American Institute of Smoking Cessation, et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932 3253]

American Institute of Smoking Cessation, et al.; Proposed Consent

Agreement With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, an Illinois-based company and its two

officers from making any representation about the relative or absolute

performance or efficacy of any smoking cessation or weight loss

program, unless they possess and rely upon competent and reliable

scientific evidence to substantiate the representation, and would

prohibit the respondents from misrepresenting the contents, results or

validity of any study, test, survey or report.

DATES: Comments must be received on or before October 4, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:Matthew Daynard, FTC/H-200, Washington,

D.C. 20580. (202) 326-3291.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's Rules of Practice (16 CFR 2.34), notice is hereby given

that the following 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 sixty (60) days. Public comment is invited. Such comments or

views will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

In the matter of American Institute of Smoking Cessation, Inc.,

a corporation, Kenneth C. Grossman, individually and as an officer

of said corporation, and Jane A. Grossman, individually and as an

officer of said corporation.

4The Federal Trade Commission having initiated an investigation of

certain acts and practices of American Institute of Smoking Cessation,

Inc. (``AISC''), a corporation, Kenneth C. Grossman, individually and

as an officer of said corporation, and Jane A. Grossman, individually

and as an officer of said corporation (``respondents''), and it now

appearing that proposed respondents are willing to enter into an

agreement containing an order to cease and desist from the use of the

acts and practices being investigated,

It is hereby agreed, By and between American Institute of Smoking

Cessation, Inc., Kenneth C. Grossman, individually and as an officer of

said corporation, and Jane A. Grossman, individually and as an officer

of said corporation, and counsel for the Federal Trade Commission that:

1. Proposed respondent AISC is an Illinois corporation, with its

principal office or place of business at 318 South Garfield, Hinsdale,

Illinois, 60521.

2. Proposed respondent Kenneth C. Grossman is the President and

Treasurer of said corporation. Respondent Jane A. Grossman is the Vice-

President and Secretary of said corporation. Together, they formulate,

direct, and control the acts and practices of said corporation. Their

address is the same as that of said corporation.

3. Proposed respondents admit all the jurisdictional facts set

forth in the attached draft complaint.

4. Proposed respondents waive:

(a) Any further procedural steps;

(b) the requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law; and

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) Any claim under the Equal Access to Justice Act, 5 U.S.C.

Sec. 504.

5. This agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

agreement is accepted by the Commission, it, together with the attached

draft complaint, will be placed on the public record for a period of

sixty (60) days and information in respect thereto publicly released.

The Commission thereafter may either withdraw its acceptance of this

agreement and so notify the proposed respondents, in which event it

will take such action as it may consider appropriate, or issue and

serve its complaint (in such form as the circumstances may require) and

decision, in disposition of the proceeding.

6. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondents of facts, other than

jurisdictional facts, or of violations of law as alleged in the draft

of the complaint here attached.

7. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to the proposed

respondents: (a) issue its complaint corresponding in form and

substance with the attached draft complaint and its decision containing

the following Order to cease and desist in disposition of the

proceeding; and (b) make information public in respect thereto. When so

entered, the Order to cease and desist shall have the same force and

effect and may be altered, modified or set aside in the same manner and

within the same time provided by statute for other orders. The Order

shall become final upon service. Delivery by the U.S. Postal Service of

the complaint and decision containing the agreed-to Order to proposed

respondents' address as stated in this agreement shall constitute

service. Proposed respondents waive any right they may have to any

other manner of service. The compliant may be used in construing the

terms of the Order, and no agreement, understanding, representation, or

interpretation not contained in the Order may be used to vary or

contradict the terms of the Order.

8. Proposed respondents have read the attached draft complaint and

the following Order. Proposed respondents understand that once the

Order has been issued, they will be required to file one or more

compliance reports showing that they have fully complied with the

Order. Proposed respondents further understand that they may be liable

for civil penalties in the amount provided by law for each violation of

the Order after it becomes final.

Order

Definition

For the purposes of this Order, ``competent and reliable scientific

evidence'' shall mean those 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. Survey evidence may

be appropriate depending on the representation made.

I

It is ordered, That respondents American Institute of Smoking

Cessation, Inc., a corporation, its successors and assigns, and its

officers, Kenneth C. Grossman, individually and as an officer of said

corporation, and Jane A. Grossman, individually and as an officer of

said corporation, and respondents' agents, representatives and

employees, directly or through any corporation, subsidiary, division,

or other device, in connection with the advertising, promotion,

offering for sale, or sale of any smoking cessation or weight loss

program, including any such program that uses hypnosis, in or affecting

commerce, as ``commerce'' is defined in the Federal Trade Commission

Act, do forthwith cease and desist from:

A. Making any representation, directly or by implication, that

participants who attend respondents' single-session group hypnosis

seminar are cured of smoking addiction without experiencing

irritability, anxiety, weight gain, or other side effects, unless, at

the time of making any such representation, respondents possess and

rely upon competent and reliable scientific evidence substantiating the

representation.

B. Making any representation, directly or by implication, about the

relative or absolute performance or efficacy of any smoking cessation

program or weight loss program, unless, at the time of making any such

representation, respondents possess and rely upon competent and

reliable scientific evidence substantiating the representation.

C. Representing through any endorsement or testimonial that any

participant(s) of respondents' smoking cessation program or weight loss

program have achieved success in smoking abstinence or weight loss

unless:

(1) at the time of making such representation, the success claimed

is representative of the typical or ordinary experience of all

participants of such program, and respondents possess and rely upon

competent and reliable scientific evidence that substantiates such

representation, or

(2) respondents disclose, clearly and prominently, and in close

proximity to the endorsement or testimonial, either:

(a) what the generally expected results would be for participants

in such program, or

(b) 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.

D. Misrepresenting, directly or by implication, the existence,

contents, validity, results, conclusions, or interpretations of any

test, study, survey or report.

E. Misrepresenting, directly or by implication, the performance or

efficacy of any smoking cessation program or weight loss program.

II

It is further ordered, That for three (3) years after the last date

of dissemination of any representation covered by this Order,

respondents, or their successors and assigns, shall maintain and upon

request make available to the Federal Trade Commission for inspection

and copying:

A. All materials that were relied upon in disseminating such

representation; and

B. All tests, reports, studies, surveys, demonstrations or other

evidence in their possession or control that contradict, qualify, or

call into question such representation, or the basis relied upon for

such representation, including complaints from consumers.

III

It is further ordered, That respondents shall notify the Commission

at least thirty (30) days prior to the effective date of any proposed

change in the corporate respondent such as dissolution, assignment, or

sale resulting in the emergence of a successor corporation(s), the

creation or dissolution of subsidiaries, or any other change in the

corporation that may affect compliance obligations arising out of this

Order.

IV

It is further ordered, That the individual respondents named herein

shall promptly notify the Commission of the discontinuance of their

present business or of their affiliation with the corporate respondent.

In addition, for a period of three (3) years from the date of service

of this Order, each respondent shall promptly notify the Commission of

each affiliation with a new business or employment that involves a

smoking cessation program or a weight loss program. Each such notice

shall include the respondent's new business address and a statement of

the nature of the business or employment in which the respondent is

newly engaged as well as a description of the respondent's duties and

responsibilities in connection with the business or employment. The

expiration of the notice provision of this paragraph shall not affect

any other obligation arising under this Order.

V

It is further ordered, That respondents shall distribute a copy of

this Order to each of their officers, agents, representatives,

independent contractors, and employees who are involved in the

preparation and placement of advertisements or promotional materials;

and, for a period of three (3) years from the date of entry of this

Order, distribute same to all future such officers, agents,

representatives, independent contractors, and employees.

VI

It is further ordered, That respondents shall, within sixty (60)

days after the date of service of this Order, file with the Commission

a report, in writing, setting forth in detail the manner and form in

which they have complied with this Order.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from American Institute of Smoking Cessation,

Inc. (hereinafter ``AISC''), its President, Kenneth C. Grossman, and

its Vice-President, Jane A. Grossman, marketers of The Grossman Method

seminar, a single, three-hour, group hypnosis session program for

smoking cessation and weight loss. The Grossman Method seminar is

offered to the public nationwide by Kenneth C. Grossman at hotel

locales.

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.

The Commission's complaint charges that the proposed respondents

deceptively advertised: (1) The likelihood of seminar participants'

success in achieving abstinence from smoking cigarettes and weight

loss; and (2) the effectiveness of proposed respondents' smoking

cessation methods in leading consumers to achieve smoking abstinence

compared to other stop-smoking methods.

Success

The complaint against AISC, Kenneth C. Grossman and Jane A.

Grossman alleges that the proposed respondents failed to possess a

reasonable basis for claims they made regarding the success of their

seminar participants in quitting smoking and quickly achieving weight

loss, and made a false claim about smoking abstinence success. Through

advertisements placed in various media in advance of their seminars,

proposed respondents represented that surveys prove that 97 to 100

percent of their seminar participants permanently abstain from smoking

after attending those seminars. The complaint alleges that this claim

is false.

Proposed respondents further represented through their

advertisements, including the use of consumer endorsements, that

seminar participants: (1) Typically are cured of smoking addiction and

permanently abstain from smoking cigarettes; (2) are cured of smoking

addiction without experiencing irritability, anxiety or weight gain;

and (3) typically achieve weight loss quickly. Finally, proposed

respondents represented that over 300,000 seminar participants have

permanently quit smoking as a result of attending the Grossman Method

seminar over the last fifteen years, and that up to or over 98% of

consumers attending The Grossman Method seminar have quit smoking.

The Commission believes that these success claims for seminar

attendees' smoking cessation and weight loss are deceptive because

proposed respondents did not posses adequate substantiation for those

claims at the time they made the claims.

The proposed consent order seeks to address the alleged success

misrepresentations cited in the accompanying complaint in five ways.

First, the order (Part I.B.) requires proposed respondents to possess a

reasonable basis consisting of competent and reliable scientific

evidence substantiating any claim about the performance or efficacy of

any smoking cessation or weight loss program.

Second, the proposed order (Part I.A.) prohibits proposed

respondents from representing that seminar participants are cured of

smoking addiction without experiencing side effects, such as

irritability, anxiety or weight gain, unless the claim is substantiated

by competent and reliable scientific evidence.

Third, the proposed order (Part I.C.) prohibits proposed

respondents from representing through any endorsements that seminar

participants have achieved success in smoking abstinence or weight loss

unless the claimed success is representative of the typical or ordinary

experience of all such participants, 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 program participants, 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 achieve similar results.

Fourth, the proposed order (Part I.D.) generally prohibits proposed

respondents from misrepresenting the existence, contents, validity,

results, conclusions, or interpretations of any test, study, survey or

report.

Finally, the proposed order (Part I.E.) generally prohibits

proposed respondents from misrepresenting the performance or efficacy

of any smoking cessation or weight loss program.

Efficacy

The Commission's complaint further alleges that proposed

respondents failed to possess a reasonable basis for a claim they made

regarding the relative ability of their hypnosis program to lead

consumers to quit smoking. AISC, Kenneth C. Grossman and Jane A.

Grossman represented through their advertising that their single-

session, group hypnosis seminar is more efficacious for smoking

cessation than other stop-smoking methods. The Commission believes that

this comparative efficacy claim for proposed respondents' hypnosis

program is deceptive because proposed respondents at the time they made

the claim did not possess adequate substantiation for the claim.

To address this efficacy misrepresentation, the proposed order

(Part I.B.) requires proposed respondents to possess and rely upon

competent and reliable scientific evidence substantiating any

representation about the relative (or absolute) performance or efficacy

of any smoking cessation (or weight loss) program, before they make

such a claim. The proposed order (Part I.E.) further generally

prohibits proposed respondents from misrepresenting the performance or

efficacy of any smoking cessation program (or weight loss program).

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.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 94-19134 Filed 8-4-94; 8:45 am]

BILLING CODE 6750-01-M