Formu-3 International, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 922 3212]

Formu-3 International, 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, the Ohio weight-loss centers from making

false and unsubstantiated weight-loss and weight-loss maintenance

claims, and from misrepresenting the price of the program in any way,

and would require the respondents to make certain disclosures in

conjunction with weight-loss and safety maintenance claims in the

future.

DATES: Comments must be received on or before April 3, 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:

Brenda Doubrava, Cleveland Regional Office, Federal Trade Commission,

520-A Atrium Office Plaza, 668 Euclid Ave., Cleveland, Ohio 44114-3006.

(216) 522-4210.

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

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 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 Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

In the Matter of: Formu-3 International, Inc., a corporation,

Formu-3 of Northern Ohio, Inc., a corporation, and Formu-3 of

Southern Ohio, Inc., a corporation, File No. 922 3212.

Agreement Containing Consent Order To Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Formu-3 International, Inc., a

corporation, Formu-3 of Northern Ohio, Inc., a corporation, and Formu-3

of Southern Ohio, Inc., a corporation (``proposed 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 Formu-3 International, Inc., a

Formu-3 of Northern Ohio, Inc., and Formu-3 of Southern Ohio, Inc., by

their duly authorized officers, and their attorneys, and counsel for

the Federal Trade Commission that:

1. Proposed respondents Formu-3 International, Inc., Formu-3 of

Northern Ohio, Inc., and Formu-3 of Southern Ohio, Inc., are

corporations organized, existing, and doing business under and by

virtue of the laws of the State of Ohio. The principal place of

business of all three corporations is located at 4790 Douglas Circle

NW., Canton, Ohio 44718.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft complaint.

3. 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;

(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.

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

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.

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

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' addresses 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 [[Page 5923]] Order or the

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

7. Proposed respondents have read the draft complaint and the

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

Definitions

For the purposes of this Order, the following definitions shall

apply:

A. ``Competent and reliable scientific evidence'' shall mean 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 relevant profession or science to

yield accurate and reliable results;

B. ``Weight loss program'' shall mean any program designed to aid

consumers in weight loss or weight maintenance;

C. A ``broadcast medium'' shall mean any radio or television

broadcast, cablecast, home video or theatrical release;

D. For any Order-required disclosure in a print medium to be made

``clearly and prominently'' or in a ``clear and prominent'' manner, it

must be given both in the same type style and in: (1) Twelve point type

where the representation that triggers the disclosure is given in

twelve point or larger type; or (2) the same type size as the

representation that triggers the disclosure where that representation

is given in a type size that is small than twelve point type. For any

Order-required disclosure given orally in a broadcast medium to be made

``clearly and prominently'' or in a ``clear and prominent manner'', the

disclosure must be given at the same volume and in the same cadence as

the representation that triggers the disclosure.

E. A ``short broadcast advertisement'' shall mean any advertisement

of thirty seconds or less duration made in a broadcast medium.

I

It is Ordered that respondents, Formu-3 International, Inc., a

corporation, Formu-3 of Northern Ohio, Inc., a corporation, and Formu-3

of Southern Ohio, Inc., a corporation, their successors and assigns,

and their officers, and respondents' agents, representatives and

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

other device, including franchisees or licensees, in connection with

the advertising, promotion, offering for sale, or sale of any weight

loss program 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, about the

success of participants on any weight loss program in achieving or

maintaining weight loss or weight control unless, at the time of making

any such representation, respondents possess and rely upon competent

and reliable scientific evidence substantiating the representation,

provided, further, that for any representation that:

1. Any weight loss achieved or maintained through the weight loss

program is typical or representative of all or any subset of

participants using the program, said evidence shall, at a minimum, be

based on a representative sample of:

a. All participants who have entered the program, where the

representation relates to such persons; provided, however, that the

required sample may exclude those participants who dropped out of the

program within two weeks of their entrance, or who were unable to

complete the program due to illness, pregnancy, or change of residence;

or

b. All participants who have completed a particular phase of the

program or the entire program, where the representation only relates to

such persons;

2. Any weight loss is maintained long-term, said evidence shall, at

a minimum, be based upon the experience of participants who were

followed for a period of at least two years from their completion of

the active maintenance phase of respondents' program or earlier

termination, as applicable; and

3. Any weight loss is maintained permanently said evidence shall,

at a minimum, be based upon the experience of participants who were

followed for a period of time after completing the program that is

either:

a. Generally recognized by experts in the field of treating obesity

as being of sufficient length for predicting that weight loss will be

permanent, or

b. Demonstrated by competent and reliable survey evidence as being

of sufficient duration to permit such a prediction.

B. Representing, directly or by implication, except through

endorsements or testimonials referred to in paragraph I.E. herein, that

participants of any weight loss program have successfully maintained

weight loss, unless respondents disclose, clearly and prominently, and

in close proximity to such representation, the statement: ``For many

dieters, weight loss is temporary.''; provided, further that

respondents shall not represent, directly or by implication, that the

above-quoted statement does not apply to dieters in respondents' weight

loss program; provided, however, that a mere statement about the

existence, design, or content of a maintenance program shall not,

without more, be considered a representation that participants of any

weight loss program have successfully maintained weight loss.

C. Representing, directly or by implication, except through short

broadcast advertisements referred to in paragraph I.D. herein, and

except through endorsements or testimonials referred to in paragraph

I.E. herein, that participants of any weight loss program have

successfully maintained weight loss, unless respondents disclose,

clearly and prominently, and in close proximity to such representation,

the following information:

1. The Average percentage of weight loss maintained by those

participants;

2. The duration over which the weight loss was maintained, measured

from the date that participants ended the active weight loss phase of

the program, provided, further, that if any portion of the time period

covered includes participation in a maintenance program(s) that follows

active weight loss, such fact must also be disclosed; and

3. If the participant population referred to is not representative

of the general participant population for respondents' programs:

a. The proportion of the total participant population in

respondents' programs that those participants represent, expressed in

terms of a percentage or actual numbers of participants, or

b. The statement: ``Form-You-3 Weight Loss Centers makes no claim

that this [these] result[s] is [are] representative of all participants

in the Form-You-3 Weight Loss Centers program.'';

provided, further, that compliance with the obligations of this

paragraph I.C. in no way relieves respondents of the requirement under

paragraph I.A. of this Order to substantiate any representation

[[Page 5924]] about the success of participants on any weight loss

program in maintaining weight loss.

D. Representing, directly or by implication, in short broadcast

advertisements, that participants of any weight loss program have

successfully maintained weight loss, unless respondents:

1. Include, clearly and prominently, and in immediate conjunction

with such representation, the statement: ``Check at our centers for

details about our maintenance record.'';

2. For a period of time beginning with the date of the first

broadcast of any such advertisement and ending no sooner than thirty

days after the last broadcast of such advertisement, comply with the

following procedures upon the first presentation of any form asking for

information from a potential client, but in any event before such

person has entered into any agreement with respondents:

a. Give to each potential client a separate document entitled

``Maintenance Information,'' which shall include all the information

required by paragraph I.B. and subparagraphs I.C.1-3 of this Order and

shall be formatted in the exact type size and style as the example form

below, and shall include the heading (Helvetica 14 pt. bold), lead-in

(Times Roman 12 pt.), disclosures (Helvetica 14 pt. bold),

acknowledgment language (Times Roman 12 pt.) and signature block

therein; provided, further, that no information in addition to that

required to be included in the document required by this subparagraph

I.D.2 shall be included therein:

Maintenance Information

You may have seen our recent ad about maintenance success. Here's

some additional information about our maintenance record.

[Disclosure of maintenance statistics goes here ____________.]

For many dieters, weight loss is temporary.

I have read this notice.

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(Client Signature)

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(Date)

b. Require each potential client to sign such document; and

c. Give each client a copy of such document; and

3. Retain in each client file a copy of the signed maintenance

notice required by this paragraph;

provided, further, that:

(i) Compliance with the obligations of this paragraph I.D. in no

way relieves respondents of the requirement under paragraph I.A. of

this Order to substantiate any representation about the success of

participants on any weight loss program in maintaining weight loss; and

(ii) Respondents must comply with both paragraph I.D. and paragraph

I.C. of this Order if respondents include in any such short broadcast

advertisement a representation about maintenance success that states a

number or percentage, or uses descriptive terms that convey a

quantitative measure such as ``most of our customers maintain their

weight loss long-term''; and

provided, however, that the provisions of paragraph I.D. shall not

apply to endorsements or testimonials referred to in paragraph I.E.

herein.

E. Using any advertisement containing an endorsement or testimonial

about weight loss success or weight loss maintenance success by a

participant or participants of respondents' weight loss programs if the

weight loss success or weight loss maintenance success depicted in the

advertisement is not representative of what participants in

respondents' weight loss programs generally achieve, unless respondents

disclose, clearly and prominently, and in close proximity to the

endorser's statement of his or her weight loss success or weight loss

maintenance success:

1. What the generally expected success would be for Form-You-3

Weight Loss Centers customers in losing weight or maintaining achieved

weight loss; provided, however, that in determining the generally

expected success for Form-You-3 Weight Loss Centers customers,

respondents may exclude those customers who dropped out of the program

within two weeks of their entrance or who were unable to complete the

program due to illness, pregnancy, or change of residence; or

2. One of the following statements:

a. ``You should not expect to experience these results.''

b. ``This result is not typical. You may not do as well.''

c. ``This result is not typical. You may be less successful.''

d. ``________________'s success is not typical. You may not do as

well.''

e. ``________________'s experience is not typical. You may achieve

less.''

f. ``Results not typical.''

g. ``Results not typical of program participants.'';

provided, further, that if the endorsements or testimonials covered by

this paragraph are made in a broadcast medium, any disclosure required

by this paragraph must be communicated in a clear and prominent manner

and in immediate conjunction with the representation that triggers the

disclosure; and

provided, however, that:

(i) For endorsements or testimonials about weight loss success,

respondents can satisfy the requirements of subparagraph I.E.1. by

accurately disclosing the generally expected success in the following

phrase: ``Form-You-3 Weight Loss Centers clients lose an average of

______ pounds over an average ______ - week treatment period''; and

(ii) If the weight loss success or weight loss maintenance success

depicted in the advertisement is representative of what participants of

a group or subset clearly defined in the advertisement generally

achieve, then, in lieu of the disclosures required in either

subparagraph I.E.1. or 2. herein, respondents may substitute a clear

and prominent disclosure of the percentage of all of respondents'

customers that the group or subset defined in the advertisement

represents.

F. Representing, directly or by implication, the average or typical

rate or speed at which participants or prospective participants in any

weight loss program have lost or will lose weight, unless at the time

of making such representation, respondents possess and rely upon

competent and reliable scientific evidence substantiating the

representation.

G. Representing, directly or by implication, that participants or

prospective participants in respondents' weight loss programs have

reached or will reach a specified weight within a specified time

period, unless at the time of making such representation, respondents

possess and rely upon competent and reliable scientific evidence

substantiating the representation.

G. Representing, directly or by implication, that participants or

prospective participants in respondents' weight loss programs have

reached or will reach a specified weight within a specified time

period, unless at the time of making such representation, respondents

possess and rely upon competent and reliable scientific evidence

substantiating the representation.

H. Failing to disclose, clearly and prominently, either (1) to each

participant who, after the first two weeks on the program, is

experiencing average weekly weight loss that exceeds two percent (2%)

of said participant's initial body weight, or three pounds, whichever

is less, for at least two [[Page 5925]] consecutive weeks, or (2) in

writing to all participants, when they enter the program, that failure

to follow the diet instructions and consume the total caloric intake

recommended may involve the risk of developing serious health

complications.

I. Representing, directly or by implication, the daily, weekly, or

monthly price at which any weight loss program can be purchased, unless

respondents disclose, clearly and prominently, and in close proximity

to such representation, either: (1) The number of days, weeks, or

months participants will be obligated to pay the weekly price

represented; or (2) the total cost of the weight loss program;

provided, further, that in broadcast media, if the representation that

triggers any disclosure required by this paragraph is oral, the

required disclosure must also be made orally.

J. Misrepresenting, directly or by implication, the competence,

skill, training, credentials or expertise of any of respondents'

employees or any of the employees of respondents' franchisees.

K. Misrepresenting, directly or by implication, through numerical

or descriptive terms or any other means, the existence or amount of

calories, fat, or any other nutrient or ingredient in any food product,

or otherwise misrepresenting the performance, efficacy, safety,

nutritional composition, or benefits of any food or drug, as those

terms are defined in Section 15 of the Federal Trade Commission Act.

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

efficacy, price, or safety of any weight loss program.

II

Nothing in this Order shall prohibit respondents from making any

representation that is specifically permitted in labeling for any such

product by regulations promulgated by the Food and Drug Administration

pursuant to the Nutrition Labeling and Education Act of 1990, or by

nutrition labeling regulations promulgated by the Department of

Agriculture pursuant to the Federal Meat Inspection act or the Poultry

Products Inspection Act.

III

Nothing in this Order shall prohibit respondents 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.

IV

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 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 corporation

that may affect compliance obligations arising out of this Order.

V

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.

VI

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 or

in communication with customers or prospective customers or who have

any responsibilities with respect to the subject matter of this Order;

and, for a period of five (5) years from the date of entry of this

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

representatives, independent contractors and employees.

VII

It is further ordered that:

A. Respondent Formu-3 International, Inc., shall distribute a copy

of this Order to each of its franchises and licensees and shall

contractually bind them to comply with the prohibitions and affirmative

requirements of this Order; respondent may satisfy this contractual

requirement by incorporating such Order requirements into its current

Operations Manual; and

B. Respondent Formu-3 International, Inc., shall further make

reasonable efforts to monitor its franchisees' and licensees'

compliance with the Order provisions; respondent may satisfy this

requirement by: (1) Taking reasonable steps to notify promptly any

franchisee or licensee that respondent determines is failing materially

or repeatedly to comply with any order provision; (2) providing the

Federal Trade Commission with the name and address of the franchisee or

licensee and the nature of the noncompliance if the franchisee or

licensee fails to comply promptly with the relevant Order provision

after being so notified; and (3) in cases where that franchisee's or

licensee's conduct constitutes a material or repeated violation of the

order, diligently pursuing reasonable and appropriate remedies

available under its franchise or license agreement and applicable state

law to bring about a cessation of that conduct by the franchisee or

licensee.

Provided, however, that respondent Formu-3 International, Inc.'s

compliance with this Part shall constitute an affirmative defense to

any civil penalty action arising from an act or practice of one of

respondent's franchisees or licensees that violates this Order where

respondent: a) has not authorized, approved or ratified that conduct;

b) has reported that conduct promptly to the Federal Trade Commission

under this Part; and c) in cases where that franchisee's or licensee's

conduct constitutes a material or repeated violation of the Order, has

diligently pursued reasonable and appropriate remedies available under

the franchise or license agreement and applicable state law to bring

about cessation of that conduct by the franchisee or licensee.

VIII

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 it has 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 Formu-3 International, Inc., Formu-3 of

Northern Ohio, Inc., and Formu-3 of Southern Ohio, Inc., (hereinafter

referred to collectively as ``Formu-3''), marketers of the Formu-You-3

(or ``Formu-3'') Weight Loss Centers' low-calorie diet program. The

Formu-3 diet program is offered to the public throughout much of the

United States through centers franchised by Formu-3 International,

Inc., and through centers owned by [[Page 5926]] Formu-3 of Northern

Ohio, Inc., and Formu-3 of Southern Ohio, Inc.

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) Their diet program's success in helping

customers achieve and maintain weight loss; (2) the rate at which

customers will lose weight; (3) the time frame within which consumers

will achieve their desired weight loss goals; (4) the purchase price of

the Formu-3 program; (5) the benefits to dieters of the food products

Formu-3 sells; and (6) the qualifications and expertise of counselors

employed at Formu-3 weight loss centers. The complaint also alleges

that Formu-3 engaged in the deceptive practice of failing to warn

clients it monitors of the health importance of following the diet

protocol.

Success

The complaint against Formu-3 alleges that the company failed to

possess a reasonable basis for claims it made regarding the success of

its customers in losing weight and avoiding the regain of weight lost

during the program. Through consumer testimonials and other

advertisements, Formu-3 represented that its customers typically are

successful in reaching their weight loss goals and in maintaining their

weight loss achieved under the Formu-3 diet program long-term or

permanently.

The Commission believes that these success claims for customer

weight loss and maintenance of achieved weight loss are deceptive

because Formu-3, at the time it 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 several ways.

First, the order (Part I.A.) requires the company to possess a

reasonable basis consisting of competent and reliable scientific

evidence substantiating any claim about the success of participants on

any diet program in achieving or maintaining weight loss. To ensure

compliance, the order further specifies what this level of evidence

shall consist of when certain types of success claims are made:

(1) In the case of claims that weight loss is typical or

representative of all participants using the program or any subset of

those participants, that evidence shall be based on a representative

sample of: (a) all participants who have entered the program, where the

representation relates to such persons; or (b) all participants who

have completed a particular phase of the program or the entire program,

where the representation only relates to such persons.

(2) In the case of claims that any weight loss is maintained long-

term, that evidence shall be based upon the experience of participants

who were followed for a period of at least two years after their

completion of the respondents' program, including any periods of

participation in respondents' maintenance program.

(3) In the case of claims that weight loss is maintained

permanently, that evidence shall be based upon the experience of

participants who were followed for a period of time after completing

the program that is either: (a) generally recognized by experts in the

field of treating obesity as being of sufficient length to constitute a

reasonable basis for predicting that weight loss will be permanent; or

(b) demonstrated by competent and reliable survey evidence as being of

sufficient duration to permit such a prediction.

Second, as measures to ensure future compliance, the proposed order

requires the proposed respondents for any claim that participants of

any diet program have successfully maintained weight loss to disclose

the fact that ``For many dieters, weight loss is temporary'' (Part

I.B.), as well as the following information relating to that claim

(Part I.C.):

(1) The average percentage of weight loss maintained by those

participants (e.g., ``60% of achieved weight loss was maintained''),

(2) The duration over which the weight loss was maintained,

measured from the date that participants ended the active weight loss

phase of the program, and the fact that all or a portion of the time

period covered includes participation in proposed respondent's

maintenance program(s) that follows active weight loss, if that is the

case--e.g., ``participants maintain an average of 60% of weight loss 22

months after active weight loss (includes 18 months on maintenance

program)'', and

(3) Where the participant population referred to is not

representative of the general participant population for the program,

the proportion of the total participant population that those

participants represent, expressed in terms of a percentage of actual

numbers of participants--e.g. ``Participants on maintenance--30% of our

customers--kept off an average of 66% of the weight for one year

(includes time on maintenance program)'' or, in lieu of that factual

disclosure, the statement: ``Form-You-3 Weight Loss Centers makes no

claim that this result is representative of all participants in the

Form-You-3 Weight Loss Centers program.''

Third, for maintenance success claims made in broadcast

advertisements of thirty seconds or less duration, the proposed order

(Part I.D.) requires that Formu-3, in lieu of making the factual

disclosures required for such claims by Part I.C:

(1) Include in such advertisements the statement ``Check at our

centers for details about our maintenance record.''; and

(2) Provide consumers at point-of-sale with a required form that

includes the factual disclosures required by Part I.C, which form must

be signed by the client and retained in the company's client file. If

any potential participant who does not then participate in the program

refused to sign or accept a copy of such document, respondent shall so

indicate on such document.

The proposed order makes clear that this alternative disclosure

requirement does not relieve Formu-3 of the obligation to substantiate

any maintenance success claim, in accordance with Part I.A of the

order, and it ``takes back'' the exception from full quantitative

disclosures in short broadcasting advertising if Formu-3 makes a

maintenance success claim that uses numbers or descriptive terms that

convey a quantitative measure, such as ``most of our customers maintain

their weight loss long term.'' Formu-3 in that case would have to make

all the required disclosures in the ad and provide the disclosures at

point-of-sale.

Fourth, for weight-loss and weight-loss maintenance success claims

made through endorsements or testimonials that are not representative

of what Formu-3 diet program participants generally achieve, the order

(Part I.E.) requires that Formu-3 disclose either what the generally

expected success would be for Formu-3 customers, or one of several

alternative statements, such as ``This result is not typical. You may

be less successful,'' which explains the limited applicability of

atypical testimonials in accordance with the Commission's ``Guides

Concerning Use [[Page 5927]] of Endorsements and Testimonials in

Advertising'' 16 C.F.R. 255.2 (a). Under the proposed order, Formu-3

may satisfy the requirements of the first disclosure concerning

generally expected success by accurately disclosing those facts in the

following format: ``Form-You-3 Weight Loss Centers clients lose an

average of ______ pounds over an average ______ - week treatment

period.''

Finally, the proposed order (Part I.L.) generally prohibits Formu-3

from misrepresenting the performance or efficacy of any weight loss

program.

Rate of Weight Loss

The Commission's complaint further alleges that Formu-3 failed to

possess a reasonable basis for claims it made concerning the rate of

weight loss for participants in its program and that the rate of weight

loss claims it made were false.

The proposed consent order addresses these practices (Part I.F.) by

prohibiting Formu-3 from representing that participants in its program

will lose weight at an average or typical rate or speed unless Formu-3

possesses and relies upon competent and reliable scientific evidence

substantiating the representation.

Projection of Weight Loss

The Commission's complaint also alleges that Formu-3 failed to

possess a reasonable basis for its claim, made during initial sales

presentations, that consumers will typically reach their desired

weight-loss goals within the time frame computed by Formu-3 personnel.

To address this practice, the proposed order (Part I.G.) prohibits

Formu-3 from representing that prospective participants will reach a

specified weight within a specified period of time, unless proposed

respondents possess and rely upon competent and reliable scientific

evidence substantiating the representation.

Price

The Commission's complaint against Forum-3 also alleges that Formu-

3 failed to disclose adequately to consumers the total price of the

diet program.

The proposed consent order seeks to address the practice in two

ways. First, Part I.I. of the proposed order prohibits Formu-3 from

advertising a daily, weekly or monthly price for its program unless it

also discloses: (1) the number of days, weeks or months participants

will be required to pay the advertised price; or (2) the total cost of

the weight loss program. Second, Part I.L. of the order prohibits

Formu-3 from misrepresenting the price of the program in any way.

Monitoring Practices

According to the complaint, Formu-3 provides its customers with

diet protocols that require customers to come in to one of proposed

respondents' centers three times per week for monitoring of their

progress, including weighing-in. In the course of regularly

ascertaining weight loss progress, respondents, in some instances, are

presented with weight loss results indicating that customers are losing

weight significantly in excess of their projected goals, which is an

indication that they may not be consuming all of the food prescribed by

their diet protocol. According to the complaint, such conduct could, if

not corrected promptly, result in health complications. In light of

this monitoring practice, the Commission's complaint alleges that

Formu-3 has failed to disclose to consumers who are losing weight

significantly in excess of their projected goals that failing to follow

the diet protocol and consume all of the food prescribed could result

in health complications.

The proposed consent order seeks to address the alleged monitoring

misrepresentation cited in the accompanying complaint in two ways.

First, the order (Part I.H.) requires Formu-3 to disclose in writing to

all participants when they enter the program, that failure to follow

the program protocol and eat all of the food recommended may involve

the risk of developing serious health complications. Second, the

proposed order (Part I.L.) generally prohibits any misrepresentation

concerning the safety of any weight loss program.

Certified Counselors

The Commission's complaint also charges that Formu-3 falsely

claimed counselors employed in its diet centers are certified by an

objective evaluation process in the treatment of obesity.

The order seeks to address this practice by prohibiting Formu-3

from misrepresenting the competence, training or expertise of any of

its employees or employees of its franchisees. (Part I.J.)

Benefits of Food Products

The complaint alleges that Formu-3 misrepresented the benefits to

dieters of the food products it sells. To remedy this practice, the

order (Part I.K.) prohibits respondents from misrepresenting the

existence or amount of calories, fat or any other nutrient or

ingredient in any food product, or the benefits of any such product.

Parts II. and III. of the order allow respondents to make claims

about food products and drugs that are specifically permitted in

labeling by regulations of the Food and Drug Administration or the

Department of Agriculture pursuant to statutes administered by those

agencies.

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.

Donald S. Clark,

Secretary.

[FR Doc. 95-2306 Filed 1-30-95; 8:45 am]

BILLING CODE 6750-01-M