FOR IMMEDIATE RELEASE: April 17, 1990 FTC, TEXAS CHARGE "INFOMERCIALS" FOR HEALTH-CARE PRODUCTS WERE DECEPTIVE; CHARGES SETTLED UNDER CONSENT AGREEMENT REQUIRING $1.5 MILLION IN CONSUMER REDRESS The Federal Trade Commission has charged Twin Star Produc- tions, Inc. and six Twin Star officers with making false and unsubstantiated claims in connection with program-length commer- cials for a weight-loss product, a baldness product, and an impotence product, and with falsely representing that their program-length commercials are something other than paid commercial advertising. Texas Attorney General Jim Mattox also announced an agreed order against Twin Star and one officer settling similar charges. Under the FTC consent agreement announced today for public comment, the company and officers are prohibited from making unsubstantiated efficacy claims for any product or service and have agreed not to misrepresent that a paid advertisement is an inde- pendent program. The agreement also requires Twin Star and five of the six individuals to pay a total of $1.5 million in consumer redress. "Today's settlement, the first in which the Commission has obtained consumer redress from an infomercial marketer, sends a signal to the booming infomercial industry that deceptively formatted programming will not be tolerated," said Barry J. Cutler, Director of the Bureau of Consumer Protection. "Program-length commercials, known as 'infomercials,' are a new and rapidly growing type of television advertising, which often mimic the format of genuine TV talk show or investigative news pro- grams," Cutler said. "They share many of the features of a regular TV show: they are typically the same length, 30 minutes; some claim to be part of a series; some have a host, often a celebrity; and others present reports by 'investigative reporters.' And just like genuine TV shows, they 'break away' to realistic looking commercials for the product being featured." "There's nothing illegal about advertisers paying for commer- cials to sell products," Cutler continued. "The problem is when it is designed so the consumer can't tell whether it is a genuine TV show or a paid commercial." The FTC and Texas both cited infomercials advertising the EuroTrym Diet Patch, a weight-loss product; Foliplexx, a baldness product; and Y-Bron, an impotence product. The FTC's complaint charges that claims for these products are false, misleading and deceptive. "This consent agreement also demonstrates the Commission's continuing concern about false claims for diet and other health- related products. The three products here are often sold through fraudulent misrepresentations. This settlement demonstrates the Commission's continuing determination to stop deception in two important areas -- deceptive claims for health products and deceptive program-length commercials," said Cutler. Under the FTC consent agreement, Twin Star and the six individuals agreed not to disseminate the three infomercials or another 30-minute advertisement for the book How to Make Money By Doing Business With the Government. They are also prohibited from misrepresenting that their commercials are independent programs and not paid advertising. In any commercials 15 minutes long or long- er, respondents must include one or more disclaimers noting that the program is a paid advertisement for the particular product or service being advertised. Under the terms of the FTC agreement, Twin Star will pay one million dollars and Jerald H. Steer, Allen R. Singer, Douglas E. Gravink, Peter Claypatch, and Steven L. Singer will pay a total of $500,000 in consumer redress over an 18-month period. Judith P. Singer, who is also named in the complaint and is subject to the injunctive provisions of the agreement, is not required to pay redress. They are all based in Scottsdale, Ariz. The investigation was handled by the FTC's Seattle Regional Office. Charles A. Harwood, Director of the Office, also expressed appreciation for the substantial and valuable assistance provided by the Office of the Attorney General of Arizona, and the Office of the Attorney General of Texas. The Texas settlement with Twin Star was filed in the District Court of Dallas County, Texas. Inquiries concerning that settle- ment should be directed to Craig Jordan, Assistant Attorney General, at 214-742-9698. A consent agreement is for settlement purposes only and does not constitute admission of any 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 up to $10,000. The consent agreement will appear 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 Office of the Secretary, FTC, 6th St. and Pennsylvania Ave., N.W., Washington, D.C. 20580. Copies of the consent agreement, the complaint, and an analysis of the agreement are available from the FTC's Public Reference Branch, Room 130, same address; 202-326-2222; TTY 202- 326-2502. # # # PRESS CONTACT: Brenda A. Mack, Office of Public Affairs, 202-326-2182 STAFF CONTACT: Charles A. Harwood, Seattle Regional Office, 206-442-4656 Patricia A. Hensley, Seattle Regional Office, 206-442-4656 (Twin)