FTC Hits Internet Health Fraud in Continuation of Operation Cure.All:

New Cases Target Deceptive Hi-Tech Marketing Techniques

For Release

Internet health fraud continues to plague consumers looking for solutions to serious health-related illnesses. The Federal Trade Commission today announced three separate settlements with Internet companies and their principal officers. The products include cetylmyristoleate (CMO) and Essiac Tea. The FTC alleges that these companies touted their products as being effective treatments or cures for various diseases, including arthritis, cancer, diabetes and AIDS, without adequate substantiation to support the claims. In addition, the FTC complaints challenge the companies' use of various types of sophisticated Internet techniques, such as metatags, hyperlinks, and mouseovers, to deceive consumers about the efficacy of their products.

The Arizona Attorney General also announced a settlement with a Scottsdale-based homeopathist who made unsubstantiated claims in his Internet advertising for intravenous hydrogen peroxide therapy.

The cases announced today are the results of "Operation Cure.All"- an ongoing federal and state law enforcement and consumer education campaign launched in June 1999 targeting bogus health claims on the Internet. Last year the Commission announced an Internet surf that identified more than 400 Web sites making questionable claims for products sold to treat serious diseases. Today's law enforcement actions target sites identified in earlier Internet surfs.

"The promotions for these supplements as 'miracle' cures are really reprehensible because they target people who have very serious, if not life-threatening, health conditions," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "At a time when many health-conscious consumers are using the Web as a source of information, it's important to remember that claims must be truthful to meet legal standards, whether they're in the daily paper, on TV, or on the Internet."

The FTC's proposed settlements are with Michael D. Miller, doing business as Natural Heritage Enterprises; CMO Distribution Centers of America, Inc., and its president, Kalon Samulonis; and EHP Products, Inc., and its president Elaine Parrish. The State of Arizona's settlement is with Gordon Josephs.

"Practicing medicine does not give anyone the freedom to defraud people," said Arizona Attorney General Janet Napolitano. "This was an outrageous effort to scam chronically ill people by making unsubstantiated claims about treatments or cures."

The use of the Internet to disseminate deceptive health claims is troubling because so many consumers rely on it for health information, Bernstein said. According to Cyber Dialogue, as of December 1999, 34.7 million U.S. adults seek health information online, an increase of 56 percent over the same time last year. Health and medical content is the fifth most commonly accessed type of information online, yet the majority (67%) of online health seekers found it difficult to separate online information that is trustworthy from that which is not. Seventy three percent of those who search for health information online seek information about specific medical conditions. The eight most commonly searched diseases/conditions are: allergies (37%), cancer (35%), heart disease (29%), arthritis (24%), digestive disorders (24%), migraines (20%), and asthma (19%).

"The Food and Drug Administration also is deeply concerned about the public health implications of the Internet sales of unapproved drugs where sellers can bypass the public health safeguards set in place by the Congress, the States, and FDA," said John M. Taylor, Senior Advisor for Regulatory Policy, Office of Regulatory Affairs. "As a part of Operation Cure.All, FDA is investigating, in conjunction with the Federal Trade Commission, websites suspected of breaking the law. FDA has made Internet surveillance an enforcement priority and the agency plans to take legal actions if appropriate."

In addition to challenging unsubstantiated health claims, these cases illustrate how technology can be misused to deceive consumers. The three Internet techniques involved in the FTC's cases are "metatags," "mouseover text," and hyperlinks. "Metatags" are keywords embedded in the source code for a Web page that are invisible to an average consumer but are used by some search engines to respond to consumers' search requests. Certain Internet search engines index sites in part based on the metatags. In the Natural Heritage Enterprise and the EHP Products cases, the Commission alleged that metatags, taken together with the visible portion of the Web site, were used to communicate deceptive representations. Because a consumer generally searches for a specific health topic, e.g., "cancer cure," techniques that direct a consumer to a particular Web site can contribute to the consumer's belief that the products offered on the identified site are effective for that purpose.

In the Natural Heritage Enterprise case, Miller also used "mouseover text" in a deceptive manner, according to the FTC. Generally, when a surfer rolls the mouse over an image such as a flower, a small text window pops up briefly on the screen. Instead of using that text to describe the image that appears on the screen (e.g. "flower image.gif"), Miller used the text window to make additional express efficacy claims about the product, such as: "Cures cancer, leukemia, lymphoma. Cures lupus, breast, prostate cancer."

Hyperlinks can be used to communicate deceptive claims. The FTC complaint alleged that Miller also used hyperlinks to deceive consumers by directing them to other sites (with other domain names) that were purportedly independent from the respondent's own site, implying that the information available from the other Web sites was not tied to his company. In fact, the linked Web sites were created by Miller and made deceptive disease claims that Essiac, for example, would cure AIDS.

In the FTC cases, the companies agreed to settle the charges and the proposed settlement agreements were announced today for public comment.

Michael D. Miller, d/b/a Natural Heritage Enterprises, based in Crestone, Colorado, sold Essiac Tea, a well-known alternative "remedy" for cancer. Essiac Tea generally is a mixture of four herbs: burdock root, sheep sorrel, rhubarb root and slippery elm bark. Miller sold the prepared tea for $14.50 for a bottle and the dried herbal mixture for $12. Miller made claims that Essiac Tea is effective in curing a number of diseases, such as cancer, diabetes, AIDS/HIV and feline leukemia.

CMO Distribution Centers of America, based in Sarasota, Florida, sold its CMO™ capsules for approximately $100 per bottle. CMO Distribution Centers made claims that its product would regulate and normalize the immune system in a single course of treatment and would cure arthritis and reverse the effects of the disease. The product was also claimed to be effective in treating other conditions, including asthma, emphysema and certain cancers. The company claimed that its product has been recognized in medical newsletters and scientific journals to be a revolutionary breakthrough in treating arthritis. The complaint alleges that CMO's efficacy claims are unsubstantiated and that the claims about certain scientific studies, including statements that CMO is accepted in the medical community or by the Arthritis Foundation, are false.

EHP Products, based in Ashland, Kentucky, sold its CMO product, Myristin®, for about $65 per bottle or $100 when packaged with an herbal formula and a lotion. EHP claimed that CMO provides long-term relief from arthritis symptoms and may prevent rheumatoid arthritis and osteoarthritis. EHP advertised that its product had been patented for both osteoarthritis and rheumatoid arthritis, and that the patents "prove" the effectiveness of the product. Testimonials used by EHP in its advertising also represented the product as an effective treatment for other ailments, including hepatitis C, eczema, and sinus drainage, and claimed that CMO can reduce blood pressure and levels of blood sugar and cholesterol. The complaint alleges that the company's claims of efficacy are unsubstantiated, and that EHP misrepresented that scientific studies or the issuance of patents prove the effectiveness of Myristin®.

The proposed settlements would resolve the charges by prohibiting Miller, CMO Distribution and EHP from making unsubstantiated claims for Essiac Tea and CMO, respectively. The companies also would be prohibited from making unsubstantiated health claims for any food, drug, dietary supplement or program and from misrepresenting the results of any tests, study or research. The proposed settlements would further prohibit the respondents from making any representations about the performance, safety, efficacy or health benefits of their products or any other food, dietary supplement or drug, without adequate substantiation. In addition, the settlements with CMO Distribution and EHP would require the respondents to offer full refunds to consumers who purchased their products for personal use or that of their families, and to notify their distributors of the settlements and to monitor their future advertising. The settlement with Miller would require him to pay $17,500 in consumer redress and send notices to all consumers who purchased his Essiac Tea products advising them that Essiac Tea has not been demonstrated to be an effective remedy in fighting cancer or any other disease.

State of Arizona vs. Gordon Josephs. According to the Arizona Attorney General, Dr. Josephs, who operates homeopathic clinics in Arizona, made unsubstantiated claims in his advertisements that intravenous hydrogen peroxide therapy is an effective treatment for virtually every disease, including fatal, chronic and short-term diseases. The list of diseases included asthma, chronic obstructive lung disease, Alzheimers', herpes, migraines and hepatitis, among others. The settlement permanently prohibits Josephs and his employees from making any unsubstantiated claims for hydrogen peroxide therapy.

The FTC warns consumers to be on the lookout for the following typical phrases and marketing techniques that are used to deceive consumers:

  • The product is advertised as a quick and effective cure-all for a wide range of ailments.
  • The promoters use words like "scientific breakthrough," "miraculous cure," "exclusive product," "secret ingredient" or "ancient remedy."
  • The text is written in "medicalese" - impressive-sounding terminology to disguise a lack of good science.
  • The promoter claims the government, the medical profession or research scientists have conspired to suppress the product.
  • The advertisement includes undocumented case histories or testimonials claiming amazing results.
  • The product is advertised as available from only one source.

 

Bernstein also expressed the agency's appreciation for the assistance of the U.S. Food and Drug Administration in its investigations. The FTC advises consumers who wish to use the Internet to find health information to try www.consumer.gov, the federal gateway for consumer information. It provides specific resources to educate people about fraud and quackery and how to find and evaluate information on the Web.

The Commission vote to approve the proposed settlements for public comment was 5-0.

A summary of each of the proposed consent agreements will be published in the Federal Register shortly. They will be subject to public comment for 30 days, until May 5, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: Consent agreements are for settlement purposes only and do not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints, proposed consent agreements and analyses to aid public comment, as well as the news release, 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.

STATE OF ARIZONA CONTACT:


Noreen R. Matts
Office of the Arizona Attorney General
402 W. Congress,
Suite 315 Tucson,
AZ 85071 520-628-6504

 

(FTC File No. - CDC - 982 3180)
(FTC File No. - EHP - 982 3181)
(FTC File No. - Natural Heritage - 992 3225)

Contact Information

Media Contact:
Brenda Mack
Office of Public Affairs
202-326-2182
Staff Contact:
Richard Cleland
Bureau of Consumer Protection
202-326-3088
(Operation Cure.All)

Tom Carter
Southwest Region
1999 Bryan Street, Suite 2150
Dallas, Texas 75201-6803
214- 979-9372
(CMO Distribution and EHP Products)

Richard Cleland
202-326-3088
( Michael D. Miller)