For Your Information: June 20, 1997
The Federal Trade Commission today announced the following actions.
Consent agreements given final approval: Following a public comment period on each, the Commission has made final consent agreements with the following entities. The Commission action makes the consent orders binding on the respondents.
- The consent order with Autodesk, Inc., of San Rafael, California, and Softdesk, Inc., of LaMesa, California, settles charges that Autodesk’s acquisition of Softdesk would substantially lessen competition in the development and sale of computer-aided design (CAD) software engines, in violation of antitrust laws. Softdesk divested its own CAD engine, "IntelliCADD," to Boomerang Technology, Inc. The order prohibits the combined firm from reacquiring the IntelliCADD product or any entity that owns or controls it, without prior notice to the Commission, for a 10-year period. In addition, Autodesk is prohibited from interfering with Boomerang’s ability to recruit or hire Softdesk employees who worked on the development of IntelliCADD. (See March 31, 1997 news release for more details on this case; Docket No. C-3756; Commission vote on June 18 to issue the order as final was 5-0.) Staff contact is Joseph Krauss, 202-326- 2713.
The following nine consent orders were negotiated as part of "Operation Waistline," a coordinated, long-term law enforcement and consumer education program regarding misleading and deceptive weight-loss claims. (See March 25, 1997 news release for more details regarding these cases. The Commission votes to finalize the orders were all 5-0.)
- The consent order with KCD Incorporated, KCD Holdings, Inc., and Deerfield Corporation, of Westlake Village and Thousand Oaks, California, and company officers Clark M. Holcomb, Bonnie L. Richards, and Gerald E. Hatto, settles charges in connection with the marketing of "SeQuester," an over-the-counter cellulose-bile product purportedly for weight loss, and fat and cholesterol reduction. The order requires the respondents to have scientific substantiation for claims regarding the benefits or safety of any product or program, including claims that it (1) reduces the body’s absorption of fat or sugar; (2) provides any weight loss benefit, allows consumers to eat high-fat foods without increasing their risk of high cholesterol, clogged arteries, heart disease or other health problems; (3) reduces the risk of these health problems; or (4) can be used safely and beneficially in amounts sufficient to cause diarrhea. The order also bars them from misrepresenting the existence or results of any test or study. Further, it requires KCD, KCD Holdings and Richards to pay $150,000 in redress over one year. (Docket No. C- 3752.) Staff contact is Laureen France, Seattle Regional Office, 206-220-6350.
- Three separate consent orders with (1) Interactive Medical Technologies, Ltd. (IMT), and Effective Health, Inc. (EHI), of Los Angeles, California, and company officers (2) William Pelzer, Jr., and (3) William E. Shell, M.D., settle charges in connection with both the marketing of "Lipitrol," another cellulose-bile product, and the assistance provided to the KCD respondents in marketing SeQuester. The IMT and EHI orders include scientific substantiation requirements and prohibitions on misrepresenta tions similar to those in the KCD order. All three orders bar the respondents from assisting entities that they know or should know are making false, misleading or unsubstantiated claims for any weight loss, fat reduction or cholesterol reduction product or program, and require them to monitor the business practices of certain parties to whom they provide assistance. IMT and EHI must pay $35,000 in redress over a year. Shell must pay $20,000 in redress over one year and post a $1 million performance bond before he markets Lipitrol or any similar product or holds any ownership interest or official position in any business that markets Lipitrol or any similar product; and a $250,000 bond before he markets any weight loss, fat reduction or cholesterol reduction product or program or holds an ownership interest or official position in a business that markets any weight loss or fat or cholesterol reduction product or program. (Docket Nos. IMT/EHI-- C-3751; Pelzer--C-3750; Shell--C-3749.) Staff contact is Laureen France, Seattle Regional Office; 206-220-6350.
- The consent order with Amerifit, Inc., of Bloomfield, Connecticut, settles charges in connection with the marketing of diet supplements sold under the trade names "Fat Burners" and "Fast Burners." The order requires the company to pay $100,000 for disgorgement, and prohibits it from using "Fat Burners" unless it is part of the trade name, "Fat Burners Diet, Exercise and Supplement System," and the material containing that name clearly and prominently makes the following disclosures: "The dietary supplement in this system is for nutritional use only and does not contribute to weight loss or loss of body fat." The order also requires Amerifit to have scientific substan tiation for any claim that a food, drug or dietary supplement will cause weight loss or reduce body fat. (Docket No. C-3747). Staff contact is Justin Dingfelder, 202-326-3017.
- The consent order with 2943174 Canada, Inc., also doing business as United Research Center, Inc., of Montreal, Quebec, and company president Patrice Runner, settles charges in connection with their marketing of the "Svelt-PATCH," a skin patch that purportedly melts away body fat. The consent order requires the respondents to have scientific substantiation for claims that any product or program controls appetite, increases human metabolism, reduces body fat, causes weight loss, causes long-term or permanent weight loss, reduces cholesterol, or provides any weight-related benefit. Scientific substantiation also is required for claims about the benefits or efficacy of any drug or device. Finally, the order prohibits misrepresentations about the existence or results of any test or study. (Docket No. C-3748.) Staff contact is Ronald Waldman, New York Regional Office, 212-264-1242.
- The consent order with Bodywell, Inc., also doing business as Bodywell U.S.A., of New York City, and company officer Gerard Du Passage, settles charges in connection with the marketing of insoles sold as "Slimming Soles" that purportedly cause weight loss by stimulating certain areas of the feet. The order prohibits use of the name "Slim ming Soles" to represent that a product causes weight loss without scientific substantia tion that it does. It also requires the respondents to have scientific substantiation for claims that any product causes significant weight loss, with or without changes in diet or exercise; causes weight loss at any particular rate; or provides weight loss, fat loss, weight regulation, control or maintenance benefit. Further, the order requires testi monials used by the respondents to represent the typical experience of consumers or to clearly and prominently disclose the generally expected results or the fact that consumers should not expect to experience similar results. The order also prohibits misrepresenta tions about the existence or results of any test or study, violations of the FTC’s Mail or Telephone Order Merchandise Rule, and requires them to pay $100,000 in redress. (Docket No. C-3754.) Staff contact is Beth Grossman, 202-326-3019.
- The consent order with Guildwood Direct Limited, also doing business as Intermed Laboratories, of Niagara Falls, New York, settles charges in connection with the adver tising of "Slimming Insoles," shoe insoles purported to cause weight loss by stimulating certain areas of the feet. As in the Bodywell order, this order requires the company to have scientific substantiation for weight-loss related claims for any product, and prohibits the use of the name "Slimming Insoles" to imply without substantiation that any product causes weight loss. Further, the order requires testimonials used by the respondents to represent the typical experience of consumers or to clearly and prominently disclose the generally expected results or the fact that consumers should not expect to experience similar results. It also prohibits Guildwood from representing that Advance Bio/Natural Research Labs is a bona fide, independent research organization, and from misrepre senting the existence or results of any test or study. Finally, it requires Guildwood to pay $40,000 in consumer redress, of which all but $7,500 is suspended. (Docket No. C- 3753.) Staff contact is Beth Grossmam, 202-326-3019.
- The consent order with Dean Distributors, Inc., doing business as Advanced Health Care Systems; Cambridge Direct Sales; and Medibase, of Burlingame and Monterey, California, settles charges in connection with the marketing of low-calorie and very-low- calorie diet programs, including the "Food for Life Weight Management System" and the "Cambridge Diet," through a multi-level distribution system. The order requires the respondents to have substantiation for weight-loss and weight-loss maintenance claims, sets out the standards for the type of evidence required to support various weight-loss maintenance claims, and requires advertisements with maintenance claims to include the statement, "For many dieters, weight loss is temporary." Ads making any claim about the safety of their programs must be accompanied by a clear disclosure about the need for physician monitoring to minimize the potential health risks. (Docket No. C-3755.) Staff contact is Walter Gross, 202-326-3319.
Copies of the documents and news releases referenced above are available from the FTC’s web site at http://www.ftc.gov and also 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 news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
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