ANALYSIS OF PROPOSED CONSENT ORDER
The Federal Trade Commission has accepted an agreement to a proposed consent order from Bogdana Corporation; and Joseph L Gruber and Bogda Gruber, individually and as officers of Bogdana Corporation.
The proposed consent order has been placed on the public record for sixty (60) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreements proposed order.
This matter involves alleged deceptive representations for two dietary supplements: Cholestaway, capsules or wafers purported to lower serum cholesterol; and Flora Source, a powdered supplement purported to replace natural intestinal flora, thereby boosting the immune system and providing other health benefits. Advertisements for the products included 30-minute television infomercials, 30-minute radio infomercials, 60-second television commercials, and catalogs.
According to the FTC complaint, by using the trade name "Cholestaway," and through the advertisements, the respondents made claims that Cholestaway: significantly lowers serum cholesterol levels; significantly lowers serum cholesterol levels without changes in diet; significantly lowers serum cholesterol levels and causes significant weight loss even if users eat foods high in fat, including fried chicken and pizza; substantially reduces or eliminates the bodys absorption of dietary fat; lowers low density lipoprotein cholesterol and improves the high density lipoprotein cholesterol to low density lipoprotein cholesterol ratio; is effective in the treatment of hardening of the arteries and heart disease; causes significant weight loss; causes significant weight loss without changes in diet; significantly reduces blood triglyceride levels; significantly reduces elevated blood pressure; and is scientifically proven to lower serum cholesterol levels and reduce elevated blood pressure significantly; and that testimonials from consumers appearing in the advertisements for Cholestaway reflect the typical or ordinary experience of members of the public who use the product. The complaint alleges that the respondents did not have a reasonable basis for any of these representations at the time they were made.
The complaint also alleges that the respondents misrepresented radio infomercials for Cholestaway to be independent radio programs rather than commercial messages.
The complaint further alleges that the respondents made claims, without a reasonable basis, that Flora Source: replaces the natural intestinal flora that are lost due to illness, prescription drugs or antibiotics, thereby reducing the risk of developing illnesses such as chronic fatigue syndrome (Epstein-Barr syndrome) and other immunosuppression diseases, including AIDS; improves the body's absorption of nutrients, including B vitamins; enhances the body's immune response and is effective in the treatment of immunosuppression diseases, including AIDS; prevents weight gain; and is effective in the prevention or treatment of anorexia and gastrointestinal disorders and symptoms, including food sensitivities, constipation, diarrhea, dyspepsia, abdominal pain, bloating and gas.
The consent order contains provisions designed to prevent the respondents from engaging in similar acts and practices in the future.
Part I of the order prohibits the respondents from making the representations about Cholestaway challenged in the complaint, unless they possess and rely upon competent and reliable scientific evidence that substantiates the representation. Part II of the order contains similar provisions with regard to the challenged representations about Flora Source.
Part III prohibits respondents from making any representation about the efficacy, performance, safety or benefits of any food, dietary supplement or drug unless they possess and rely upon competent and reliable scientific evidence that substantiates the representation.
Part IV prohibits the respondents from using the name "Cholestaway" or any other name that represents that the product will lower serum cholesterol levels unless they have substantiation.
Part V prohibits the respondents from misrepresenting the existence, contents, validity, results, conclusions or interpretations of any test, study, or research.
Part VI prohibits the respondents from representing that the experience represented by a user testimonial or endorsement of the product is the typical or ordinary experience of users of the product unless the representation is substantiated or they disclose what the generally expected results would be or that consumers should not expect the same results.
Part VII prohibits the respondents from disseminating any advertisement that misrepresents that it is not a paid advertisement, and requires disclosures, during television ads fifteen minutes in length or longer and radio ads five minutes or longer, that the program is a paid advertisement.
Part VIII allows the respondents to make representations for any drug that are permitted in labeling for that drug under any tentative final or final Food and Drug Administration ("FDA") standard or under any new drug application approved by the FDA.
Part IX allows the respondents to make representations for any product that are specifically permitted in labeling for that product by regulations issued by the FDA under the Nutrition Labeling and Education Act of 1990.
Parts X through XII and XIV require the respondents to keep copies of advertisements making representations covered by the order; to keep records concerning those representations, including materials that they relied upon when making the representations; to provide copies of the order to certain of the corporate respondents personnel; to notify the Commission of changes in corporate structure; and to file compliance reports with the Commission. Part XV provides that the order will terminate after twenty (20) years under certain circumstances.
Part XIII requires that the Grubers notify the Commission of any change in their business or employment.
The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.