Zygon International, Inc., a Redmond, Washington-based company that marketed the "Learning Machine" and other products, has agreed to settle deceptive advertising charges brought by the Federal Trade Commission. Zygon has agreed to pay up to $195,000 in refunds to consumers as part of a settlement with the FTC to resolve charges that it made a host of unsubstantiated claims for its products.
The FTC complaint, which names Zygon and its owner, Dane Spotts, was the result of a coordinated investigation by the FTC, the Attorneys General of Illinois, Pennsylvania, Texas, and Washington, and the District Attorney of Napa County, California, all of whom are also announcing settlements with Zygon today.
Some of the advertisements challenged in the FTC complaint appeared in national publications such as USA Today, Omni magazine, Longevity magazine, and USAir's in-flight magazine. Zygon also sold products through its mail-order catalog and on a home page on the Internet.
The FTC challenged claims for five products: the "Learning Machine" and the "SuperMind," which, among other things, purportedly accelerate learning and enable users to lose weight, quit smoking, increase their I.Q., and learn foreign languages overnight; the "SuperBrain Nutrient Program," pills touted as improving memory, intelligence, concentration, and other cognitive and mental functions; "Fat Burner Pills," advertised to help users burn fat and lose weight; and "Day and Night Eyes" pills, advertised for improving vision and night blindness. The FTC also challenged claims for Zygon's 30-day money-back guarantee, charging that numerous consumers who returned products within 30 days after receipt did not receive a refund within a reasonable time frame, if at all."This is a case where nationally circulated newspapers and magazines ran ads claiming that consumers could learn foreign languages, quadruple their reading speed, or quit smoking just by putting on a headset with flashing lights," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "It's fair to say that a great number of the claims were facially dubious at best. With a little more careful screening by the media, these ads would not have been allowed to see the light of day." Pennsylvania Attorney General Tom Corbett stated, "This case is a good example of how separate government agencies can work together for the benefit of all consumers."
Under the proposed settlement, Zygon and Spotts have agreed that they will have competent and reliable substantiation to back up the types of claims challenged in the complaint, as well as any claims about the performance, benefits, efficacy or safety of any product or service. If Zygon or Spotts advertise any refund policy, they would be required to honor it by giving consumers refunds within the time frame they specify or, if no time is specified, within 30 days.
Under the settlement, Zygon would be required to pay up to $195,000 in consumer refunds. Consumers who returned products to Zygon after October 15, 1995 and who have not already received a refund will automatically receive a refund check. Any remaining funds would be used for refunds for Learning Machine purchasers who apply for a refund and for purchasers who bought other products from Zygon before October 15, 1995, returned them for a refund, and never received their money back. Consumers who believe that they are eligible for a refund should call 1-800-320-9105 or write Zygon Refund Center, c/o Gilardi & Co., P.O. Box 8060, San Rafael, CA 94912-8060 for more information.
The order also contains various reporting provisions designed to assist the FTC in monitoring the respondents’ compliance.
The Commission vote to approve the proposed consent agreement for public comment was 5-0. It will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does 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 $10,000.
Copies of the complaint, proposed consent agreement, and an analysis of the agreement to assist the public in commenting, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
(FTC File No. 942 3171)