The Federal Trade Commission has given final approval to a consent agreement with William J. Santamaria and his firms, Taleigh Corporation and Choice Diet Products, Inc. Taleigh and Choice marketed the FormulaTrim 3000, MegaLoss 1000, and MiracleTrim diet pills, and the Nicotain Stop Smoking Patch. The consent agreement settles charges that the respondents made a host of false and unsubstantiated claims for their products, used consumer endorsements deceptively, and charged consumers' credit cards and debited their checking accounts when not authorized to do so by the consumers or for larger amounts than the consumers had authorized. The Commission's action makes the consent order provisions binding on the respondents.
All three respondents are based in Boca Raton, Florida (they are collectively referred to below as Choice). Choice advertised the products in newspaper tabloids and on television.
The final order prohibits the respondents from falsely claiming that any weight-loss product with phenylpropanolamine (PPA) is new or unique, results in rapid weight loss, causes substantial weight loss without diet or exercise, causes a user to burn more fat than certain specified types of exercise or than prolonged exercise activity, or that it contains an ingredient formerly available only through doctors. Claims that Nicotain or any similar product enables users to stop smoking easily, or that it works through a mechanism much like that in a prescription stop-smoking patch, also are prohibited as false. In addition, the settlement prohibits the respon- dents from misrepresenting the nature or operating mechanism of any smoking deterrent or stop-smoking product.
The order also requires the respondents to have competent and reliable scientific evidence to back up representations that a weight-loss product causes, helps cause or helps main- tain weight loss; that it helps a user to stop smoking easily; or regarding the performance, benefits, efficacy or safety of any weight-loss or stop-smoking product, or for any food, dietary supplement, drug, or device. The respondents also are required to disclose in ads that make weight-loss claims that dieting, exercise or both are required to lose weight, unless they have scientific substantiation demonstrating that their product is effective without dieting or exercise.
In addition, the order prohibits Choice from misrep- resenting that any product is new or unique, the existence or conclusions of any test or study, or that an endorsement for any product represents the typical experience of people who use it. They also are required to disclose any material connection between them and any endorser.
Further, the settlement prohibits Choice from charging consumers' credit cards or debiting their checking accounts except as affirmatively authorized, and from misrepresenting, or not fully disclosing the conditions of, any refund policy. Additionally, it prohibits the respondents from violating the Truth in Lending Act or the FTC's Mail/Telephone Order Rule, which governs when orders must be shipped and sets out con- sumers' cancellation and refund rights.
Finally, the settlement requires Santamaria to post a $300,000 performance bond, or to place that amount in an escrow account, before marketing any weight-loss product or smoking deterrent or cessation product in the future. The money would be used for redress to consumers or for disgorge- ment should he violate the order or the FTC Act in the future.
The consent agreement was announced for a public-comment period on March 14. The Commission vote to issue it in final form occurred on June 16 and was 4-0, with Chairman Robert Pitofsky not participating.
NOTE: A consent agreement is for settlement purposes only and does not constitute 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 by the respon- dents. Each violation of such an order may result in a civil penalty of up to $10,000.
A news release summarizing the complaint and consent agreement was issued at the time the Commission accepted the consent agreement for public comment. Copies of that release and of the complaint and final order are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. 912 3232)
(Docket No. C-3587)