UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

JEANIE ELLER, individually.

FILE NO.

AGREEMENT CONTAINING

CONSENT ORDER

The Federal Trade Commission has conducted an investigation of certain acts and practices of Jeanie Eller, individually ("proposed respondent"). Proposed respondent, having been represented by counsel, is willing to enter into an agreement containing a consent order resolving the allegations contained in the attached draft complaint. Therefore,

IT IS HEREBY AGREED by and between Jeanie Eller, individually, and counsel for the Federal Trade Commission that:

1. Proposed respondent Jeanie Eller, individually or in concert with others, actively participated in the creation and dissemination of program-length television and radio commercials which promote Jeanie Eller’s Action Reading. Her residence is 42828 North 7th Avenue, Phoenix, Arizona 85027.

2. Proposed respondent admits all the jurisdictional facts set forth in the draft complaint.

3. Proposed respondent waives:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a statement of findings of fact and conclusions of law; and

c. All rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pursuant to this agreement.

4. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission, it, together with the draft complaint, will be placed on the public record for a period of sixty (60) days and information about it publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify proposed respondent, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision in disposition of the proceeding.

5. This agreement is for settlement purposes only and does not constitute an admission by proposed respondent that the law has been violated as alleged in the draft complaint, or that the facts as alleged in the draft complaint, other than the jurisdictional facts, are true.

6. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to proposed respondent, (1) issue its complaint corresponding in form and substance with the attached draft complaint and its decision containing the following order in disposition of the proceeding, and (2) make information about it public. When so entered, the order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Delivery of the complaint and the decision and order to proposed respondent by any means specified in Section 4.4 of the Commission's Rules shall constitute service. Proposed respondent waives any right she may have to any other manner of service. The complaint may be used in construing the terms of the order. No agreement, understanding, representation, or interpretation not contained in the order or in the agreement may be used to vary or contradict the terms of the order.

7. Proposed respondent has read the draft complaint and consent order. She understands that she may be liable for civil penalties in the amount provided by law and other appropriate relief for each violation of the order after it becomes final.

Definitions

For purposes of this order, the following definitions shall apply:

  1. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.
  2. Unless otherwise specified, “respondent” shall mean Jeanie Eller, individually and her agents, representatives and employees.
  3. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44.

ORDER

I.

IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of Jeanie Eller Action Reading or any other product or program that provides instruction in any aspect of reading in or affecting commerce, shall not make any representation, in any manner, expressly or by implication:

A. The extent to which individuals who use such product will learn to read, or

B. The success rate of individuals who use such product,

unless, at the time the representation is made, respondent possesses and relies upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates the representation.

II.

IT IS FURTHER ORDERED that respondent Jeanie Eller shall, for three (3) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and

C. All tests, reports, studies, surveys, demonstrations, or other evidence in her possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations.

III.

IT IS FURTHER ORDERED that respondent Jeanie Eller, for a period of five (5) years after the date of issuance of this order, shall notify the Commission of the discontinuance of her current business or employment, or of her affiliation with any new business or employment. The notice shall include respondent's new business address and telephone number and a description of the nature of the business or employment and her duties and responsibilities. All notices

required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

IV.

IT IS FURTHER ORDERED that respondent Jeanie Eller shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which she has complied with this order.

V.

This order will terminate twenty (20) years from the date of its issuance, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years;

B. This order's application to any respondent that is not named as a defendant in such complaint; and

C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided, further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

Signed this day of ______, 1998

JEANIE ELLER
individually

LEWIS ROSE
Arent Fox Kintner Plotner & Kahn
1050 Connecticut Ave. N.W.
Washington, D.C. 20036-5339
(202) 857-6012
Attorney for Respondent

RUSSELL W. DAMTOFT
Counsel for the Federal Trade Commission

MARY ELIZABETH TORTORICE
Counsel for the Federal Trade Commission

CHARULATA B. PAGAR
Counsel for the Federal Trade Commission

APPROVED:

C. STEVEN BAKER
Director
Chicago Regional Office

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

JEANIE ELLER, individually.

DOCKET NO.

COMPLAINT

The Federal Trade Commission, having reason to believe that Jeanie Eller, individually (“respondent”), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent Jeanie Eller has manufactured, advertised, offered for sale, sold, and distributed products to the public, including Jeanie Eller’s Action Reading. Individually or in concert with others, she participated in the acts or practices alleged in this complaint. Her residence is 42828 North 7th Avenue, Phoenix, Arizona 85027.

2. Respondent entered into an agreement with Mega Systems, Inc., a corporation which creates and distributes program-length radio and television commercials which run for 30 minutes or less and fit within normal radio and television broadcasting time slots. The television commercials were and are broadcast on network, independent and cable television stations throughout the United States. The radio commercials were and are broadcast on network and independent radio stations throughout the United States. In at least one of Mega Systems, Inc.’s program-length television and radio commercials, respondent acts as the guest and promotes Jeanie Eller’s Action Reading.

3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

4. Respondent has created and disseminated advertisements for Jeanie Eller’s Action Reading, including but not necessarily limited to the attached Exhibits A and B. These advertisements contain the following statements:

A. Trudeau: “According to my guest, Jennie Eller, every single person -- if they can see, hear and talk -- can learn to read, guaranteed. She also claims that her revolutionary approach to teaching reading is easy, quick and works 100 percent of the time.”

*****

Eller: “That is the program I took back. We started using it in the Anchorage School District. Every child that went through it learned to read.”

*****

“And when you go through this program, you start at the beginning and you take every logical step right through it. And when you come out, you are a fluent, independent reader. And I’ve put my 30 years of teaching credibility on the line. It absolutely is guaranteed to work.”

*****

“[B]ut any child that you show them how that code works, you can’t stop them from reading. They crack that code. And that code is the key.”

*****

Trudeau: “But you’re talking about this secret code. The government says -- you were mentioning to me -- that teaches (sic) certain kids just can’t read, and you’re saying that’s hogwash.”

Eller: “It is. It’s absolute hogwash. I’ve been teaching for 30 years and I’ve never had anyone not learn to read.”

Trudeau: “Because I just (sic) watching a show the other day on -- on -- on TV and they were saying, this guy’s trying to read. He’s tried -- he tried a phonics program himself. He -- he still can’t read. He’s frustrated. He thinks he’s dumb. And they said -- they made the statement, the only way he can read is by hard, hard work, and he still may never learn how to read.”

Eller: “No, that is absolutely not true, and I hope he’s watching this show, because if he’ll get this program, I guarantee you he’ll learn to read.”

*****

“[I]f you tell them what the words are, they know those words. They speak those words. The people that I taught to read on the Oprah Show, as soon as they could decode, decipher the newspaper, they knew those words. They were articulate people. They spoke the language. They understood the language. They just could not decipher the language.”

*****

“Absolutely, because it not only teaches the decoding, the phonics part, it teaches comprehension.”

*****

B. For Adults

****

Easier and quicker for adults to learn, because most already know the vocabulary - they just need to learn how to “decode” written words and sentences.

*****

Most people can complete the entire program and learn to read within 4-6 weeks.

*****

1. How can it improve comprehension?

Even though we’ve heard a lot of words before in conversation, a person who can’t read wouldn’t recognize them. Action Reading teaches you how to read words for their meaning. (It’s like putting a persons (sic) face to their name, when you have only spoken to them on the telephone.)

*****

6. Does Jeanie guarantee that she can teach anyone to read?

Action Reading can teach anyone who can see, hear, think and talk to read...

*****

14. How does it work?

Jeanie’s proven, phonics based method incorporates all of the learning senses through art, games, body movements, and music to create an active and entertaining experience that doesn’t seem like work.

Learning to read has been compared to cracking a code. Once you know the secret it’s easy to decode a sentence. Action Reading teaches the sounds and patterns of our language and how to use them for decoding. (Exhibit B; Telephone Sales Script.)

5. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that Jeanie Eller’s Action Reading is successful in teaching reading 100% of the time.

6. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that she possessed and relied upon a reasonable basis that substantiated the representation set forth in Paragraph 5, at the time the representation was made.

7. In truth and in fact, respondent did not possess and rely upon a reasonable basis that substantiated the representation set forth in Paragraph 5, at the time the representation was made. Therefore, the representation set forth in Paragraph 6 was, and is, false or misleading.

8. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Sections 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this day of _____, 1998 , has issued this complaint against respondent.

By the Commission.

Donald S. Clark
Secretary

SEAL

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from respondent Jeanie Eller.

The proposed consent order has been placed on the public record for sixty (60) days for reception 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 and take other appropriate action or make final the agreement's proposed order.

This matter concerns success claims made regarding Jeanie Eller’s Action Reading, a home-study phonetics program, promoted by respondent. The Commission's complaint charges that respondent, in concert with Mega Systems, Inc., made unsubstantiated claims that Jeanie Eller’s Action Reading is successful in teaching reading 100% of the time. In fact, the complaint alleges, Jeanie Eller’s Action Reading is not successful in teaching reading 100% of the time.

The proposed consent order contains provisions designed to remedy the violations charged and to prevent the respondent from engaging in similar acts and practices in the future. The proposed order extends to Jeanie Eller Action Reading or any other product or program that provides instruction in any aspect of reading.

Part I of the proposed consent order prohibits the respondent from representing the extent to which individuals who use such product will learn to read or the success rate of individuals who use such product, unless the representation is substantiated.

The remaining parts of the proposed consent order require the respondent to maintain promotional and substantiation materials related to the claims covered by the order, to notify the Commission of any changes in her employment, and to file one or more compliance reports.

The purpose of this analysis is to facilitate public comment on the proposed consent order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.