Gorayeb Seminars, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932-3254]

Gorayeb Seminars, Inc., 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, a New Jersey-based company and its

officer 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.

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 Gorayeb Seminars, Inc., a corporation, Gorayeb

Learning Systems, Inc., a corporation, and Ronald B. Gorayeb,

individually and as an officer of said corporations.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Gorayeb Seminars, Inc., a corporation,

Gorayeb Learning Systems, Inc., a corporation, and Ronald B. Gorayeb,

individually and as an officer of said corporations (``proposed

respondents'' or ``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 Gorayeb Seminars, Inc., Gorayeb

Learning Systems, Inc., their duly authorized officers, and Ronald B.

Gorayeb, individually and as an officer of said corporations, and their

attorney, and counsel for the Federal Trade Commission that:

1. Proposed respondent Gorayeb Seminars, Inc., is a New Jersey

corporation, with its principal office or place of business at 101

Roundhill Drive, Rockaway, New Jersey, 07866.

2. Proposed respondent Gorayeb Learning Systems, Inc., is a New

Jersey corporation, with its principal office or place of business at

101 Roundhill Drive, Rockaway, New Jersey 07866.

3. Proposed respondent Ronald B. Gorayeb is the President,

Secretary, and sole director and shareholder of said corporations. He

formulates, directs, and controls the acts and practices of said

corporations and his address is the same as that of said corporations.

4. Proposed respondents admit all the jurisdictional facts set

forth in the attached draft complaint.

5. 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. 504.

6. 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.

7. 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.

8. 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 complaint 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.

9. 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.

I

It is ordered, that respondents Gorayeb Seminars, Inc., a

corporation, Gorayeb Learning Systems, Inc., a corporation, their

successors and assigns, and their officers, and Ronald B. Gorayeb,

individually and as an officer of said corporations, 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 lose 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. Representing, directly or by implication, that participants who

attend respondents' single-session group hypnosis seminar are cured of

smoking addiction without experiencing withdrawal, 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. 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 respondents 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

corporations that may affect compliance obligations arising out of this

Order.

IV

It is further ordered, that the individual respondent named herein

shall promptly notify the Commission of the discontinuance of his

present business or of his affiliation with the corporate respondents.

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

of this Order, the 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.

Analyis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Gorayeb Seminars, Inc. (hereinafter

``GSI''), Gorayeb Learning Systems, Inc. (hereinafter ``GLS'') and

their President, Ronald B. Gorayeb, marketers of The Gorayeb Method

seminar, a single, two-hour, group hypnosis session program for smoking

cessation and weight loss. The Gorayeb Method seminar is offered to the

public nationwide by Ronald B. Gorayeb 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 and maintaining abstinence from smoking cigarettes

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

weight-loss programs in leading consumers to achieve and maintain

weight loss compared to other weight-loss methods.

Success

The complaint against GSI, GLS and Ronald B. Gorayeb 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 achieving and maintaining weight loss. Through

advertisements placed in various media in advance of their seminars,

proposed respondents represented that seminar participants: (1) Are

cured of smoking addiction and permanently abstain from smoking

cigarettes; (2) are cured of smoking addiction without experiencing

withdrawal, anxiety or weight gain; and (3) achieve and maintain weight

loss. Proposed respondents further represented that thousands of

consumers have permanently quit smoking and thousands have achieved and

maintained weight loss as a result of attending The Gorayeb Method

seminars.

The Commission believes that these success claims for seminar

attendees' smoking cessation, weight loss and maintenance of achieved

weight loss are deceptive because proposed respondents did not possess

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 three 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

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

by competent and reliable scientific evidence.

Finally, the proposed order (Part I.C.) 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 achieve and maintain weight loss. GSI, GLS and Ronald B.

Gorayeb represented through their advertising that their single-

session, group hypnosis seminar is more efficacious for weight loss and

weight-loss maintenance than other weight-loss 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 weight loss program (or smoking cessation program), before they

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

prohibits proposed respondents from misrepresenting the performance or

efficacy of any weight loss program (or smoking cessation 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. 94-19135 Filed 8-4-94; 8:45 am]

BILLING CODE 6750-01-M