reports and notifications by the Respondents. Paragraph XII 
obligates the Respondents to cooperate in certain ways with any 
Commission inquiry into their compliance with the order. The proposed 
order will expire in 20 years.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E6-7533 Filed 5-17-06; 8:45 am]
BILLING CODE 6750-01-P