Johnson & Collins Research, Inc. and Gregor A. Von Ehrenfels; Consent Agreement with Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 952-3478]

Johnson & Collins Research, Inc. and Gregor A. Von Ehrenfels;

Consent Agreement with Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Consent agreement.

-----------------------------------------------------------------------

SUMMARY: In settlement of alleged violations of federal laws

prohibiting unfair acts and practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would prohibit the Minneapolis-based company from

making false or unsubstantiated representations in future

advertisements for weight-loss booklets or for other weight-loss

products or programs. The consent agreement settles allegations that

Johnson & Collins's advertisements for the Total Body Reshaping System

and the Super Total Body Shaping System (``TBR System''), which

appeared in magazines directed at teenage girls, failed to disclose

that the TBR System consisted primarily of booklets containing advice

on dieting and exercising.

DATES: Comments must be received on or before May 28, 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:

Joel Winston, Federal Trade Commission, S-4002, 6th and Pennsylvania

Ave., NW., Washington, DC, 202-326-3153.

Richard L. Cleland, Federal Trade Commission, S-4002, 6th and

Pennsylvania Ave., NW., Washington, DC, 202-326-3088.

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)).

Before Federal Trade Commission

[File No. 952-3478]

In the Matter of Johnson & Collins Research, Inc., a

corporation, and Gregor A. Von Ehrenfels, individually and as an

officer of said corporation; Agreement Containing Consent Order to

Cease and Desist.

The Federal Trade Commission, having initiated an investigation of

certain acts and practices of Johnson & Collins Research, Inc., a

corporation, and Gregor A. Von Ehrenfels, individually and as an

officer of said corporation, hereinafter sometimes referred to as

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 Johnson & Collins Research,

Inc., by its authorized officer, and Gregor A. Von Ehrenfels,

individually and as an officer of said corporation, and their attorney,

and counsel for the Federal Trade Commission that:

1. Proposed respondent Johnson & Collins Research, 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 5115 Excelsior Blvd., in the City of

Minneapolis, State of Minnesota 55416.

Proposed respondent Gregor A. Von Ehrenfels is an officer of said

corporation. Individually or in concert with others, he participates in

and/or

[[Page 13200]]

formulates, directs, and controls the acts and practices of said

corporation and his address is the same as that of said corporation.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of complaint here attached.

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. 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 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 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 here attached 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' address as stated in this agreement shall constitute

service. Proposed respondents waive any right they may have to any

other manner of service. The complaint may be used in construing the

terms of the order, and no agreement, understanding, representation, or

interpretation not contained in the order or 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 purposes of this Order;

1. ``Clearly and prominently'' shall mean as follows: (a) In a

television or videotape advertisement, the disclosure shall be

presented simultaneously in both the audio and video portions of the

advertisement. The audio disclosure shall be delivered in a volume and

cadence and for a duration sufficient for an ordinary consumer to hear

and comprehend it. The video disclosure shall be of a size and shade,

and shall appear on the screen for a duration, sufficient for an

ordinary consumer to read and comprehend it.

(b) In a print advertisement, the disclosure shall be in a type

size, and in a location, that are sufficiently noticeable so that an

ordinary consumer will see and read it, in print that contrasts with

the background against which it appears. In multipage documents, the

disclosure shall appear on the cover or first page.

(c) In a radio advertisement, the disclosure shall be delivered in

a volume and cadence sufficient for an ordinary consumer to hear and

comprehend it.

2. ``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 profession to yield accurate and

reliable results.

3. ``Weight-loss product'' shall mean any product or program

designed or used to prevent weight gain or to produce weight loss,

reduction or elimination of fat, slimming, or caloric deficit in a user

of the product or program.

I

It is ordered that respondents, Johnson & Collins Research, Inc., a

corporation, its successor and assigns, and its officers; and Gregor A.

von Ehrenfels, individually and as an officer of Johnson & Collins

Research, Inc.; and respondents' agents, representatives and employees,

directly or through any partnership, corporation, subsidiary, division

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

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

distribution of Total Body Reshaping System, Super Total Body Reshaping

System, or any substantially similar product, 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 such product does not require dieting.

II

It is further ordered that respondents, Johnson & Collins Research,

Inc., a corporation, its successors and assigns, and its officers; and

Gregor A. von Ehrenfels, individually and as an officer of Johnson &

Collins Research, Inc.; and respondents' agents, representatives and

employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the

manufacturing, advertising, packaging, labeling, promotion, offering

for sale, sale, or distribution of any weight-loss product, 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 is effective in causing fast and significant weight

loss;

B. Such product is effective in reducing body fat or cellulite;

C. Such product is effective in causing weight loss, fat reduction,

or increased muscle tone in specific, desired areas of the body;

D. Such product is effective in burning excess calories, modifying

caloric intake, or converting food into energy instead of fat; or

E. Such product has any effect on users' weight, body size or

shape, body measurements, appetite,

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

and rely upon competent and reliable scientific evidence that

substantiates the representation.

III

Nothing in Parts I and II of this Order shall prohibit respondents

from making

[[Page 13201]]

representations which promote the sale of books and other publications,

provided that, the advertising only purports to express the opinion of

the author or to quote the contents of the publication; the advertising

discloses the source of the statements quoted or derived from the

contents of the publication; and the advertising discloses the author

to be the source of the opinions expressed about the publication. This

Part shall not apply, however, if the publication or its advertising is

used to promote the sale of some other product as part of a commercial

scheme.

IV

It is further ordered that respondents, Johnson & Collins Research,

Inc., a corporation, its successors and assigns, and its officers; and

Gregor A. von Ehrenfels, individually and as an officer of Johnson &

Collins Research, Inc.; and respondents' agents, representatives and

employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the

manufacturing, advertising, packaging, labeling, promotion, offering

for sale, sale, or distribution of Total Body Reshaping System, Super

Total Body Reshaping System, or any substantially similar product, in

or affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from making any

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

such product has any effect on weight or body size, unless respondents

disclose, clearly and prominently, that such product consists primarily

of a booklet or pamphlet containing information and advice on weight

loss.

V

It is further ordered that respondents, Johnson & Collins Research,

Inc., a corporation, its successors and assigns, and its officers; and

Gregor A. von Ehrenfels, individually and as an officer of Johnson &

Collins Research, Inc.; and respondents' agents, representatives and

employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the

manufacturing, advertising, packaging, labeling, promotion, offering

for sale, sale, or distribution of any weight-loss product, in or

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

Commission Act, do forthwith cease and desist from making any

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

such weight-loss product has any effect on weight or body size, unless

they disclose, clearly and prominently, that dieting and/or increasing

exercise is required to lose weight; provided however, that this

disclosure shall not be required if respondents possess and rely upon

competent and reliable scientific evidence demonstrating that the

weight-loss product is effective without either dieting or increasing

exercise.

VI

It is further ordered that respondent, Johnson & Collins Research,

Inc., shall:

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

copy of this Order to each of respondent's 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 respondent's 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 respondent or any subsidiary, successor, or assign,

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

responsibilities.

VII

It is further ordered that 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.

VIII

It is further ordered that respondent, Johnson & Collins Research,

Inc., shall notify the Federal Trade Commission at least thirty (30)

days prior to any proposed change in its corporate structure, 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.

IX

It is further ordered that respondent, Gregor A. von Ehrenfels,

shall, for a period of three (3) 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 involving the

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

loss product. 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.

X

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.

XI

It is further ordered that respondents 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.

[[Page 13202]]

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from proposed respondents Johnson & Collins

Research, Inc. and Gregor A. von Ehrenfels, an officer of the

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.

This matter concerns advertising for ``Total Body Reshaping

System'' and ``Super Total Body Reshaping System'' (collectively

referred to herein as ``TBRS''). These products are booklets or

pamphlets containing advice on dieting and exercise in order to achieve

weight loss and body toning. The advertisements ran in teen-oriented

magazines.

The Commission's complaint charges that proposed respondents

falsely represented that users of the TBRS are not required to

consciously diet to lose weight. The complaint also alleges that

proposed respondents lacked a reasonable basis when they made the

following claims: (1) TBRS is effective in causing fast and significant

weight loss; (2) TBRS is effective in significantly reducing body fat

and cellulite; (3) TBRS is effective in causing weight loss, fat

reduction, and increased muscle tone in specific, desired areas of the

body; and (4) TBRS is effective in burning excess calories, modifying

caloric intake, and converting food into energy instead of fat.

Finally, the complaint alleges that, in light of their representations,

proposed respondents' failure to disclose in advertisements that TBRS

consists only of booklets or pamphlets containing advice concerning

techniques for reducing caloric intake and/or increasing exercise, and

that reducing caloric intake and/or increasing exercise is required to

lose weight, was a deceptive practice.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent proposed respondents from

engaging in similar acts in the future.

Part I of the proposed order prohibits proposed respondents from

representing that TBRS, or any substantially similar product, does not

require dieting. Part II requires proposed respondents to possess

competent and reliable scientific evidence before making any of the

representations alleged to be unsubstantiated in the complaint for any

weight-loss product; as well as any representation that any such

product has any effect on users' weight, body size or shape, body

measurements, or appetite.

Part III of the proposed order provides that nothing in Parts I and

II prohibits proposed respondents from making representations which

promote the sale of books and other publications, provided that, the

advertising only purports to express the opinion of the author or to

quote the contents of the publication; the advertising discloses the

source of the statements quoted or derived from the contents of the

publication; and the advertising discloses the author to be the source

of the opinions expressed about the publication. Part III does not

apply to any publication or its advertising that is used to promote the

sale of some other product as part of a commercial scheme.

Part IV prohibits proposed respondents from representing that TBRS,

or any substantially similar product, has any effect on weight or body

size, unless they disclose clearly and prominently that the product

consists solely of a booklet or pamphlet containing information and

advice on weight loss. Part V requires proposed respondents to disclose

that diet or exercise are required to lose weight in connection with

any representation about the effect of weight-loss product on weight or

body size, unless they have competent and reliable scientific evidence

to the contrary.

Part VI requires Johnson & Collins Research to distribute a copy of

the order to certain current and future company personnel. Part VII

requires proposed respondents to maintain, for five years, all

materials that support, contradict, qualify, or call into question any

representations they make that are covered by the proposed order. Under

Part VIII of the proposed order, Johnson & Collins Research is required

to notify the Federal Trade Commission at least thirty days prior to

any proposed change in its corporate structure that may affect

compliance with the order's obligations. Part IX requires that Gregor

A. von Ehrenfels, for a period of three years, notify the Commission of

his affiliation with any new business or employment involving the

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

loss product. Part X provides for the termination of the order after

twenty years under certain circumstances. Part XI obligates 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 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. 96-7292 Filed 3-25-96; 8:45 am]

BILLING CODE 6750-01-M