Nordic Track, Inc.; Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 942-3202]

Nordic Track, Inc.; Consent Agreement With Analysis to Aid Public

Comment

AGENCY: Federal Trade Commission.

ACTION: 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

bar the Chaska, Minnesota-based corporation from misrepresenting

weight-loss study results and would require it to have competent and

reliable evidence to back up weight loss, weight maintenance, and

related claims for any exercise equipment it sells. The Commission had

alleged that Nordic Track made false and unsubstantiated weight loss

and weight maintenance claims in advertising its cross-country ski

exercise machine.

DATES: Comemnts must be received on or before April 29, 1996.

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:

Jeffrey Klurfeld or Kerry O'Brien, Federal Trade Commission, San

Francisco Regional Office, 901 Market Street, Suite 570, San Francisco,

CA 94103. (415) 356-5270.

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 NordicTrack, Inc., a corporation. File No: 942-

3202.

Agreement Containing Consent Order to Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of NordicTrack, Inc., a corporation, and it

now appearing that NordicTrack, Inc., a corporation, hereinafter

sometimes referred to as proposed respondent, is 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 NordicTrack, Inc., by its duly

authorized officer, and its attorney, and counsel for the Federal Trade

Commission that:

1. Proposed respondent NordicTrack, Inc. is a corporation

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

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

business located at 104 Peavey Road, in the City of Chaska, State of

Minnesota.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

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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; 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 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 respondent of facts, other than

jurisdictional facts, or of violations of law as alleged in the draft

complaint here attached.

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 Section 2.34 of the

Commission's Rules, the Commission may, without further notice to

proposed respondent, (a) issue its complaint corresponding in form and

substance with the draft of complaint here attached 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

respondent's address as stated in this agreement 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 will 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

I.

It is ordered that respondent NordicTrack, Inc., a corporation, its

successors and assigns, and its officers, agents, representatives, and

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

or other device, in connection with the manufacturing, labelling,

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

exercise equipment 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:

A. The percentage of its customers who have successfully lost

weight;

B. The percentage of its customers who have successfully maintained

weight loss;

C. The number of pounds lost by its customers;

D. The percentage of weight loss maintained by its customers;

E. The rate or speed at which its customers have experienced weight

loss;

F. The length of time its customers must use such product to

achieve weight loss;

G. The comparative efficacy of any other weight loss method or

methods; or

H. The benefits, efficacy, or performance of such product in

promoting weight loss or weight loss maintenance;

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

and relies upon competent and reliable evidence, which when appropriate

must be competent and reliable scientific evidence, that substantiates

the representation. For the purposes of this Order, ``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 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.

II.

It is further ordered that respondent NordicTrack, Inc., a

corporation, its successors and assigns, and its officers, agents,

representatives, and employees, directly or through any corporation,

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

manufacturing, labelling, advertising, promotion, offering for sale,

sale, or distribution of any exercise equipment 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 implications, the existence, contents, validity,

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

relating to weight loss, weight loss maintenance or comparisons with

the efficacy of other weight loss methods.

III.

It is further ordered that for three (3) years after the last date

of 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:

A. All materials that were relied upon in disseminating such

representation; 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, or the basis relied upon for such

representation, including complaints from consumers.

IV.

It is further ordered that respondent shall notify the Commission

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

respondent such as dissolution, assignment or sale resulting in the

emergence of a successor corporation, the creation or dissolution of

subsidiaries, or any other change in the corporation which may affect

compliance obligations arising out of this Order.

V.

It is further ordered that respondent shall, within ten (10) days

from the date of service of this Order upon it, distribute a copy of

this Order to each of its officers, agents, representatives,

independent contractors, and employees involved in the preparation and

placement of advertisements or promotional materials, or who is in

[[Page 7797]]

communication with customers or prospective customers, or who has any

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

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

Order, distribute a copy of this Order to all of respondent's future

such officers, agents, representatives, independent contractors, and

employees.

VI.

It is further ordered that this Order will terminate twenty years

from the date of its issuance, or twenty years from the most recent

date that the United States or the Federal Trade Commission files a

complaint (with or without an accompanying consent decree) in federal

court alleging any violation of the Order, whichever comes later;

provided, however, that the filing of such a complaint will not affect

the duration of:

A. Any paragraph in this Order that terminates in less than twenty

years;

B. This Order's application to any respondent that is not named as

a defendant in such complaint; and

C. This Order if such complaint is filed after the Order has

terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a federal

court rules that the respondent did not violate any provision of the

Order, and the dismissal or ruling is either not appealed or upheld on

appeal, then the Order will terminate according to this paragraph as

though the complaint was never filed, except that the Order will not

terminate between the date such complaint is filed and the later of the

deadline for appealing such dismissal or ruling and the date such

dismissal or ruling is upheld on appeal.

VII.

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

from the date of service of this Order upon it, 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 an agreement, subject to

final approval, to a proposed consent order from respondent

NordicTrack, Inc., (``NordicTrack'') a Minnesota corporation.

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.

NordicTrack manufacturers and distributes various exercise

equipment to consumers, including its cross-country ski exercisers. The

Commission's complaint charges that respondent's advertising contained

false or unsubstantiated representations relating to the weight loss

and weight maintenance experience of NordicTrack owners. Specifically,

the complaint alleges that the respondent did not possess adequate

substantiation for claims that: (1) seventy or eighty percent of those

who purchased a NordicTrack cross-country ski exerciser to lose weight

lost an average of seventeen pounds; (2) eighty percent of those who

purchased a NordicTrack cross-country ski exerciser to lose weight and

lost weight using it maintained all of their weight loss for at least a

year; (3) eighty percent of those who purchased a NordicTrack cross-

country ski exerciser to lose weight maintained all of their weight

loss at least a year; and (4) consumers who use NordicTrack cross-

country ski exercisers for twenty minutes a day, three times per week,

lose an average of eighteen pounds in twelve weeks. In addition, the

compliant alleges that the respondent falsely represented that it had

competent and reliable research or studies which prove these claims.

The complaint alleges that respondent based its success rate claims

on studies which suffered from various methodological flaws. For

example, the results of the studies reflect the experiences of only a

highly selected population of purchasers who were able to integrate the

NordicTrack cross-country ski exerciser into their regular, weekly,

exercise regime. One such study involved putting thirty-eight

participants through a rigorous twelve-week exercise program.

Respondent based weight-loss claims on the average weight loss

experienced by the twenty participants (53 percent) able to complete

the program. The studies also failed to take into account changes in

the dietary habits of purchasers. Furthermore, the studies were based

on self-reported body weights, unadjusted for bias, which may yield

inaccurate results.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondent from engaging in

similar acts and practices in the future. Part I of the proposed order

would prohibit the company from making any claim for any exercise

equipment regarding: (1) the percentage of its customers who have

successfully lost weight; (2) the percentage of its customers who have

successfully maintained weight loss; (3) the number of pounds lost by

its customers; (4) the percentage of weight loss maintained by its

customers; (5) the rate or speed at which its customers have

experienced weight loss; (6) the length of time its customers must use

such product to achieve weight loss; (7) the comparative efficacy of

any other weight loss method or methods; or (8) the benefits, efficacy,

or performance of such product in promoting weight loss or weight loss

maintenance, unless at the time of making them, they possess and rely

upon competent and reliable evidence.

Part II of the proposed order prohibits the company from

misrepresenting in any manner, directly or by implication, the

existence, contents, validity, results, conclusions, or interpretations

of any test, study or survey relating to weight loss, weight loss

maintenance or comparisons with the efficacy of other weight loss

methods.

The proposed order also requires the respondent to maintain

materials relied upon to substantiate claims covered by the order; to

provide a copy of the consent agreement to all employees or

representatives involved in the preparation and placement of the

company's advertisements, as well as to all company executives and

marketing and sales managers; to notify the Commission of any changes

in corporate structure that might affect compliance with the order; and

to file one or more reports detailing compliance with the order.

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

proposed order. 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. 96-4693 Filed 2-28-96; 8:45 am]

BILLING CODE 6750-01-M