[Federal Register Volume 79, Number 10 (Wednesday, January 15, 2014)]
[Notices]
[Pages 2662-2668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00643]


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FEDERAL TRADE COMMISSION

[File No. 112 3095]


GeneLink, Inc.; foru\TM\ International Corporation; Analysis of 
Proposed Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreements.

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SUMMARY: The consent agreements in this matter settle alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis of 
Proposed Consent Orders to Aid Public Comment describes both the 
allegations in the draft complaints and the terms of the consent 
orders--embodied in the consent agreements--that would settle these 
allegations.

DATES: Comments must be received on or before February 6, 2014.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/genelinkconsent or https://ftcpublic.commentworks.com/ftc/forutmconsent online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Genelink, Inc.-Consent 
Agreement; File No. 112-3095'' or ``foru\TM\ International Corporation-
Consent Agreement; File No. 112-3095'' on your comment and file your 
comment online at https://ftcpublic.commentworks.com/ftc/genelinkconsent or https://ftcpublic.commentworks.com/ftc/forutmconsent 
https://ftcpublic.commentworks.com/ftc/fidelitynationalconsent by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Carolyn Hann, 202-326-2745, Bureau of 
Consumer Protection, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR Sec.  
2.34, notice is hereby given that the above-captioned consent 
agreements containing consent orders to cease and desist, having been 
filed with and accepted, subject to final approval, by the Commission, 
have 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 agreements, and the allegations in the complaints. An 
electronic copy of the full text of the consent agreement packages can 
be obtained from the FTC Home Page (for January 7, 2014), on the World 
Wide Web, at http://www.ftc.gov/os/actions.shtm. 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.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before February 6, 
2014. Write ``Genelink, Inc.-Consent Agreement; File No. 112-3095'' or 
``foruTM International Corporation-Consent Agreement; File 
No. 112-3095'' on your comment. Your comment--including your name and 
your state--will be placed on the public record of this proceeding, 
including, to the extent practicable, on the public Commission Web 
site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of 
discretion, the Commission tries to remove individuals' home contact 
information from comments before placing them on the Commission Web 
site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or

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financial information which . . . is privileged or confidential,'' as 
discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 
4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include 
competitively sensitive information such as costs, sales statistics, 
inventories, formulas, patterns, devices, manufacturing processes, or 
customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/genelinkconsent or https://ftcpublic.commentworks.com/ftc/forutmconsent by following the instructions on the web-based form. If 
this Notice appears at http://www.regulations.gov/# !home, you also may 
file a comment through that Web site.
    If you file your comment on paper, write ``Genelink, Inc.-Consent 
Agreement; File No. 112-3095'' or ``foruTM International 
Corporation-Consent Agreement; File No. 112-3095'' on your comment and 
on the envelope, and mail or deliver it to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex 
D), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, 
submit your paper comment to the Commission by courier or overnight 
service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before February 6, 2014. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Orders To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, Agreements Containing Consent 
Orders from GeneLink, Inc., also doing business as GeneLink 
Biosciences, Inc. (``GeneLink'') and foruTM International 
Corporation, formerly known as GeneWize Life Sciences, Inc. 
(``foruTM''). The proposed consent orders have been placed 
on the public record for thirty (30) days for receipt 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 agreements and the comments received, and will decide 
whether it should withdraw from the agreements or make final the 
agreements' proposed orders.
    These matters involve the advertising and promotion of purported 
genetically customized nutritional supplements and skin repair serum 
products, which GeneLink and its co-respondent and former subsidiary, 
foruTM sold through a multi-level marketing (``MLM'') 
network. According to the FTC complaints, GeneLink and 
foruTM represented that genetic disadvantages identified 
through the companies' DNA assessments are scientifically proven to be 
mitigated by or compensated for with the companies' nutritional 
supplements. The complaints allege that this claim is false and thus 
violates the FTC Act. The FTC complaints also charge that the companies 
represented that these custom-blended nutritional supplements: (1) 
Effectively compensate for genetic disadvantages identified by 
respondents' DNA assessments, thereby reducing an individual's risk of 
impaired health or illness, and (2) treat or mitigate diabetes, heart 
disease, arthritis, and insomnia. The complaints allege that these 
claims are unsubstantiated and thus violate the FTC Act.
    With regard to the purported genetically customized skin repair 
serum products, the FTC complaints charge that the companies 
represented that the products are scientifically proven to reduce the 
appearance of wrinkles and improve skin firmness; and enhance or 
diminish aging predispositions, including collagen breakdown, sun 
damage, and oxidative stress. The complaints allege that these claims 
are false and thus violate the FTC Act.
    Additionally, the complaints allege that the companies provided 
advertisements and promotional materials to their MLM affiliates for 
use in the marketing and sale of their genetically customized 
nutritional supplements and skin repair serum products. The complaints 
allege that the companies thereby provided their affiliates with means 
and instrumentalities to further the deceptive and misleading acts and 
practices at issue.
    Finally, the FTC complaints allege that the companies' acts and 
practices related to data security were unfair and deceptive. The 
companies collected personal information, including names, addresses, 
email addresses, telephone numbers, dates of birth, Social Security 
numbers, bank account numbers, credit card account numbers, and genetic 
information. They represented to consumers that they implemented 
reasonable and appropriate measures to secure consumers' personal 
information. The complaints allege the companies failed to provide 
reasonable and appropriate security for consumers' personal 
information. According to the complaints, among other things, the 
companies:
    (1) Failed to implement reasonable policies and procedures to 
protect the security of consumers' personal information collected and 
maintained by respondents;
    (2) Failed to require by contract that service providers implement 
and maintain appropriate safeguards for consumers' personal 
information;
    (3) Failed to provide reasonable oversight of service providers, 
for instance by requiring that service providers implement simple, low-
cost, and readily available defenses to protect consumers' personal 
information;
    (4) Created unnecessary risks to personal information by: (a) 
Maintaining consumers' personal information in clear text; (b) 
providing respondents' employees, regardless of business need, with 
access to consumers' complete personal information; (c) providing 
service providers with access to consumers' complete personal 
information, rather than, for example, to fictitious data sets, to 
develop new applications; (d) failing to perform assessments to 
identify reasonably foreseeable risks to the security, integrity, and 
confidentiality of consumers' personal information on respondents' 
network; and (e) providing a service provider that needed only certain 
categories of information for its business purposes with access to 
consumers' complete personal information; and

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    (5) Did not use readily available security measures to limit 
wireless access to their network.
    The complaints further allege respondents' failure to provide 
reasonable oversight of service providers and respondents' failure to 
limit employees' access to consumers' personal information resulted in 
a vulnerability that, until respondents were alerted by an affiliate, 
provided that affiliate with the ability to access the personal 
information of every foruTM customer and affiliate in 
respondents' customer relationship management database. The personal 
information that could have been accessed included consumers' names, 
addresses, email addresses, telephone numbers, dates of birth, and 
Social Security numbers. The complaints allege that respondents' 
practices were likely to cause substantial injury to consumers, were 
not reasonably avoidable by consumers, and were not outweighed by 
countervailing benefits to consumers or competition.
    The proposed consent orders contain provisions designed to prevent 
GeneLink and foruTM from engaging in similar acts or 
practices in the future. The orders cover representations made in 
connection with the manufacturing, labeling, advertising, promotion, 
offering for sale, sale, or distribution of any Covered Product, in or 
affecting commerce. First, the orders define Covered Product as any 
drug, food, or cosmetic that is: (a) Customized or personalized for a 
consumer based on that consumer's DNA or other genetic assessment, 
including, but not limited to, the nutritional supplement and skin 
repair serum products at issue; or (b) promoted to modulate the effect 
of genes. Second, the orders define Essentially Equivalent Product to 
mean a product that contains the identical ingredients, except for 
inactives, in the same form, dosage, and route of administration as the 
Covered Product; provided that the Covered Product may contain 
additional ingredients if reliable scientific evidence generally 
accepted by experts in the field demonstrates that the amount and 
combination of additional ingredients is unlikely to impede or inhibit 
the effectiveness of the ingredients in the Essentially Equivalent 
Product. Third, the orders define adequate and well-controlled human 
clinical study to mean a human clinical study that is randomized and 
adequately controlled; utilizes valid end points generally recognized 
by experts in the relevant disease field; yields statistically 
significant between-group results; and is conducted by persons 
qualified by training and experience to conduct such a study. This 
definition requires that the study be double-blind and placebo-
controlled; however, this definition provides an exception for any 
study of a conventional food if the respondent can demonstrate that 
placebo control or blinding cannot be effectively implemented given the 
nature of the intervention. Finally, the orders define Covered 
Assessment as any genetic test or assessment, including but not limited 
to, the companies' current DNA assessments. With respect to information 
security, the proposed orders closely follows the Commission's previous 
data security orders.
    Part I of the consent orders is designed to address GeneLink's and 
foruTM's specific claims about diseases and serious health 
conditions by prohibiting the companies from making any representation 
that any Covered Product is effective in the diagnosis, cure, 
mitigation, treatment, or prevention of any disease, including any 
representation that such product will treat, prevent, mitigate, or 
reduce the risk of diabetes, heart disease, arthritis, or insomnia, 
unless such representation is non-misleading and, at the time the 
representation is made, GeneLink and foruTM possess and rely 
upon competent and reliable scientific evidence, at least two adequate 
and well-controlled human clinical studies of the Covered Product, or 
of an Essentially Equivalent Product, conducted by different 
researchers, independently of each other, that conform to acceptable 
designs and protocols and whose results, when considered in light of 
the entire body of relevant and reliable scientific evidence, are 
sufficient to substantiate that the representation is true. Further, 
claims that a Covered Product effectively treats or prevents a disease 
in persons with a particular genetic variation, must be conducted on 
subjects with that genetic variation because persons with the 
particular genetic variation may respond differently to the Covered 
Product than do persons without the variation. The substantiation 
standard imposed under this Part is reasonably necessary to ensure that 
any future claims about diseases and serious health conditions made by 
the named respondents are not deceptive; this standard does not 
necessarily apply to firms not under order.
    Part II of the consent orders prohibits GeneLink and 
foruTM from making any representation about the health 
benefits, performance, or efficacy of any Covered Product or any 
Covered Assessment, unless the representation is non-misleading, and 
proposed respondents rely on competent and reliable scientific evidence 
that is sufficient in quality and quantity based on standards generally 
accepted in the relevant scientific fields, when considered in light of 
the entire body of relevant and reliable scientific evidence, to 
substantiate that the claim is true.
    Part III of the consent orders addresses claims regarding 
scientific research. It prohibits GeneLink and foruTM, with 
regard to any Covered Product or any Covered Assessment, from 
misrepresenting the existence, contents, validity, results, or 
conclusions of any test, study, or research. This Part also prohibits 
GeneLink and foruTM from representing that the benefits of 
any Covered Product or any Covered Assessment are scientifically 
proven.
    Part IV of the consent orders provides that nothing in the orders 
shall prohibit GeneLink and foruTM from making any 
representation for any product that is specifically permitted in 
labeling for such product by regulations promulgated by the FDA 
pursuant to the Nutrition Labeling and Education Act of 1990, or that 
is permitted under sections 303-304 of the Food and Drug Administration 
Modernization Act of 1997, which, under certain circumstances, permit 
claims about health and nutrient content as long as those claims are 
based on current, published, authoritative statements from certain 
federal scientific bodies (e.g., National Institutes of Health, Centers 
for Disease Control) or from the National Academy of Sciences.
    Part V of the consent orders prohibits GeneLink and 
foruTM from providing any person or entity with means and 
instrumentalities that contain any representations prohibited under 
Parts I through III of the orders.
    Part VI of the consent orders requires GeneLink and 
foruTM to establish, implement, and maintain programs to 
monitor its affiliates' compliance with Parts I through III of the 
proposed orders. In particular, for GeneLink's and foruTM's 
top 50 revenue-generating affiliates, on at least a monthly basis, the 
companies must monitor and review such affiliates' Web sites and also 
conduct online monitoring and review of the Internet for any 
representations by such affiliates. This Part also requires GeneLink 
and foruTM to terminate and withhold payment from an 
affiliate within seven days of reasonably concluding that the affiliate 
made representations that the affiliate knew or should have known 
violated Parts I, II, or III of the order. Finally, this Part requires 
GeneLink and foruTM to create, maintain, and make available 
to FTC

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representatives within 14 days of receipt of a written request, reports 
sufficient to show compliance with this Part.
    Part VII of the consent orders prohibits GeneLink and 
foruTM from misrepresenting the extent to which they 
maintain and protect the privacy, confidentiality, security, or 
integrity of any personal information collected from or about 
consumers.
    Part VIII of the consent orders requires GeneLink and 
foruTM to establish and maintain a comprehensive information 
security program that is reasonably designed to protect the security, 
confidentiality, and integrity of personal information collected from 
or about consumers. The security program must contain administrative, 
technical, and physical safeguards appropriate to GeneLink's and 
foruTM's size and complexity, nature and scope of its 
activities, and the sensitivity of the information collected from or 
about consumers. Specifically, the proposed orders require GeneLink and 
foruTM to:
     Designate an employee or employees to coordinate and be 
accountable for the information security program;
     identify material internal and external risks to the 
security, confidentiality, and integrity of personal information that 
could result in the unauthorized disclosure, misuse, loss, alteration, 
destruction, or other compromise of such information, and assess the 
sufficiency of any safeguards in place to control these risks;
     design and implement reasonable safeguards to control the 
risks identified through risk assessment, and regularly test or monitor 
the effectiveness of the safeguards' key controls, systems, and 
procedures;
     develop and use reasonable steps to select and retain 
service providers capable of appropriately safeguarding personal 
information they receive from GeneLink and foruTM, and 
require service providers by contract to implement and maintain 
appropriate safeguards; and
     evaluate and adjust its information security program in 
light of the results of testing and monitoring, any material changes to 
operations or business arrangement, or any other circumstances that it 
knows or has reason to know may have a material impact on its 
information security program.
    Part IX of the consent orders requires GeneLink and 
foruTM to obtain biennial independent assessments of their 
security programs for 20 years.
    Part X of the consent orders requires dissemination of the orders 
to officers, to Scientific Advisory Board members, to licensees, and to 
employees having managerial responsibilities with respect to the 
subject matter of the orders.
    Part XI of the consent orders requires GeneLink and 
foruTM to keep, for a prescribed period, copies of all 
materials relied upon to prepare the assessment and any other materials 
relating to GeneLink's and foruTM's compliance with Parts 
VIII and IX, as well as relevant advertisements and promotional 
materials, including marketing and training materials distributed to 
licensees and affiliates.
    Parts XII and XIII of the consent orders requires GeneLink and 
foruTM to notify the Commission of changes in corporate 
structure that might affect compliance obligations under the orders, 
and to file compliance reports. Part XIV provides that the orders will 
terminate after twenty (20) years, with certain exceptions.
    The purpose of this analysis is to facilitate public comment on the 
proposed orders, and it is not intended to constitute an official 
interpretation of the agreements and proposed orders or to modify their 
terms in any way.

    By direction of the Commission, Commissioner Ohlhausen 
dissenting.
Janice Podoll Frankle,
Acting Secretary.

Statement of Chairwoman Edith Ramirez and Commissioner Julie Brill

    We write to explain our support for the remedy imposed against 
respondents GeneLink, Inc. and foru International Corporation, which we 
believe to be amply supported by the relevant facts. In this, as in all 
of the Commission's advertising actions alleging deceptive health 
claims, the Commission has called for, as proposed relief, a level of 
substantiation that is grounded in concrete scientific evidence and 
reasonably tailored to ensure that the conduct giving rise to the 
violation ceases and does not recur, among other important remedial 
goals. In our view, the remedy adopted here accomplishes just that, 
without imposing undue costs on marketers or consumers more generally.
    Respondents market and sell genetically customized nutritional 
supplements and topical skin products. As described in the complaint, 
this enforcement action stems from claims made by respondents in 
promotional materials and through testimonials that their products 
compensate for consumers' ``genetic disadvantages'' and cure or treat 
serious conditions such as diabetes, heart disease, and arthritis. In a 
newsletter, for example, respondents represented their products had 
cured ``a serious diabetic and cardiac patient,'' and an affiliate's 
Web site stated that the products produced ``improvements in everything 
from blood pressure to eczema to hormonal issues to arthritis.'' \1\ 
The Commission alleges that respondents lacked adequate substantiation 
for these claims and that they falsely represented that the products' 
benefits were scientifically proven.
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    \1\ Compl. Exs. G and H.
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    Disease treatment claims such as these require a rigorous level of 
substantiation. Based on evidence from genetics and nutritional 
genomics experts, the Commission has reason to believe that well-
controlled human clinical trials (referred to here as ``randomized 
controlled trials'' or ``RCTs'') are needed to substantiate 
respondents' claims and that the studies relied on by respondents to 
back up their claims fall far short of this evidence. Because 
respondents lacked even one valid RCT for their products, it was 
unnecessary for the Commission to decide, for purposes of assessing 
liability, the precise number of RCTs needed to substantiate their 
claims.
    In fashioning an appropriate remedy, however, we are requiring that 
respondents have at least two RCTs before making disease prevention, 
treatment, and diagnosis claims. We have the discretion to issue orders 
containing ``fencing-in'' provisions--``provisions . . . that are 
broader than the conduct that is declared unlawful.'' Telebrands Corp. 
v. FTC, 457 F.3d 354, 357 n.5 (4th Cir. 2006) (citation and internal 
quotation marks omitted). Here, we believe that the two-RCT mandate is 
appropriate and reasonably crafted to prevent the recurrence of 
respondents' alleged unlawful conduct. This requirement conforms to 
well-recognized scientific principles favoring replication of study 
results to establish a causal relationship between exposure to a 
substance and a health outcome. See, e.g., Thompson Med. Co., 104 
F.T.C. 648, 720-21, 825 (1984) (requiring two RCTs to support claims of 
arthritis pain relief and thereby affirming determination that 
``[r]eplication is necessary because there is a potential for 
systematic bias and random error in any clinical trial''), aff'd, 791 
F.2d 189 (D.C. Cir. 1986).\2\ It also provides clear rules for

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respondents, facilitating the setting of future research and marketing 
agendas, and preserves law enforcement resources by minimizing future 
argument over the quantity and quality of substantiation needed for the 
most serious health claims about respondents' products. Moreover, the 
deceptive claims alleged in the complaint are the type of significant 
violations of law for which fencing-in relief is more than justified as 
an additional safeguard against potential recidivism. See, e.g., id. at 
834 (ruling that deceptive health claims about topical analgesic for 
arthritis pain warranted fencing-in, and noting that the seriousness of 
the violations was ``affected by the fact that consumers could not 
readily judge the truth or falsity of the claims'').
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    \2\ See also Geoffrey Marczyk et al., Essentials of Research 
Design and Methodology 15-16 (2005) (``The importance of replication 
in research cannot be overstated. Replication serves several 
integral purposes, including establishing the reliability (i.e., 
consistency) of the research study's findings and determining . . . 
whether the results of the original study are generalizable to other 
groups of research participants.'').
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    While not taking issue with respondents' liability as alleged in 
the Commission's complaint, Commissioner Ohlhausen objects to the 
Commission's decision to require, as a remedial matter, that 
respondents have at least two RCTs before representing that their 
genetic products can cure, treat, diagnose, or prevent a disease. In 
addition to arguing that the two-RCT requirement is ``unduly high,'' 
Commissioner Ohlhausen expresses concern that these and other recent 
Commission orders may lead advertisers in general to believe that they 
too must invariably have two RCTs to substantiate health and disease 
claims for a variety of products, leading them to forgo otherwise 
adequately substantiated claims and depriving consumers of potentially 
useful information.\3\ We respectfully disagree.
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    \3\ Statement of Commissioner Maureen K. Ohlhausen, Dissenting 
in Part and Concurring in Part [hereinafter Ohlhausen Statement] at 
1. In her Statement, Commissioner Ohlhausen also references various 
weight-loss related enforcement actions announced today by the 
Commission, including FTC v. Sensa Products, LLC. Her objections, 
however, center on the remedy imposed in this matter.
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    There is nothing in our action today that amounts to the imposition 
of a ``de facto two-RCT standard on health- and disease-related 
claims.'' \4\ In this and other recent enforcement actions, the 
Commission has consistently adhered to its longstanding view that the 
proper level of substantiation for establishing liability is a case-
specific factual determination as to what constitutes competent and 
reliable scientific evidence for the advertising claims at issue.\5\ 
The same fact-specific approach has guided the Commission's remedial 
standards. Recent Commission consent orders concerning different types 
of health claims have variously required two RCTs,\6\ one RCT,\7\ or 
more generally defined ``competent and reliable scientific evidence.'' 
\8\ Against this backdrop, we are not persuaded that by requiring two 
RCTs as a remedial matter here, the Commission will create a 
misperception among advertisers about the substantiation standards that 
govern liability for deceptive advertising.\9\ However, to the extent 
other marketers look to our orders for signals as to the type of 
backing required for disease treatment claims, we prefer that they 
understand that serious claims like those made by respondents must have 
hard science behind them.
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    \4\ Ohlhausen Statement at 3.
    \5\ See, e.g., Bristol Meyers Co., 102 F.T.C. 21, 332-38 (1983), 
aff'd, 738 F.2d 554 (2d Cir. 1984); FTC, Dietary Supplements: An 
Advertising Guide for Industry 10 (Apr. 2001) [hereinafter Dietary 
Supplements Advertising Guide] (``When no specific claim about the 
level of support is made, the evidence needed depends on the nature 
of the claim. A guiding principle for determining the amount and 
type of evidence that will be sufficient is what experts in the 
relevant area of study would generally consider to be adequate.'').
    \6\ See, e.g., FTC v. Skechers U.S.A., Inc., No. 1:12-cv-01214-
JG (N.D. Ohio July 12, 2012) (prohibiting, as a remedial matter, 
weight loss claims without two RCTs); FTC v. Labra, No. 11 C 2485 
(N.D. Ill. Jan. 11, 2012) (same); FTC v. Iovate Health Scis.USA, 
Inc., No. 10-cv-587 (W.D.N.Y. July 29, 2010) (same); Nestl[eacute] 
Healthcare Nutrition, Inc., 151 F.T.C. 1 (2011) (requiring two RCTs 
for claims that any probiotic drink or certain nutritionally 
complete drinks reduce the duration of acute diarrhea in children or 
absences from daycare or school due to illness).
    \7\ See, e.g., FTC v. Skechers U.S.A., Inc., No. 1:12-cv-01214-
JG (N.D. Ohio July 12, 2012) (prohibiting muscle strengthening 
claims for any footwear product without one RCT); FTC v. Reebok 
Int'l Ltd., No. 1:11-cv-02046-DCN (N.D. Ohio Sept. 29, 2011) (same).
    \8\ See, e.g., NBTY, Inc., 151 F.T.C. 201 (2011) (requiring 
marketer of vitamins to possess ``competent and reliable scientific 
evidence'' for any claim about the health benefits, performance, or 
efficacy of any product).
    \9\ Moreover, as Commissioner Ohlhausen notes, Ohlhausen 
Statement at 2 n.7, there may be some instances in which the medical 
community would not require RCTs to demonstrate that a substance 
treats, prevents, or reduces the risk of a disease. See, e.g., 
Dietary Supplements Advertising Guide, supra note 5, at 11 
(explaining that an appropriately qualified claim based on 
epidemiological evidence would be permitted where ``[a] clinical 
intervention trial would be very difficult and costly to conduct,'' 
``experts in the field generally consider epidemiological evidence 
to be adequate'' and there is no ``stronger body of contrary 
evidence''). But, contrary to Commissioner Ohlhausen's contention, 
the link between folic acid and neural tube birth defects was 
substantiated using a combination of RCTs and observational 
epidemiological evidence, as indicated by the articles she cites. 
See, e.g., Walter C. Willett, Folic Acid and Neural Tube Defect: 
Can't We Come to Closure?, 82 Am. J. Pub. Health 666, 667 (1992).
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    We also disagree that the proposed remedy will deny consumers 
access to useful information about new areas of science. The value of 
information naturally depends on its accuracy.\10\ As the D.C. Circuit 
has emphasized, ``misleading advertising does not serve, and, in fact, 
disserves, th[e] interest'' of ``consumers and society . . . in the 
free flow of commercial information.'' FTC v. Brown & Williamson 
Tobacco Corp., 778 F.2d 35, 43 (D.C. Cir. 1985) (citation and internal 
quotation marks omitted). If respondents wish to rely on emerging 
science, they can qualify their claims accordingly. Properly qualified 
claims are lawful and permissible under our proposed orders. See 
Proposed Consent Orders, Part III.
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    \10\ In some instances, ``emerging'' scientific evidence has 
been subsequently contradicted by further research, leading to 
consumer confusion and potential physical and financial harm. See, 
e.g., Eric A. Klein et al., Vitamin E and the Risk of Prostate 
Cancer, The Selenium and Vitamin E Cancer Prevention Trial (SELECT), 
306 J. Am. Med. Ass'n 1549, 1551 (2011) (reporting that a 2008 
randomized, placebo-controlled prospective clinical trial of over 
35,000 men contradicted ``considerable preclinical and 
epidemiological evidence that selenium and vitamin E may reduce 
prostate cancer risk,'' and that follow-up observational data from 
2011 showed a statistically significant increase in prostate cancer 
in the vitamin E group over placebo).
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    The fact that the ingredients in respondents' products are safe 
also does not alter our conclusion. Consumers who rely on respondents' 
claims may forgo important diet and lifestyle changes that are known to 
reduce the risk of diabetes, heart disease, or arthritis. Or they may 
forgo treatments that, unlike respondents' products, have been 
demonstrated to be effective. In addition, respondents charge a 
premium, over $100 per month, for their customized products. Consumers, 
therefore, may be deceived both to their medical and economic detriment 
when a safe product provides an ineffective treatment. See FTC v. QT, 
Inc., 512 F.3d 858, 863 (7th Cir. 2008) (safe but deceptively 
advertised treatment ``will lead some consumers to avoid treatments 
that cost less and do more; the lies will lead others to pay too much 
for [treatment] or otherwise interfere with the matching of remedies to 
medical conditions''); Pfizer Inc., 81 F.T.C. 23, 62 (1972) (``A 
consumer should not be compelled to enter into an economic gamble to 
determine whether a product will or will not perform as 
represented.''). Unsubstantiated disease claims also harm honest 
competitors that expend considerable resources on studies or analyses 
of the existing science and conform their advertising claims 
accordingly. Allowing companies to rely on ``emerging'' evidence to 
support disease claims merely because the products in question are safe 
would risk a ``race to the bottom''--the proliferation of progressively 
more egregious disease claims, which would harm both

[[Page 2667]]

legitimate competitors and consumers in the process.
    Finally, Commissioner Ohlhausen argues that requiring the RCTs to 
be conducted by different researchers working independently of each 
other imposes undue burdens in the absence of evidence that a defendant 
has fabricated or interfered with a study or its results.\11\ This 
requirement is an important safeguard that lessens the likelihood that 
researcher bias will affect the outcome of a study and helps ensure 
that the results are replicable.\12\
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    \11\ Ohlhausen Statement at 2-3.
    \12\ Commissioner Ohlhausen also objects to the Part I 
requirement that testing be conducted on the product about which the 
advertising claim is made or an ``essentially equivalent product,'' 
arguing that the order should authorize ``claims regarding 
individual ingredients in combined products as long as claims for 
each ingredient are properly substantiated and there are no known 
interactions.'' Ohlhausen Statement at 3. In fact, the orders permit 
that very thing. If there is reliable evidence that the additional 
ingredients will not interact with the tested product in a way that 
impacts efficacy, the orders do not require testing of the combined 
product. See Proposed Consent Orders at 3 (defining ``Essentially 
Equivalent Product'' to permit additional ingredients, beyond those 
in the tested product, if ``reliable scientific evidence generally 
accepted by experts in the field demonstrates that the amount and 
combination of additional ingredients [in the respondent's product] 
is unlikely to impede or inhibit the effectiveness of the 
ingredients in the [tested product]'').
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    In short, we believe the relief obtained by the Commission in this 
settlement is warranted and strikes the right balance between the need 
for accuracy in health-related advertising claims and the burden placed 
on respondents.

Statement of Commissioner Maureen K. Ohlhausen Dissenting In Part and 
Concurring In Part

    I strongly support the Commission's enforcement efforts against 
false and misleading advertisements and therefore have voted in favor 
of the consent agreements with Sensa Products, LLC; HCG Diet Direct, 
LLC; L'Occitane, Inc.; and LeanSpa, LLC, despite having some concerns 
about the scope of the relief in several of these weight-loss related 
matters. I voted against the consent agreements in the matter of 
GeneLink, Inc. and foru International Corporation, however, because 
they impose an unduly high standard of at least two randomized 
controlled trials (or RCTs) to substantiate any disease-related claims, 
not just weight-loss claims. Adopting a one-size-fits-all approach to 
substantiation by imposing such rigorous and possibly costly 
requirements for such a broad category of health- and disease-related 
claims \1\ may, in many instances, prevent useful information from 
reaching consumers in the marketplace and ultimately make consumers 
worse off.\2\
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    \1\ This provision may apply quite broadly in practice given the 
Commission majority's conclusion in our POM Wonderful decision that 
many of the claims involving the continued healthy functioning of 
the body also conveyed implied disease-related claims. See POM 
Wonderful, LLC, No. 9344, 2013 WL 268926 (F.T.C. Jan. 16, 2013).
    \2\ To be clear, however, I am not advocating in favor of 
permitting ``unsubstantiated disease claims,'' as suggested in the 
statement of Chairwoman Ramirez and Commissioner Brill. Rather, I am 
suggesting that consumers would on balance be better off if we 
clarified that our requirements permit a variety of health- or 
disease-related claims about safe products, such as foods or 
vitamins, to be substantiated by competent and reliable scientific 
evidence that might not comprise two RCTs.
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    The Commission has traditionally applied the Pfizer \3\ factors to 
determine the appropriate level of substantiation required for a 
specific advertising claim. These factors examine the nature of the 
claim and the type of product it covers, the consequences of a false 
claim, the benefits of a truthful claim, the cost of developing the 
required substantiation for the claim, and the amount of substantiation 
experts in the field believe is reasonable for such a claim.\4\ One of 
the goals of the Pfizer analysis is to balance the value of greater 
certainty of information about a product's claimed attributes with the 
risks of both the product itself and the suppression of potentially 
useful information about it. Under such an analysis, the burden for 
substantiation for health- or disease-related claims about a safe 
product, such as a food, for example, should be lower than the burdens 
imposed on drugs and biologics because consumers face lower risks when 
consuming the safe product.\5\
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    \3\ Pfizer, Inc., 81 F.T.C. 23 (1972).
    \4\ Id. at 91-93; see also FTC Policy Statement Regarding 
Advertising Substantiation, 104 F.T.C. 839 (1984) (appended to 
Thompson Med. Co., 104 F.T.C. 648, 839 (1984)).
    \5\ The FDA designates most food ingredients as GRAS (generally 
recognized as safe). 21 C.F.R. Sec.  170.30. Vitamins and minerals 
are treated as foods by the FDA and are also GRAS. See FDA Guidance 
for Industry: Frequently Asked Questions about GRAS (Dec. 2004), 
available at http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/IngredientsAdditivesGRASPackaging/ucm061846.htm#1. As a result, food 
ingredients, vitamins, and minerals can be combined and sold to the 
public without direct evidence on the particular combination 
realized in the new product. Many products are made up of several 
common generic ingredients, for which there is little financial 
incentive to test individually or to retest in each particular 
combination.
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    Recently, however, Commission orders, including the ones in the 
matter of GeneLink and foru International, seem to have adopted two 
RCTs as a standard requirement for health- and disease-related claims 
for a wide array of products.\6\ RCTs can be difficult to conduct and 
are often costly and time-consuming relative to other types of testing, 
particularly for diseases that develop over a long period of time or 
complex health conditions. Requiring RCTs may be appropriate in some 
circumstances, such as where use of a product carries some significant 
risk, or where the costs of conducting RCTs may be relatively low, such 
as for conditions whose development or amelioration can be observed 
over a short time period. Thus, I am willing to support the order 
requirement of two RCTs for short-term weight loss claims in the Sensa, 
HCG Diet Direct, L'Occitane, and LeanSpa matters because such studies 
can be conducted in a relatively short amount of time at a lower cost 
than for many other health claims. My concern with GeneLink and foru 
International and the series of similar orders is that they might be 
read to imply that two RCTs are required to substantiate any health- or 
disease-related claims, even for relatively-safe products. It seems 
likely that producers may forgo making such claims about these kinds of 
products, even if they may otherwise be adequately supported by 
evidence that does not comprise two RCTs.\7\
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    \6\ The orders in this matter include as a Covered Product any 
food, drug, or cosmetic that is genetically customized or 
personalized for a consumer or that is promoted to modulate the 
effect of genes. Other cases requiring two RCTs are POM Wonderful 
LLC, Docket No. 9344 (F.T.C. Jan. 10, 2013) (fruit juice); Dannon 
Co., Inc., 151 F.T.C. 62 (2011) (yogurt); Nestl[eacute] Healthcare 
Nutrition, Inc., 151 F.T.C. 1 (2011) (food); FTC v. Iovate Health 
Sci. USA, Inc., No. 10-cv-587 (W.D.N.Y. July 29, 2010) (dietary 
supplement).
    \7\ Notably, the medical community does not always require RCTs 
to demonstrate the beneficial effects of medical and other health-
related innovations. For example, the recommendation that women of 
childbearing age take a folic acid supplement to reduce the risk of 
neural tube birth defects was made without RCT evidence on the 
relevant population. See Walter C. Willett, ``Folic Acid and Neural 
Tube Defect: Can't We Come to Closure?'' American Journal of Public 
Health, May 1992, Vol. 82, No. 5; Krista S. Crider, Lynn B. Bailey 
and Robert J. Berry, ``Folic Acid Food Fortification--Its History, 
Effect, Concerns, and Future Directions,'' Nutrients 2011, Vol. 3, 
370-384.
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    Although raising the requirement for both the number and the rigor 
of studies required for substantiation for all health- or disease-
related claims may increase confidence in those claims, the 
correspondingly increased burdens in time and money in conducting such 
studies may suppress information that would, on balance, benefit 
consumers. If we demand too high a level of substantiation in pursuit 
of certainty, we risk losing the benefits to consumers of having access 
to information about emerging areas of science and the corresponding 
pressure on firms to compete on the health features of their products. 
In my view, the Commission should apply the Pfizer balancing test in

[[Page 2668]]

a more finely calibrated manner than they have in the GeneLink and foru 
International orders to avoid imposing ``unduly burdensome restrictions 
that might chill information useful to consumers in making purchasing 
decisions.'' \8\
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    \8\ FTC Staff Comment Before the Food and Drug Administration In 
the Matter of Assessing Consumer Perceptions of Health Claims, 
Docket No. 2005N-0413 (2006), available at http://www.ftc.gov/be/V060005.pdf.
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    In addition, based on the same concerns about imposing 
unnecessarily burdensome and costly obligations, I do not support a 
general requirement that all products be tested by different 
researchers working independently without an indication that the 
defendant fabricated or otherwise interfered with a study or its 
results.\9\ Where defendants have fabricated results, as our complaint 
against Sensa alleges, a requirement of independent testing may be 
appropriate, but a simple failure to have adequate substantiation 
should not automatically trigger such an obligation. In other cases, 
where there is some concern about a sponsor or researcher biasing a 
study, our orders may address this in a less burdensome way by 
requiring the producer making the disease-related claims to provide the 
underlying testing data to substantiate its claims, which we can 
examine for reliability. Similarly, the requirement to test an 
``essentially equivalent product,'' which appears to be more rigorous 
than FDA requirements for food and supplement products, can 
significantly and unnecessarily increase the costs of substantiation, 
again potentially depriving consumers of useful information. Instead, 
Commission orders should clearly allow claims regarding individual 
ingredients in combined products as long as claims for each ingredient 
are properly substantiated and there are no known relevant 
interactions.\10\
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    \9\ The FDA does not require independent testing for clinical 
investigational studies of medical products, including human drug 
and biological products or medical devices, and it permits sponsors 
to use a variety of approaches to fulfill their responsibilities for 
monitoring. See FDA Guidance for Industry Oversight of Clinical 
Investigations--A Risk-Based Approach to Monitoring (Aug. 2013), 
available at http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM269919.pdf.
    \10\ Although the statement by Chairwoman Ramirez and 
Commissioner Brill asserts that the orders in GeneLink and foru 
International permit claims for individual ingredients in combined 
products as long as the claims for each ingredient are properly 
substantiated and there are no known interactions, the orders 
actually require that ``reliable scientific evidence generally 
accepted by experts in the field demonstrate that the amount and 
combination of additional ingredients is unlikely to impede or 
inhibit the effectiveness of the ingredients in the Essentially 
Equivalent Product.'' Decision and Order at 2, In the Matter of 
GeneLink, Inc. FTC File No. 112 3095 (emphasis added). My point is 
that the FDA does not require direct evidence regarding combinations 
of individual ingredients deemed GRAS but the order on its face 
requires scientific evidence demonstrating the effect of such 
combinations.
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    It is my hope and recommendation that as we consider future cases 
involving health- and disease-related claims, the Commission and its 
staff engage in a further dialogue about our substantiation 
requirements to discern how best to assess the potential costs and 
benefits of allowing different types of evidence that might provide a 
reasonable basis to substantiate such claims. Although I am willing to 
support liability for failures to have adequate substantiation for 
health- and disease-related claims under certain circumstances, I am 
not willing to support a de facto two-RCT standard on health- and 
disease-related claims for food or other relatively-safe products.

Statement of Commissioner Joshua D. Wright

    Today the Commission announces five settlements involving the 
deceptive marketing of a variety of nutritional and dietary 
supplements, skincare products, and weight-loss remedies. While the 
course of business conduct, type of product and particular advertising 
claim at issue in each case differs, all share one common 
characteristic--the Commission has alleged that, in the course of 
advertising their products, each of these defendants has made false or 
unsubstantiated claims about the treatment of certain medical or health 
conditions.
    Cases that challenge false or unsubstantiated claims--especially 
those involving serious medical conditions--are an important component 
of our agency's mission to protect consumers from economic injury. 
Indeed, the aggregate consumer injury in these particular matters is 
estimated to be $420 million and these settlement agreements will 
return approximately $33 million to consumers. I fully support the 
Commission's efforts to deter deceptive advertising and voted in favor 
of authorizing these particular settlements.
    In crafting remedial relief in these cases, the Commission 
inevitably faces a tradeoff between deterring deceptive advertising and 
preserving the benefits to competition and consumers from truthful 
claims. Tailoring remedial relief--including the level of 
substantiation required--to the specific claims at issue is in the best 
interests of consumers.\1\ I write today to express some of my views on 
this issue.
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    \1\ The Commission's determination of whether an advertiser has 
adequate substantiation in the first instance depends upon ``a 
number of factors relevant to the benefits and costs of 
substantiating a particular claim. These factors include: The type 
of claim, the product, the consequences of a false claim, the 
benefits of a truthful claim, the cost of developing substantiation 
for the claim, and the amount of substantiation experts in the field 
believe is reasonable.'' FTC Policy Statement Regarding Advertising 
Substantiation, appended to Thompson Medical Co., 104 F.T.C. 648, 
839 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 
U.S. 1086 (1987). Formulating the required level of substantiation 
for injunctive relief should necessarily be grounded in the factors 
set forth in this policy statement, although additional 
considerations might also be relevant.
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    Each of the consent agreements announced today includes injunctive 
relief provisions requiring the settling parties to satisfy a standard 
of ``competent and reliable scientific evidence'' before again making 
the claims at issue. Each consent agreement further defines ``competent 
and reliable scientific evidence'' as requiring, among other things, 
two adequate and well-controlled human clinical studies (randomized 
controlled trials or RCTs) of the product. I encourage the Commission 
to explore more fully whether the articulation and scope of injunctive 
relief in these and similar settlements strikes the right balance 
between deterring deceptive advertising and preserving for consumers 
the benefits of truthful claims. The optimal amount and type of 
evidence to substantiate a future claim will vary from case to case. 
Similarly, a fact-specific inquiry may justify specially crafted 
injunctive relief in certain cases, such as bans, performance bonds or 
document retention requirements for underlying study data. I look 
forward to working with my fellow Commissioners to continue to examine 
and evaluate our formulation of the competent and reliable scientific 
evidence standard, as well as the ancillary injunctive provisions in 
consent agreements, in order to best protect consumers from the costs 
imposed upon them by deceptive advertising while encouraging 
competition and truthful advertising that benefits consumers.

[FR Doc. 2014-00643 Filed 1-14-14; 8:45 am]
BILLING CODE 6750-01-P