Agreement Settles Charges HSN Violated FTC Order To Substantiate Ad Claims
Home Shopping Network (HSN), the TV retailer that reaches more than 70 million households, has agreed to settle Federal Trade Commission charges that it aired advertisements for a variety of skin care, weight-loss, and PMS/menopause products containing claims it could not substantiate, in violation of a 1996 FTC order. Home Shopping Network, Inc., and its subsidiary, Home Shopping Club, L.P., will pay a $1.1 million civil penalty to settle the charges, and will be ordered not to make ad claims it cannot substantiate.
In March, 1995, the Commission issued a complaint charging HSN and two subsidiaries, Lifeway Health Products, Inc., and Home Shopping Club, Inc., with violating federal laws by making claims they could not substantiate for four Lifeway-brand therapeutic products, including a vitamin spray to prevent colds and a stop-smoking spray. On September 26, 1996, the defendants agreed to settle the FTC charges and were bound by an order that required that they have "competent and reliable scientific evidence" to support advertising claims for any product that they claimed could "cure, treat, or prevent any disease, or have any effect on the structure or function of the human body."
In the complaint announced today, the FTC alleges HSN aired ad claims for skin care, weight-loss and PMS/menopause products from 1996 through 1998 that were unsubstantiated, and violated the FTC order. For example, the complaint alleges that claims that skin care products could "clear anyone's acne within several months," and could "clear cystic acne and razor bumps on men's skin," were unsubstantiated. So were claims that users of one weight-loss product would lose between 30 and 60 pounds and that users of another would maintain their weight loss. Claims that a supplement advertised to treat premenstrual syndrome and menopause provided "all the benefits of prescription estrogen replacement drugs," were also unsubstantiated, the FTC alleged.
Violations of FTC orders carry a penalty not to exceed $11,000 per violation.
The FTC has asked the court to approve the $1.1 million settlement and to enjoin HSN and Home Shopping Club, which produces infomercials for HSN, from any future violations of the 1996 Commission order.
The complaint was filed at the FTC's request by the Department of Justice in U.S. District Court for the Middle District of Florida, in Jacksonville, this morning. The Commission vote to refer the complaint and proposed consent to DOJ for filing was 4-0.
In a separate statement, Federal Trade Commissioner Sheila F. Anthony expressed concern about the size of the civil penalty given the conduct alleged in the complaint. "I find the $1.1 million civil penalty amount to be barely adequate," Anthony said. "Only two years later, HSN is again before us, and is again facing allegations that it has made multiple unsubstantiated product efficacy claims. Indeed, these allegations give me reason to question whether HSN took its obligations under the 1996 order seriously." While applauding FTC staff's diligence in monitoring HSN's compliance with the 1996 order, Anthony noted that a larger civil penalty in this matter may have been warranted to deter future unsubstantiated claims by HSN and other advertisers. "Civil penalties and other remedial impositions cannot be a mere cost of doing business," Anthony stated. "If false claims are profitable even in the wake of penalties, advertisers will continue to make such claims."
NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees are subject to court approval and have the force of law when signed by the judge.
Copies of the complaint and proposed consent, and other documents associated with this matter are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(Civil Action No.: 99-897-CIV-T-25C)
(FTC Docket No.: D.9272)
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