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

FEDERAL TRADE COMMISSION

[File No. 932 3343]

Ninzu, 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

require, among other things, the Maryland-based marketers to possess

and rely upon competent and reliable scientific substantiating evidence

to support any performance, benefits, efficacy, or safety claims they

make for any weight loss or weight control product or program or any

acupressure device they market 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 Street and Pennsylvania Avenue NW., Washington, DC 20580.

for further information contact: Brian Dahl, FTC/S-4002, Washington, DC

20580. (202) 326-3182.

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)).

United States of America Before Federal Trade Commission

In the matter of Ninzu, Inc., Davish Merchandising, Inc., Order

By Phone, Inc., corporations, and Michael B. Metzger, individually

and as an officer and director of said corporations, File No. 932

3343.

Agreement containing Consent Order to Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Ninzu, Inc., Davish Merchandising, Inc.

d/b/a Davish Enterprises and Davish Health Products, and Order By

Phone, Inc. d/ [[Page 5933]] b/a Auricle Clip, Inc., corporations; and

Michael B. Metzger, individually and as an officer and director of said

corporations, hereinafter sometimes referred to as proposed

respondents, and it now is 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 Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order By Phone, Inc. d/b/a Auricle Clip, Inc., by their

duly authorized officer; and Michael B. Metzger, individually and as an

officer and director of said corporations, and counsel for the Federal

Trade Commission that:

1. Proposed respondent Ninzu, Inc. is a corporation organized,

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

State of Maryland, with its office and principal place of business

located at 1 East Chase Street, Suite 200, in the City of Baltimore,

State of Maryland.

Proposed respondent Davish Merchandising, Inc. is a corporation

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

of the State of Maryland, with its office and principal place of

business located at 1 East Chase Street, Suite 200, in the City of

Baltimore, State of Maryland.

Proposed respondent Order By Phone, Inc. is a corporation

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

of the State of Maryland, with its office and principal place of

business located at 1 East Chase Street, Suite 200, in the City of

Baltimore, State of Maryland.

Proposed respondent Michael B. Metzger is an officer and director

of said corporations. He formulates, directs and controls the policies,

acts and practices of said corporations. He resides at 12135 Heneson

Garth, Owings Mills, Maryland.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of 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; and

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

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

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) 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. The 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. The 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, (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

respondents' addresses as stated in this agreement shall constitute

service. Proposed respondents waive any right they might 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 in the agreement may be

used to vary or contradict the terms of the order.

7. Proposed respondents have read the proposed complaint and order

contemplated hereby. They 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

For the purposes of this Order:

1. ``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 personal qualified to do so, using

procedures generally accepted in the profession to yield accurate and

reliable results.

2. ``Acupressure device'' shall mean any product, program, or

service that is intended to function by means of the principles of

acupressure.

I

It Is Ordered that respondents, Ninzu, Inc., Davish Merchandising,

Inc. d/b/a Davish Enterprises and Davish Health Products, and Order By

Phone, Inc. d/b/a Auricle Clip, Inc., corporations, their successors

and assigns, and their officers; Michael B. Metzger, individually and

as an officer and director of said corporations; and respondents'

agents, representatives and employees, directly or through any

partnership, corporation, subsidiary, division or other device, in

connection with the advertising, packaging, labeling, promotion,

offering for sale, sale or distribution of the Ninzu, Auricle Clip, B-

Trim or any other acupressure device in or affecting commerce, as

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

forthwith cease and desist from representing, in any manner, directly

or by implication, that

A. Such product causes significant weight loss;

B. Such product causes significant weight loss without the need to

diet or exercise;

C. Such product controls appetite, eliminates a person's craving

for food, or causes weight loss without the user feeling hungry; or

D. Such product is scientifically proven to cause significant

weight loss and control appetite.

II

It Is Further Ordered that respondents, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order By Phone, Inc. d/b/a Auricle Clip, Inc.,

corporations, their successors and assigns, and their officers; Michael

B. Metzger, individually and as an officer and director of said

corporations; and respondents' agents, representatives and employees,

directly or through any partnership, corporation, subsidiary, division

or other device, in connection [[Page 5934]] with the advertising,

packaging, labeling, promotion, offering for sale, sale or distribution

of any weight-loss or weight-control product or program or any

acupressure device in or affecting commerce, as ``commerce'' is defined

in the Federal Trade Commission Act, do forthwith cease and desist from

making any representation, directly or by implication, regarding the

performance, benefits, efficacy, or safety of such product, program, or

device unless such representation is true and unless, at the time of

making such representation, respondent possess and rely upon competent

and reliable scientific evidence that substantiates the representation.

III

It Is Further Ordered that respondents, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health Products

and Order By Phone, Inc. d/b/a Auricle Clip, Inc., corporations, their

successors and assigns, and their officers; Michael B. Metzger,

individually and as an officer and director of said corporations; and

respondents' agents, representatives and employees, directly or through

any partnership, corporation, subsidiary, division or other device, in

connection with the advertising, packaging, labeling, promotion,

offering for sale, sale or distribution of any weight-loss or weight-

control product or program or any acupressure device in or affecting

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

Act, do forthwith cease and desist from representing, directly or by

implication, that any endorsement (as ``endorsement'' is defined in 16

C.F.R. Sec. 255.0(b) of the product, program, or device represents the

typical of ordinary experience of members of the public who use the

product, program, or device unless this is the case.

IV

It Is Further Ordered that respondents, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order By Phone, Inc. d/b/a Auricle Clip, Inc.,

corporations, their successors and assigns, and their officers; Michael

B. Metzger, individually and as an officer and director of said

corporations; and respondents' agents, representatives and employees,

directly or through any partnership, corporation, subsidiary, division

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

labeling, promotion, offering for sale, sale or distribution of any

weight-loss or weight-control product or program or any acupressure

device 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

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

test or study.

V

It Is Further Ordered that for five (5) 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 or its staff 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, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order By Phone, Inc. d/b/a Auricle Clip, Inc. shall:

A. Within thirty (30) days after service of this Order, provide a

copy of this Order to each of respondents' current principals,

officers, directors and managers, and to all personnel, agents, and

representatives having sales, advertising, or policy responsibility

with respect to the subject matter of this Order; and

B. For a period of five (5) years from the date of issuance of this

Order, provide a copy of this Order to each of respondents' future

principals, officers, directors, and managers, and to all personnel,

agents, and representatives having sales, advertising, or policy

responsibility with respect to the subject matter of this Order who are

associated with respondents or any subsidiary, successor, or assign,

within three (3) days after the person assumes his or her position.

VII

It Is Further Ordered that respondents, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order by Phone, Inc. d/b/a Auricle Clip, Inc., shall

notify the Federal Trade Commission at least thirty (30) days prior to

any proposed change in their corporate structures, including but not

limited to dissolution, assignment, or sale resulting in the emergence

of a successor corporation, the creation or dissolution of subsidiaries

or affiliates, the planned filing of a bankruptcy petition, or any

other corporate change that may affect compliance obligations arising

out of this Order.

VIII

It Is Further Ordered that respondent, Michael B. Metzger, shall,

for a period of five (5) years from the date of issuance of this Order,

notify the Commission within thirty (30) days of the discontinuance of

his present business or employment and of his affiliation with any new

business or employment. Each notice of affiliation with any new

business or employment shall include respondent's new business address

and telephone number, current home address, and a statement describing

the nature of the business or employment and his duties and

responsibilities.

IX

It Is Further Ordered that respondents, Ninzu, Inc., Davish

Merchandising, Inc. d/b/a Davish Enterprises and Davish Health

Products, and Order by Phone, Inc. d/b/a Auricle Clip, Inc.,

corporations, and Michael B. Metzger, individually and as an officer

and director of said corporations, shall, within sixty (60) days after

service of this Order, and at such other times as the Federal Trade

Commission may require, 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, subject to

final approval, to a proposed consent order from proposed respondents

Ninzu, Inc. d/b/a Davish Enterprises and Davish Health Products, Davish

Merchandising, Inc., Order By Phone, Inc. d/b/a Auricle Clip, Inc., and

Michael B. Metzger.

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 and take other appropriate action or make

final the agreement's proposed order.

This matter concerns advertising related to the sale of an

acupressure device, marketed under the names Ninzu, Auricle Clip, and

B-Trim, which [[Page 5935]] clips onto the ear. The Commission's

Complaint charges that proposed respondents Ninzu, Inc. d/b/a Davish

Enterprises and Davish Health Products, Davish Merchandising, Inc.,

Order By Phone, Inc. d/b/a Auricle Clip, Inc., and Michael B. Metzger

falsely represented that: (1) The Ninzu, the Auricle Clip, and the B-

Trim cause significant weight loss; (2) the Ninzu causes significant

weight loss without the need to diet or exercise; (3) the Auricle Clip

causes significant weight loss without the need to diet; (4) the Ninzu

controls appetite and eliminates a person's craving for food; (5) the

Auricle Clip controls appetite; and (6) the B-Trim reduces the user's

craving for food and causes weight loss without the user feeling

hungry.

The Complaint also alleges that proposed respondents falsely and

misleadingly represented that they possessed and relied upon a

reasonable basis when they made those claims. The Complaint further

alleges that proposed respondents falsely represented that the Ninzu

and Auricle Clip are scientifically proven to cause significant weight

loss and control appetite. Finally, the Complaint alleges that proposed

respondents falsely represented that testimonials from consumers

appearing in advertisements for the Ninzu reflect the typical or

ordinary experience of members of the public who have used the Ninzu.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the proposed respondents from

engaging in similar acts in the future.

Part I of the proposed order prohibits proposed respondents from

representing that the Ninzu, Auricle Clip, B-Trim, or any other

acupressure device: (1) Causes significant weight loss; (2) causes

significant weight loss without the need to diet or exercise; (3)

controls appetite, eliminates a person's craving for food, or causes

weight loss without the user feeling hungry; or (4) is scientifically

proven to cause significant weight loss and control appetite. The order

defines ``acupressure device'' as ``any product, program, or service

that is intended to function by means of the principles of

acupressure.'' Part II requires proposed respondents to possess

competent and reliable scientific evidence before making

representations regarding the performance, benefits, efficacy, or

safety of any weight-loss or weight-control product or program or any

acupressure device. Part III prohibits proposed respondents from

falsely claiming that endorsements or testimonials for any weight-loss

or weight-control product or program or any acupressure device

represent the typical or ordinary experience of members of the public

who use the product, program, or device. Part IV prohibits proposed

respondents from misrepresenting the results of tests or studies for

any weight-loss or weight-control product or program or any acupressure

device.

Part V requires proposed respondents to maintain, for five (5)

years, all materials that support, contradict, qualify, or call into

question any representations they make which are covered by the

proposed order. Part VI requires proposed respondents Ninzu, Inc. d/b/a

Davish Enterprises and Davish Health Products, Davish Merchandising,

Inc., and Order By Phone, Inc. d/b/a Auricle Clip, Inc. to distribute a

copy of the order to current and future principles, officers,

directors, and managers, as well as to any employees having sales,

advertising, or policy responsibility with respect to the subject

matter of the order. Under Part VII of the proposed order, proposed

respondents Ninzu, Inc. d/b/a Davish Enterprises and Davish Health

Products, Davish Merchandising, Inc., and Order By Phone, Inc. d/b/a

Auricle Clip, Inc. shall notify the Federal Trade Commission at least

thirty (30) days prior to any proposed change in their corporate

structures that may affect compliance with the order's obligations.

Part VIII requires that proposed respondent Metzger, for a period of

five (5) years, notify the Commission of any change in his business or

employment. Part IX obliges proposed respondents to file compliance

reports with the Commission.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not 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. 95-2308 Filed 1-30-95; 8:45 am]

BILLING CODE 6750-01-M