Body Wise International, Inc.; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932-3077]

Body Wise International, Inc.; 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 Carlsbad, California based company from

making false claims that a food, drug, or nutritional supplement helps

users achieve or maintain weight loss without diet or exercise, and

would bar unsubstantiated weight-loss, weight-loss maintenance,

cholesterol-reduction, or other health benefits claims for such

products. In addition, it would prohibit the deceptive use of consumer

testimonials or professional endorsements, and would require clear

disclosures of any financial connection between endorsers and the

respondent or its products.

DATES: Comments must be received on or before September 5, 1995.

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

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Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT: Jeffrey A. Klurfeld or David Newman,

San Francisco Regional Office, Federal Trade Commission, 901 Market

Street, Suite 570, San Francisco, California 94103. (415) 744-7920.

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

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Body Wise International, Inc. (``Body

Wise''), a corporation, and it now appearing that Body Wise, sometimes

referred to as proposed respondent, is willing to enter into an

agreement containing an order to cease and desist from the acts and

practices being investigated,

It is hereby agreed by and between Body Wise, by its duly

authorized officers and its attorneys, and counsel for the Federal

Trade Commission that;

1. Proposed respondent Body Wise is a corporation organized,

existing and doing business under and by virtue of the laws of the

State of Nevada, with its office and principal place of business at

6350 Palomar Oaks Court, Suite A Carlsbad, California 92009.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint.

3. Proposed respondent waives:

(a) Any further procedural steps;

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

statement of findings of fact and conclusions of law;

(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.

4. 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 of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) day, and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this agreement and so notify the proposed respondent, 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.

5. 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 complaint.

6. 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 proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft of complaint and its decision containing the following

order to cease and desist in disposition of the proceeding and (2) 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 respondent's

address as stated in this agreement containing the agreed-to order

shall constitute service. Proposed respondent waives any right it 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 or the

agreement may be used to vary or contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and order

contemplated hereby. It understands that once the order has been

issued, it may be required to file one or more compliance reports

showing that it has fully complied with the order. Proposed respondent

further understands that it may be liable for civil penalties in the

amount provided by law for each violation of the order after it becomes

final.

Order

Definitions

For the purposes of this Order, the following definitions shall

apply:

A. ``Distributor'' means any person, other than direct employees of

Body Wise, who has sold nutritional supplements on behalf of Body Wise

or who has received any compensation in connection with the sale of

nutritional supplements on behalf of Body Wise, whether such person is

characterized as a consultant, associate, distributor or otherwise.

B. ``Competent and reliable scientific evidence'' means tests,

analyses, research, studies or other evidence based on the expertise of

professionals in the relevant area, that have 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 Body Wise International, Inc., a corporation,

its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from misrepresenting or assisting others in

misrepresenting, in any manner, directly or by implication, that the

nutritional supplement, food or drug:

a. Can cause, aid, facilitate or contribute to achieving or

maintaining weight loss without a reduction in total caloric intake or

an increase in exercise; or

b. Contains any ingredient that, individually or in connection with

other ingredients, can cause, aid, facilitate or contribute to

achieving or maintaining weight loss without a reduction in total

caloric intake or an increase in exercise.

II

It is further ordered that Body Wise International, Inc., a

corporation, its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

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corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from representing or assisting others in

representing, in any manner, directly or by implication, that the

nutritional supplement, food or drug:

a. Can cause, aid, facilitate or contribute to achieving or

maintaining weight loss;

b. Contains any ingredient that, individually or in connection with

other ingredients, can cause, aid, facilitate or contribute to

achieving or maintaining weight loss;

c. Reduces, can reduce or helps reduce serum cholesterol levels;

d. Contains any ingredient that, individually or in connection with

other ingredients, reduces, can reduce or helps reduce serum

cholesterol levels; or

e. Provides, can provide, or helps provide any other health

benefit;

unless, at the time of making any such representation, respondent

possesses and relies upon competent and reliable scientific evidence

that substantiates the representation.

III

It is further ordered that Body Wise International, Inc., a

corporation, its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from misrepresenting, in any manner,

directly or by implication, the existence, contents, validity, results,

conclusions, or interpretations of any test or study.

IV

It is further ordered that Body Wise International, Inc., a

corporation, its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from representing or assisting others in

representing, in any manner, directly or by implication, that any

endorsement (as ``endorsement'' is defined in 16 CFR 255.0(b)) of such

nutritional supplement, food or drug represents the typical or ordinary

experience of members of the public who use the nutritional supplement,

food or drug, unless such representation is true and, at the time of

making such representation, respondent possesses and relies upon

competent and reliable scientific evidence that substantiates such

representation.

Provided, however, respondent may use such endorsements if the

statements or depictions that comprise the endorsements are true and

accurate, and if respondent discloses clearly, prominently, and in

close proximity to the endorsement:

a. What the generally expected performance would be in the depicted

circumstances; or

b. The limited applicability of the endorser's experience to what

consumers may generally expect to achieve; i.e., that consumers should

not expect to experience similar results.

It is further ordered that Body Wise International, Inc., a

corporation, its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from failing to disclose, clearly and

prominently, a material connection, when one exists, between a person

providing an endorsement for any such product, as ``endorsement'' is

defined in 16 CFR 255.0(b), and respondent or any other individual or

entity manufacturing, labeling, advertising, promoting, offering for

sale, selling, or distributing such product. For purposes of this

Order, ``material connection'' shall mean any relationship that might

materially affect the weight or credibility of the endorsement and

would not reasonably be expected by consumers.

VI

It is further ordered that Body Wise International, Inc., a

corporation, its successors and assigns, and its officers, directors,

representatives, agents, and employees, directly or through any

corporation, subsidiary, division or other device, in connection with

the advertising, packaging, labeling, promotion, offering for sale,

sale or distribution of nutritional supplements, food or drugs, as

``food'' and ``drug'' are defined in sections 12 and 15 of the Federal

Trade Commission Act, 15 U.S.C. 52 and 55, in or affecting commerce, as

``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from disseminating or assisting others in

disseminating any advertisement which contains any reference to

physicians or other health care professionals unless respondent

discloses clearly and conspicuously that physicians and other health

care professionals who endorse Body Wise products may be Body Wise

distributors and have a financial interest in promoting the sale of

Body Wise products.

VII

Nothing in this Order shall prohibit respondent from making any

representation that is specifically permitted in labeling for any

product by regulations promulgated by the Food and Drug Administration

pursuant to the Nutrition Labeling and Education Act of 1990.

VIII

Nothing in this Order shall prohibit respondent from making any

representation for any drug that is permitted in labeling for any such

drug under any tentative final or final standard promulgated by the

Food and Drug Administration, or under any new drug application

approved by the Food and Drug Administration.

IX

It is further ordered that respondent shall notify the Commission

at least thirty (30) days prior to any proposed change in the

corporation, such as dissolution, assignment, sale resulting in the

emergence of a successor corporation or association, or the creation or

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

corporation that may affect compliance obligations arising under this

Order.

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X

It is further ordered that for three (3) years following the

dissemination of any representation covered by this Order, respondent,

or its successors and assigns, shall maintain and upon request make

available to the Federal Trade Commission for inspection and copying,

copies of:

A. All materials that were relied upon in disseminating such

advertisement; and

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

evidence in its possession or control that contradict, qualify, or call

into question such representation, including complaints from consumers.

XI

It is further ordered that respondent shall distribute a copy of

this Order to each of its operating divisions and to each of its

officers, agents, representatives, and employees engaged in the

preparation or placement of advertisements or other materials covered

by this Order.

XII

It is further ordered that respondent shall distribute a copy of

this Order to each of its current distributors; provided that

respondent may satisfy the requirements of this section with respect to

current distributors by publishing the full text of this Order clearly

and prominently in any periodical which is published by respondent and

which is distributed to all of its distributors.

XIII

It is further ordered that respondent shall, within sixty (60) days

after service of this Order, and at such other times as the Commission

may require, file with the Commission a report, in writing, setting

forth in detail the manner and form in which it has complied with this

Order.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement to a proposed consent order from Body Wise

International, Inc. (``Body Wise'' or ``respondent''). The agreement

would settle a proposed complaint by the Federal Trade Commission that

respondent has engaged in unfair or deceptive acts or practices in

violation of section 5(a) of the Federal Trade Commission Act.

The proposed consent order has been placed on the public record for

sixty (60) days for 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 the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

The Proposed Complaint

The administrative complaint which the Commission proposed to issue

would charge that respondent markets a number of nutritional

supplements, for which it makes deceptive representations concerning

their efficacy in promoting weight loss and weight management and in

the reduction of serum cholesterol levels. The complaint also charges

Body Wise with using testimonials from physicians and consumers, when

the experiences described in the testimonials are not typical of the

likely experiences of Body Wise customers, and without disclosing that

the endorsers have a financial interest in promoting the sale of Body

Wise products. Finally, the complaint alleges that Body Wise has

encouraged the use of physicians and other health professionals as

references without disclosing to consumers that they have a direct

financial interest in promoting the sale of Body Wise products.

The definition section of the proposed order defines certain terms

used throughout the order.

Section I of the proposed order bars Body Wise from making claims

that its nutritional supplements can cause or contribute to achieving

or maintaining weight loss without a reduction in caloric intake or an

increase in exercise and or that its supplements contain any

ingredients that have that effect. Section II of the order bars

unsubstantiated weight loss, weight management and cholesterol

reduction claims. It also contains fencing-in relief that applies the

same substantiation standard to any claims regarding the health

benefits of its nutritional supplements. Section III bars Body Wise

from misrepresenting tests or studies. Section IV bars Body Wise from

using testimonials to represent the typical experience of Body Wise's

customers unless it can substantiate that such claims are in fact

typical or it clearly discloses that the endorser's experience is not

typical. Section V requires the affirmative disclosure of any material

connection between Body Wise and any endorser.

Section VI requires Body Wise, in any advertisement that contains

any reference to physicians or other health professionals, to disclose

that health care professionals who endorse Body Wise products or act as

references may be distributors and have a financial interest in

promoting the sale of Body Wise products. This section addresses Body

Wise's use of physicians as references to support the sales activities

of other Body Wise distributors.

Sections VII and VIII harmonize the requirements of the order with

the requirements of the Nutrition Labeling and Education Act of 1990

and with Food and Drug Administration procedures. The remaining

sections are standard reporting, record-keeping and notice provisions.

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 the proposed order or to modify

their terms in any way.

Donald S. Clark,

Secretary.

[FR Doc. 95-16445 Filed 7-3-95; 8:45 am]

BILLING CODE 6750-01-M