Mega Systems International, Inc., et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 942-3278]

Mega Systems International, Inc., et al.; Analysis To Aid Public

Comment

AGENCY: Federal Trade Commission.

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 March 23, 1998.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pennsylvania Avenue, N.W., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

C. Steven Baker or Russell W. Damtoft, Federal Trade Commission,

Chicago Regional Office, 55 East Monroe St., Suite 1860, Chicago, IL.

60603. (312) 353-8156.

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 January 13, 1998), on the World Wide Web, at ``http.//www.ftc.gov/

os/actions/htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, N.W.,

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, subject to

final approval, to a proposed consent order from respondents Mega

Systems International, Inc. and Jeffrey Salberg.

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 advertisements, including but not limited to

infomercials, for five Mega Systems International products: Eden's

Secret Nature's Purifying Product, Sable Hair Farming System, Kevin

Trudeau's Mega Memory System, Dr. Callahan's Addiction Breaking System,

and Jeanie Eller's Action Reading. This matter also concerns the

deceptive format of the infomercials.

The Commission's complaint charges that respondents made false and

unsubstantiated claims that Eden's Secret Nature's Purifying Product

(1) causes significant weight loss, (2) will prevent or cure illnesses,

including but not limited to fatigue, headaches, depression, arthritis,

insomnia, immune suppression, and premenstrual syndrome, (3) will

cleanse the body of

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harmful toxins, and (4) will purify the body's blood supply.

The Commission's complaint also charges that respondents made false

and unsubstantiated claims that Sable Hair Farming System (1) will

stop, prevent, cure, relieve, reverse or reduce hair loss, (2) will

promote the growth of hair where hair has already been lost, and (3) is

superior to Rogaine and Minoxidil in stopping, preventing, curing,

relieving, reversing or reducing hair loss. In addition, the

Commission's complaint charges that respondents made the false claim

that scientific studies demonstrate that Sable Hair Farming System is

effective in stopping hair loss and promoting hair growth.

The Commission's complaint also charges that respondents made the

false and unsubstantiated claim that Kevin Trudeau's Mega Memory System

will enable users to achieve a photographic memory, and the

unsubstantiated claim that Kevin Trudeau's Mega Memory System is

effective in causing adults or children with learning disabilities or

attention deficit disorder to substantially improve their memory. In

addition, the Commission's complaint charges that respondents made

false claims that (1) scientific studies of Kevin Trudeau's Mega Memory

System on seventh-grade students demonstrate that Kevin Trudeau's Mega

Memory System will substantially improve their academic performance and

grades, (2) scientific studies of Kevin Trudeau's Mega Memory System on

blind children demonstrate that Kevin Trudeau's Mega Memory System will

improve their recall ability to a level of 95% to 98%, (3) scientific

studies of Kevin Trudeau's Mega Memory System on children with IQ's of

fifty to sixty demonstrate that Kevin Trudeau's Mega Memory System will

improve their recall ability to a level of almost 100%, and (4)

scientific studies of Kevin Trudeau's Mega Memory System on children

with attention deficit disorder demonstrate that Kevin Trudeau's Mega

Memory System will substantially improve their memory.

The Commission's complaint also charges that respondents made false

and unsubstantiated claims that Dr. Callahan's Addiction Breaking

System (1) reduces an individual's compulsive desire to eat, leading to

significant weight loss, (2) reduces an individual's compulsive desire

to eat, leading to significant weight loss without the need to diet or

exercise, and (3) cures addictions and compulsions, including but not

limited to, smoking, eating, and using alcohol or heroin. In addition,

the Commission's complaint charges that respondents made the false

claim that testimonials with regard to consumers' use of Dr. Callahan's

Addiction Breaking System reflect the typical or ordinary experience of

members of the public who use the product.

The Commission's complaint also charges that respondents made

unsubstantiated claims that Jeanie Eller's Action Reading is successful

in teaching reading 100% of the time. Finally, the Commission's

complaint charges that respondents deceptively represented that their

infomercials were independent television programs and not paid

commercial advertising.

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. The proposed consent order

prohibits the respondents from representing that Eden's Secret Nature's

Purifying Product, or any substantially similar product, (1) causes

significant weight loss, (2) prevents or cures illnesses, including but

not limited to fatigue, headaches, depression, arthritis, insomnia,

immune suppression, and premenstrual syndrome, (3) will cleanse the

body of harmful toxins, or (4) will purify the body's blood supply.

The proposed consent order also prohibits the respondents from

representing that Sable Hair Farming System, or any substantially

similar product, (1) will stop, prevent, cure, relieve, reverse or

reduce hair loss, (2) will promote the growth of hair where hair has

already been lost, or (3) is superior to Rogaine and Minoxidil in

stopping, preventing, curing, relieving, reversing or reducing hair

loss. In addition, the proposed consent order prohibits respondents

from advertising, packaging, labeling, promoting, offering for sale,

selling, or distributing any product that is represented as promoting

hair growth or preventing hair loss, unless the product is the subject

of an approved new drug application for such purpose under the Federal

Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq.

The proposed consent order also prohibits the respondents from

representing that Kevin Trudeau's Mega Memory System, or any

substantially similar product, will enable users to achieve a

photographic memory. In addition, the proposed consent order prohibits

the respondents from representing that Kevin Trudeau's Mega Memory

System, or any substantially similar product, is effective in causing

adults or children with learning disabilities or attention deficit

disorder to substantially improve their memory, unless, at the time the

representation is made, respondents possess and rely upon competent and

reliable evidence, which when appropriate must be competent and

reliable scientific evidence, that substantiates the representation.

The proposed consent order also prohibits the respondents from

representing that Dr. Callahan's Addiction Breaking System, or any

substantially similar product or program, (1) reduces an individual's

compulsive desire to eat, leading to significant weight loss, (2)

reduces an individual's compulsive desire to eat, leading to

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

cures addictions and compulsions, including but not limited to,

smoking, eating, and using alcohol or heroin.

The proposed consent order also prohibits the respondents from

representing with respect to Jeanie Eller's Action Reading, or any

other product or program that provides instruction in any aspect of

reading, the extent to which individuals who use such product will

learn to read or the success rate of individuals who use such product,

unless the representation is substantiated.

The proposed consent order also prohibits the respondents from (1)

misrepresenting the existence, contents, validity, results, conclusions

or interpretations of any test, study or research, (2) representing the

benefits, performance or efficacy of any product or program, unless the

representation is substantiated, and (3) representing that the

experience represented by any user testimonial or endorsement of any

product or program represents the typical or ordinary experience of the

members of the public, unless the representation is substantiated or

clearly and prominently qualified.

In addition, the proposed consent order prohibits the respondents

from creating, producing, selling or disseminating (1) any

advertisement that misrepresents that it is not a paid advertisement,

(2) any television commercial or other video advertisement fifteen

minutes in length or longer that does not clearly and prominently

disclose within the first thirty seconds and immediately before each

presentation of ordering instructions that the program is a paid

advertisement for the product or service, and (3) any radio commercial

or other radio advertisement five minutes in length or longer that does

not broadcast clearly an audibly within the first thirty seconds and

immediately before each presentation of ordering instructions or

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periodically through the program, but no more than approximately ten

minutes apart that the program is a paid advertisement for the product

or service.

The proposed consent order also requires respondents to pay the

Federal Trade Commission $500,000. The funds paid by the respondents

shall, in the discretion of the Federal Trade Commission, be used to

provide direct redress to consumers. If the Federal Trade Commission

determines that consumer redress is impracticable or otherwise

unwarranted, any funds not so used shall be paid to the United States

Treasury.

The remaining parts of the proposed consent order require the

respondents (1) to maintain promotional and substantiation materials

related to the claims covered by the order, (2) to deliver a copy of

the order to all current and future principals, officers, directors,

and managers, and deliver a summary of the order to all current and

future employees, agents, and representatives having responsibilities

with respect to the subject matter of this order, (3) to notify the

Commission of any changes in the structure of the proposed corporate

respondent, (4) to notify the Commission of any changes in employment

of the individual respondent, and (5) to file one or more compliance

reports.

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

proposed consent 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. 98-1360 Filed 1-20-98; 8:45 am]

BILLING CODE 6750-01-M