TrendMark Inc., et al.; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 972-3255]

TrendMark 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 September 11, 1998.

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

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Michael Bloom or Ronald Waldman, New

York Regional Office, Federal Trade Commission, 150 William Street,

13th Floor, New York, N.Y. 10038-2603. (212) 264-1242.

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

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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 June 25,

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, N.W.,

Washington, D.C. 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, subject to fine

approval, an agreement to a proposed consent order (``proposed order'')

from TrendMark Inc., also doing business as TrendMark International

(``TrendMark''), and its principals, William McCormack and E. Robert

Gates.

The proposed 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 comments received and will decide whether it should withdraw from

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

This matter concerns weight loss products which were marketed by

the proposed respondents via unsolicited commercial e-mail sent to

users of America Online. The e-mail directed recipients to click on a

hyperlink that would then take them to TrendMark's website on the

Internet. Both the e-mail and Internet website made various weight loss

and health-related claims about respondents' Thin-Thin

DietTM which consisted of two products--Neuro-

ThinTM and Lipo-ThinTM.

The Commission's complaint alleges that proposed respondents

engaged in deceptive advertising in violation of Sections 5 and 12 of

the FTC Act by making unsubstantiated claims that: (1) Neuro-

ThinTM controls appetite; (2) taking Neuro-ThinTM

and Lipo-ThinTM in combination causes significant weight

loss without a change in diet; (3) taking Neuro-ThinTM and

Lipo-ThinTM in combination causes long-term or permanent

weight loss; (4) Lipo-ThinTM helps prevent the absorption of

ingested fat; (5) Lipo-ThinTM lowers LDL cholesterol and

boosts HDL cholesterol; (6) Lipo-ThinTM promotes healing of

ulcers and lesions; (7) Lipo-ThinTM helps prevent irritable

bowel syndrome; (8) Lipo-ThinTM reduces levels of uric acid

in the blood; (9) Lipo-ThinTM helps improve cardiovascular

health; and (10) testimonials from consumers appearing in

advertisements for the Thin-Thin DietTM reflect the typical

or ordinary experience of members of the public who use Neuro-

ThinTM and Lipo-ThinTM. The complaint alleges

that the proposed respondents did not have a reasonable basis for these

weight loss and health-related claims. In addition, the complaint

alleges that testimonials given by individuals on respondents' website

failed to disclose adequately that these individuals had material

connections with individuals marketing and profiting from the sales off

Neuro-ThinTM and Lipo-ThinTM.

The proposed respondents indicated that they neither possessed nor

were aware of any studies relating specifically to the Neuro-

ThinTM or Lipo-ThinTM products. Moreover, the

purported support which proposed respondents did rely upon for the

above claims--studies on individual components of Neuro-

ThinTM or Lipo-ThinTM--did not relate adequately

to their advertising claims. For example, most of the studies that were

submitted by the proposed respondents as support were test tube studies

and studies of rats. These studies cannot be used as adequate support

for the therapeutic effects of Neuro-ThinTM and Lipo-

ThinTM in human beings.

The complaint further alleges that proposed respondents made a

false claim that clinical evidence proves that Neuro-ThinTM

and Lipo-ThinTM cause users to lose significant weight.

The proposed order contains provisions designed to remedy the

violations charged and to prevent proposed respondents from engaging in

similar acts in the future.

Paragraph I of the proposed order prohibits proposed respondents

from claiming that Neuro-ThinTM and Lipo-ThinTM

or any other product or program: (1) controls appetite; (2) causes

significant weight loss without a change in diet; (3) causes long-term

or permanent weight loss; (4) prevents or helps prevent the absorption

of ingested fat; (5) lowers LDL cholesterol or boosts HDL cholesterol;

(6) promotes healing of ulcers or lesions; (7) helps prevent irritable

bowel syndrome; (8) reduces levels of uric acid in the blood; and (9)

helps improve cardiovascular health, unless, at the time the

representation is made, proposed respondents possess and rely upon

competent and reliable scientific evidence that substantiates the

representation.

Paragraph II of the proposed order states that the proposed

respondents shall not represent, in any manner, expressly or by

implication, that the experience represented by any user who gives a

testimonial or endorsement of the product represents the typical or

ordinary experience of members of the public who use the product,

unless: (a) at the time it is made, the proposed respondents possess

and rely upon competent and reliable scientific evidence that

substantiates the representation; or (b) the proposed respondents

disclose, clearly and prominently, and in close proximity to the

testimonial or endorsement, either: (1) what the generally expected

results would be for users of the product, or (2) the limited

applicability of the endorser's experience to what consumers may

generally expect to achieve, that is, that consumers should not expect

to experience similar results.

Paragraph III of the proposed order prohibits proposed respondents

from making any representation for Neuro-ThinTM and Lipo-

ThinTM or any other food, drug, dietary supplement, drug, or

device, about the health benefits, performance, or efficacy of such

product unless, at the time the representation is made, proposed

respondents possess and rely upon competent and reliable scientific

evidence that substantiates the representation.

Paragraph IV of the proposed order prohibits proposed respondents

from misrepresenting the existence, contents, validity, results,

conclusions, or interpretations of any test, study, or study.

Paragraph V of the proposed order requires the proposed respondents

to disclose, clearly and prominently, a material connection, when one

exists, between a person providing an endorsement for any product or

program and any respondent, or any individual or entity labeling,

advertising, promoting, offering for sale, selling, or distributing

such product or program.

Paragraph VI of the proposed order provides that nothing in this

order shall prohibit proposed respondents from making any

representation about any drug permitted by the Food and Drug

Administration.

Paragraph VII of the proposed order provides that nothing in this

order shall prohibit proposed respondents from making any

representation for any product that is specifically permitted in

labeling for such product by regulations promulgated by the Food and

Drug

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Administration pursuant to the Nutrition Labeling and Education Act of

1990.

Paragraph VIII of the proposed order contains record keeping

requirements for materials that substantiate, qualify, or contradict

covered claims and requires the proposed respondents to keep and

maintain all advertisements and promotional materials containing any

representation covered by the proposed order. In addition, paragraph IX

requires distribution of a copy of the consent order to current and

future officers and agents having responsibility with respect to the

subject matter of the order. Further, Paragraph X provides for

Commission notification upon a change in the corporate respondent.

Paragraph XI requires proposed respondents William McCormack and E.

Robert Gates to notify the Commission when either of them discontinues

his current business or employment and of an affiliation by either of

them with any new businesses or employment. Paragraph XII of the

proposed order requires the proposed respondents to file a compliance

report. Finally, paragraph XIII of the proposed order provides for the

termination of the order after twenty years under specified conditions.

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.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-18616 Filed 7-10-98; 8:45 am]

BILLING CODE 6750-01-M