Body Systems Technology, Inc. et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9823177]

Body Systems Technology, 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 August 30, 1999.

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

Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Donald D'Amato, New York Regional

Office, Federal Trade Commission, 150 William Street, Suite 1300, New

York, NY 10038, (212) 264-1223.

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

(June 24, 1999), 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, NW, Washington, DC

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

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. Two paper copies of each comment should be filed,

and should be accompanied, if possible by a 3\1/2\ inch diskette

containing an electronic copy of the comment. 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 final

approval, an agreement to a proposed consent order from Body Systems

Technology, Inc. (``BST''), a corporation, and William E. Chace and

James D. Davis, individually and as officers of the corporation

(``proposed respondents'').

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

sixty (60) days for the 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 and take appropriate action or make final

the agreement's proposed order.

This matter involves proposed respondents' making of health-related

advertising claims on the Internet and elsewhere for their shark

cartilage capsules, una de gato capsules, and una de gato liquid. The

proposed complaint alleges that BST and its two principal officers

violated Section 5 of the Federal Trade Commission Act (``FTC Act'') by

making the following unsubstantiated claims: BST's una de gato products

are or are likely to be an effective treatment of cancer, HIV/AIDS, and

arthritis; and BST's shark cartilage capsules are effective in the

prevention and treatment of cancer. The proposed complaint also alleges

that the proposed respondents violated Section 5 of the FTC Act by

falsely representing that research studies show that BST's una de gato

products are or are likely to be an effective treatment of cancer, HIV/

AIDs,

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and arthritis; and by falsely representing that published laboratory

studies prove that BST's shark cartilage capsules are effective in the

prevention and treatment of cancer.

Paragraph I of the proposed consent order prohibits proposed

respondents from representing that BST's shark cartilage capsules or

any other product or program is effective in the prevention of cancer

or is effective in the treatment of cancer unless, at the time the

representation is made, respondents possess and rely upon competent and

reliable scientific evidence that substantiates the representation.

Paragraph II of the proposed consent order prohibits proposed

respondents from representing that BST's una de gato capsules, BST's

una de gato liquid, or any other product or program is or is likely to

be an effective treatment of cancer, is or is likely to be an effective

treatment of HIV/AIDS, or is or is likely to be an effective treatment

of arthritis unless, at the time the representation is made, proposed

respondents possess and rely upon competent and reliable scientific

evidence that substantiates the representation.

Paragraph III of the proposed consent order prohibits for any food,

dietary supplement, drug, or any program, representations about the

health benefits, performance, efficacy, or safety of such product or

program, unless, at the time the presentation is made, proposed

respondents possess and rely upon competent and reliable scientific

evidence that substantiates the representation.

Paragraph IV of the proposed consent order prohibits for any

product or program, misrepresentations about the existence, contents,

validity, results, conclusions, or interpretations of any test, study,

or research.

Paragraph V of the proposed consent order allows proposed

respondents to make any representation that is specifically permitted

in the labeling for any product by regulations promulgated by FDA

pursuant to the Nutrition Labeling and Education Act of 1990.

Paragraph VI of the proposed consent order allows proposed

respondents to make any representation for any drug that is permitted

by the FDA in the drug's labeling.

Paragraph VII of the proposed consent order governs proposed

respondents' notification, termination, and monitoring requirements

with respect to BST distributors. Proposed respondents are required to

send a letter to distributors that informs then that it is against the

law to make false claims about any BST product or program or to make

health-related claims about any product or program of BST that are not

substantiated by competent and reliable scientific evidence. The letter

further states that distributors must agree not to use, rely on, or

distribute any advertising or make oral representations containing

false or unsubstantiated claims. Further, distributors must agree to

submit all advertising to BST for approval prior to dissemination. The

letter informs distributors that failure to comply with these terms

will result in immediate termination, and if BST believes that the

distributor has made false or unsubstantiated claims it will report the

violation to the Federal Trade Commission. The proposed respondents are

required to have their distributors sign, date, and return the letter

as a condition of remaining a distributor.

Paragraph VIII is a record-keeping provision that requires proposed

respondents to maintain records of all notification letters sent to

distributors, communications between respondents and distributors

referring or relating to the requirements of Paragraph VII, and any

other materials created pursuant to Paragraph VII of the proposed

order.

Paragraph IX of the proposed consent order requires the proposed

respondents to provide full refunds for a specified period of time to

all purchasers of their shark cartilage capsules, una de gato capsules,

and una de gato liquid identifiable prior to the time the respondents

stopped making, and took aggressive steps to stop its distributors from

making, the alleged deceptive claims.

Paragraph X of the proposed order requires the proposed respondents

to provide the FTC with a monitoring report detailing the steps

respondents have taken to comply with the redress requirements.

Paragraph XI of the proposed order contains record keeping

requirements for materials that substantiate, qualify, or contradict

claims covered by the proposed order. Paragraph XII of the proposed

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

future officers and agents. Paragraph XIII provides for Commission

notification upon a change in the corporate respondent and Paragraph

XIV requires Commission notification when the individual respondent

changes his business or employment. Paragraph XV requires the proposed

respondents to keep and maintain all records demonstrating compliance

with the terms and provisions of the order. Paragraph XVI provides for

the termination of the order after twenty (20) years under certain

circumstances.

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 director of the Commission.

Benjamin I. Berman,

Acting Secretary.

[FR Doc 99-16709 Filed 6-30-99; 8:45 am]

BILLING CODE 6750-01-M