IHI Clinics, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 942 3100]

IHI Clinics, 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 Georgia corporation and two officers

from misrepresenting the performance, success or efficiency of their

smoking cessation or weight loss and maintenance seminars, or any such

program, and from representing that the U.S. Government has rated their

single session group hypnosis seminar as the more effective method of

weight loss or smoking cessation, unless the respondents possess and

rely upon competent and reliable scientific evidence to substantiate

such representations. In addition, the consent agreement would prohibit

the respondents from misrepresenting any tests, studies, surveys,

reports or testimonials.

DATES: Comments must be received on or before January 30, 1995.

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

Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

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

Washington, DC 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)).

In the matter of IHI Clinics, Inc., a corporation, Gordon Brick,

individually and as an officer of said corporation, and Larry Brick,

individually and as a former officer of said corporation; Agreement

Containing Consent Order To Cease and Desist.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of IHI Clinics, Inc. (``IHIC''), a

corporation, Gordon Brick, individually and as an officer of said

corporation, and Larry Brick, individually and as an officer of said

corporation (``proposed respondents''), and it is 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 IHI Clinics, Inc., Gordon Brick,

individually and as an officer of said corporation, and Larry Brick,

individually and as a former officer of said corporation, and counsel

for the Federal Trade Commission that:

1. Proposed respondent IHIC is a Georgia corporation, with its

principal office and place of business at 1962 Carthage Road, Tucker,

Georgia, 30084.

2. Proposed respondent Gordon Brick is the President and Chief

Executive Officer of said corporation. He formulates, directs and

controls the acts and practices of said corporation. Proposed

respondent Larry Brick is the former President of said corporation.

Together with Gordon Brick, he formulated, directed, and controlled 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 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

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 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.

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 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.

8. Proposed respondents have read the 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 IHI Clinics, Inc., a corporation,

its successors and assigns, and its officers, Gordon Brick,

individually and as an officer of said corporation, and Larry Brick,

individually and as a former 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. Representing, directly or by implication, that ninety-five

percent or more of the participants who attend respondents' smoking

cessation seminars permanently abstain from smoking after attending

those seminars, unless such is the case.

B. Representing, directly or by implication, that the United States

Government has rated the single-session, group hypnosis seminar used by

respondents as the best way to stop smoking.

C. Representing, directly or by implication, that participants who

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

smoking addiction without experiencing craving, stress, 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.

D. 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.

E. 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.

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

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

test, study, survey or report.

G. 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 emergency 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.

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 IHI Clinics, Inc. (hereinafter ``IHIC''),

its Chief Executive Officer and President, Gordon Brick, and its former

President, Larry Brick, marketers of The IHI Clinic Method seminar, a

single, three-hour, group hypnosis session program for smoking

cessation and weight loss. The IHI Clinic Method seminar is offered to

the public nationwide by Larry Brick 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'

smoking cessation and weight-loss methods in leading consumers to

achieve smoking abstinence, weight loss, and weight-loss maintenance

compared to other stop-smoking and weight-loss methods.

Success

The complaint against IHIC, Gordon Brick and Larry Brick alleges

that the proposed respondents made false claims and failed to possess a

reasonable basis for other 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 95

percent or more 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 that seminar participants: (1) Are cured of smoking

addiction and permanently abstain from smoking cigarettes; (2) are

cured of smoking addiction without experiencing craving, stress or

weight gain; (3) achieve and maintain weight loss; and (4) achieve

weight loss quickly. Finally, proposed respondents represented that

thousands of seminar participants have permanently quit smoking as a

result of attending the IHI Clinic Method seminar, and that various

smoking cessation and weight-loss testimonials from seminar

participants reflected the typical or ordinary experience of members of

the public who have attended the IHI Clinic Method seminar.

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 at the time they

made the claims did not possess adequate substantiation for those

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.D.) 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 95 percent or more of their seminar

attendees permanently abstain from smoking after those seminars, unless

that is the case.

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

respondents from representing that seminar participants are cured of

smoking addiction without experiencing side effects, such as craving,

stress or weight gain, unless the claim is substantiated by competent

and reliable scientific evidence.

Fourth, the proposed order (Part I.E.) 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.

Finally, the proposed order (Part I.G.) 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 made false claims and failed to possess a reasonable basis

for other claims they made regarding relative ability of their hypnosis

program to lead consumers to quit smoking. IHIC, Gordon Brick, and

Larry Brick represented through their advertising that the U.S.

Government has rated the group hypnosis method used by respondents as

the best way to stop smoking. The complaint alleges that this claim is

false, because the U.S. Government has not so rated proposed

respondents' hypnosis method.

Proposed respondents further represented through their

advertisements that their single-session, group hypnosis seminar is

more efficacious for smoking cessation, weight loss and weight-loss

maintenance than other smoking cessation and weight-loss methods. The

Commission believes that these comparative efficacy claims for The IHI

Clinic Method hypnosis program are deceptive because proposed

respondents at the time they made the claims did not possess adequate

substantiation for them.

To address these efficacy misrepresentations, the proposed order

(Part I.B.) prohibits IHIC, Gordon Brick and Larry Brick from

representing that the U.S. Government has rated the group hypnosis

method used by respondents as the best way to stop smoking. The

proposed order (Part I.F.) further generally prohibits proposed

respondents from misrepresenting the existence, contents, validity,

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

report. Finally, the order (Part I.D.) 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 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. 94-29575 Filed 12-1-94; 8:45 am]

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