Bogdana Corporation, et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 952-3235]

Bogdana Corporation, et al.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

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ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before July 17, 1998.

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, FTC/S-4002, Washington, D.C. 20580. (202) 326-3153.

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 above-captioned 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. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for May 12, 1998), on the World Wide Web, at ``http://www.ftc.gov/os/

actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue NW,

Washington, DC 20580, either in person or by calling (202) 326-3627.

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)).

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Bogdana Corporation; and Joseph L. Gruber

and Bogda Gruber, Individually and as officers of Bogdana Corporation.

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

sixty (60) days for receipt of comments by interested persons. Comments

received during this period will become part of the public record.

After sixty (60) days, the Commission will again review the agreement

and the comments received, and will decide whether it should withdraw

from the agreement or make final the agreement's proposed order.

This matter involves alleged deceptive representations for two

dietary supplements: Cholestaway, capsules or wafers purported to lower

serum cholesterol; and Flora Source, a powdered supplement purported to

replace natural intestinal flora, thereby boosting the immune system

and providing other health benefits. Advertisements for the products

included 30-minute television infomercials, 30-minute radio

infomercials, 60-second television commercials, and catalogs.

According to the FTC complaint, by using the trade name

``Cholestaway,'' and through the advertisements, the respondents made

claims that Cholestaway: significantly lowers serum cholesterol levels;

significantly lowers serum cholesterol levels without changes in diet;

significantly lowers serum cholesterol levels and causes significant

weight loss even if users eat foods high in fat, including fried

chicken and pizza; substantially reduces or eliminates the body's

absorption of dietary fat; lowers low density lipoprotein cholesterol

and improves the high density lipoprotein cholesterol to low density

lipoprotein cholesterol ratio; is effective in the treatment of

hardening of the arteries and heart disease; causes significant weight

loss; causes significant weight loss without changes in diet;

significantly reduces blood triglyceride levels; significantly reduces

elevated blood pressure; and is scientifically proven to lower serum

cholesterol levels and reduce elevated blood pressure significantly;

and that testimonials from consumers appearing in the advertisements

for cholestaway reflect the typical or ordinary experience of members

of the public who use the product. The complaint alleges that the

respondents did not have a reasonable basis for any of these

representations at the time they were made.

The complaint also alleges that the respondents misrepresented

radio infomercials for Cholestaway to be independent radio programs

rather than commercial messages.

The complaint further alleges that the respondents made claims,

without a reasonable basis, that Flora Source: replaces the natural

intestinal flora that are lost due to illness, prescription drugs or

antibiotics, thereby reducing the risk of developing illnesses such as

chronic fatigue syndrome (Epstein-Barr syndrome) and other

immunosuppression diseases, including AIDS: improves the body's

absorption of nutrients, including B vitamins; enhances the body's

immune response and is effective in the treatment of immunosuppression

diseases, including AIDS; prevents weight gain; and is effective in the

prevention or treatment of anorexia and gastrointestinal disorders and

symptoms, including food sensitivities, constipation, diarrhea,

dyspepsia, abdominal pain, bloating and gas.

The consent order contains provisions designed to prevent the

respondents from engaging in similar acts and practices in the future.

Part I of the order prohibits the respondents from making the

representations about Cholestaway challenged in the complaint, unless

they possess and rely upon competent and reliable scientific evidence

that substantiates the representation. Part II of the order contains

similar provisions with regard to the challenged representations about

Flora Source.

Part III prohibits respondents from making any representation about

the efficacy, performance, safety or benefits of any food, dietary

supplement or drug unless they possess and rely upon competent and

reliable scientific evidence that substantiates the representation.

Part IV prohibits the respondents from using the name

``Cholestaway'' or any other name that represents that the product will

lower serum cholesterol levels unless they have substantiation.

Part V prohibits the respondents from misrepresenting the

existence, contents, validity, results, conclusions or interpretations

of any test, study, or research.

Part VI prohibits the respondents from representing that the

experience represented by a user testimonial or endorsement of the

product is the typical or ordinary experience of users of the product

unless the representation is substantiated or they disclose what the

generally expected results would be or that consumers should not expect

the same results.

Part VII prohibits the respondents from disseminating any

advertisement that misrepresents that it is not a paid advertisement,

and requires disclosures, during television ads fifteen minutes in

length or longer and radio ads five minutes or longer, that the program

is a paid advertisement.

Part VIII allows the respondents to make representations for any

drug that are permitted in labeling for that drug

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under any tentative final or final Food and Drug Administration

(``FDA'') standard or under any new drug application approved by the

FDA.

Part IX allows the respondents to make representations for any

product that are specifically permitted in labeling for that product by

regulations issued by the FDA under the Nutrition Labeling and

Education Act of 1990.

Parts X through XII and XIV require the respondents to keep copies

of advertisements making representations covered by the order; to keep

records concerning those representations, including materials that they

relied upon when making the representations; to provide copies of the

order to certain of the corporate respondents' personnel; to notify the

Commission of changes in corporate structure; and to file compliance

reports with the Commission. Part XV provides that the order will

terminate after twenty (20) years under certain circumstances.

Part XIII requires that the Grubers notify the Commission of any

change in their business or employment.

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.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-13140 Filed 5-15-98; 8:45 am]

BILLING CODE 6750-01-M