New Vision International et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9623270]

New Vision International 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 February 16, 1999.

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

Room 159, 600 Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Matthew Gold or Sylvia Kundig, San Francisco Regional Office, Federal

Trade Commission, 901 Market Street, Suite 570, San Francisco,

California 94103, (415) 356-5270.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(d) 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 December 8, 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, 600 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 an agreement, subject to

final approval, to a proposed consent order from New Vision

International, Inc., NVI Promotions, L.L.C., and their two principals,

Jason P. Boreyko and Benson K. Boreyko (hereinafter ``New Vision'' or

``respondents''). New Vision is a multi-level marketing company that

sells nutritional supplements. In a separate action, the Commission has

also accepted a similar agreement involving Max F. James, a distributor

of New Vision products.

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

sixty (60) days for the 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 any 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 has focused on New Vision's advertisements for a

regimen of nutritional supplements that they called ``God's Recipe.''

The advertisements claimed that God's Recipe could mitigate or cure the

effects of Attention Deficit Disorder or Attention Deficit

Hyperactivity Disorder.

The proposed complaint alleges that New Vision could not

substantiate the following claims: (1) that God's Recipe can cure,

prevent, treat or mitigate Attention Deficit Disorder or its symptoms;

(2) that God's Recipe can cure, prevent, treat or mitigate Attention

Deficit Hyperactivity Disorder or its symptoms; (3) that God's Recipe

is an effective alternative treatment to the prescription drug Ritalin

for Attention Deficit Disorder and Attention Deficit Hyperactivity

Disorder; and (4) that testimonials from consumers appearing in the

advertisements for God's Recipe reflect the typical or ordinary

experience of members of the public whose children have used the

product.

Part I of the proposed consent order prohibits New Vision, when

advertising God's Recipe or any other food, drug or dietary supplement,

from making claims (1) through (3), above, unless the claim is

substantiated at the time it is made. Part II of the proposed order

addresses claims made through endorsements or

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testimonials. Under Part II, respondents may make such representations

if they possess and rely upon competent and reliable evidence that

substantiates the representations; or the respondents must disclose

either what the generally expected results would be for users of the

advertised products, or the limited applicability of the endorser's

experience to what consumers may generally expect to achieve. The

proposed order's treatment of testimonial claims is in accordance with

the Commission's ``Guides Concerning Use of Endorsements and

Testimonials in Advertising,'' 16 CFR 255.2(a).

Part III of the proposed order prohibits respondents from making

unsubstantiated claims about the safety of any food, drug or dietary

supplement, or about the ability of such product to treat, cure,

alleviate the symptoms of, prevent, or reduce the risk of developing

any disease or disorder. Part IV of the proposed order contains

language permitting New Vision to make drug claims that have been

approved by the FDA pursuant to either a new drug application or a

tentative final or final standard. Part V states that New Vision would

be permitted to make claims that the FDA has approved pursuant to the

Nutrition Labeling and Education Act of 1990.

Part VI of the proposed order requires New Vision to retain, and

make available to the Commission upon request, all advertisements and

promotional materials containing any representation covered by the

order, as well as any materials that it relied upon in disseminating

the representation and any materials that contradict, qualify, or call

into question the representation.

Parts VII and VIII of the proposed order require New Vision to

distribute the order to relevant parties. Part VII requires New Vision

to distribute a copy of the order to all current and future principals,

officers, directors, and managers, and to any employee, agent or

representative with responsibilities under the order. Part VIII.A

requires the company to distribute a letter, attached to the order as

Appendix A, to each current active distributor. Part VIII.B requires

the company to distribute a letter, attached to the order as Appendix

B, to future distributors for a period of five years. These

substantially similar letters state that no distributor may make any

claim regarding the therapeutic or curative properties of New Vision

products unless she has received prior approval from New Vision. The

letters also state that all distributor advertising must either be

obtained from New Vision or pre-approved by New Vision. In addition,

the letters state that failure to conform to these requirements will be

grounds for suspension or termination.

Part IX of the proposed New Vision order contains some additional

requirements in recognition of the fact that, as a multi-level

marketing company, New Vision's contact with consumers is made almost

exclusively through a network of distributors who are not covered by

the order. For example, Part IX.A.1 would require the company to compel

its distributors to submit all advertising to the company for pre-

approval. Part IX.A.2 would require New Vision to establish a mechanism

for suspending or terminating business dealings with any distributor

who fails to submit advertising for pre-approval. Part IX.A.3 would

require New Vision to send to each active distributor a notice, every

six months, reminding them of the pre-approval requirement. To ensure

that the company remains abreast of its distributor's marketing efforts

over the Internet, Part IX.A.4 would require New Vision to conduct a

monthly search of the World Wide Web for independent distributor

advertising.

Part IX.B of the proposed order would require New Vision to police

to distributors and investigate complaints that any distributor may be

violating the order. Part IX.C would require New Vision to discontinue

dealing with any distributor once respondents obtain actual knowledge,

or knowledge fairly implied on the basis of objective circumstances,

that the distributor is making a representation that is prohibited by

the order, unless that person immediately ceases such activity. If New

Vision learns that the distributor has not permanently ceased making

representations prohibited by the order, New Vision must immediately

discontinue its dealings with the distributor.

The remainder of the proposed New Vision order contains standard

requirements that the corporate respondents notify the Commission of

any changes in corporate structure that might affect compliance with

the order, that the individual respondents notify the Commission of

changes in their employments status, and that New Vision file one or

more reports detailing their compliance with the order.

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. 98-33284 Filed 12-15-98; 8:45 am]

BILLING CODE 6750-01-M