J. Walter Thompson USA, Inc.

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The Federal Trade Commission today announced a proposed agreement with J. Walter Thompson USA, Inc., settling charges that it engaged in deceptive practices in connection with the advertising it created for the Jenny Craig weight-loss program. The advertisements at issue contain variations of the claim that nine out of 10 Jenny Craig clients would recommend the Jenny Craig weight-loss program to a friend. The FTC has alleged that J. Walter Thompson lacked substantiation for these claims, and falsely claimed that competent and reliable studies or surveys supported the claims.

J. Walter Thompson, which maintains its principal office in New York, New York, was the exclusive advertising agency for Jenny Craig, Inc. during the time period the challenged ads appeared, beginning in early 1992 and continuing until at least May of 1993. This case represents the fourth time J. Walter Thompson, the nation's second largest advertising agency, has settled FTC charges that the agency misrepresented the results of tests, surveys or studies used in advertising it produced.

The proposed consent agreement to settle these charges, announced today for public comment, would prohibit J. Walter Thompson from claiming that any weight-loss program is recommended, approved, or endorsed by any person, group, or other entity unless it possesses and relies upon competent and reliable evidence, scientific when appropriate, that substantiates the representation. The settlement also prohibits J. Walter Thompson from misrepresenting, with regard to any diet-related food, or any weight-loss or weight-control program, weight-loss product, health or fitness program or exercise equipment, the existence, results, or interpretations of any test, study, or survey.

Finally, the proposed settlement contains various reporting provisions that would assist the FTC in monitoring its compliance.

The Commission vote to approve the proposed consent for public comment was 4-0, with Chairman Robert Pitofsky recused and three Commissioners issuing statements discussing the scope of the order.

Commissioner Mary L. Azcuenaga said in her statement that she believes the order provision prohibiting misrepresentations as to the contents or validity of tests or studies should not be limited to misrepresentations concerning any weight-loss or weight-control program, weight-loss product, health or fitness program, exercise equipment, or diet-related food. "In my view, J. Walter Thompson relied on a clearly flawed study in making its deceptive claims, and it continued to make claims based on this flawed study even after it had received contradictory results from a more reliable study that it had commissioned. J. Walter Thompson also could readily transfer deceptive test result claims to other products, as demonstrated by the fact that J. Walter Thompson has entered into three other consent agreements to settle allegations that it made deceptive claims concerning survey or test results for three disparate products." Azcuenaga also stated that, "Given that J. Walter Thompson's deception appears to have been deliberate and that its deception readily could be transferred to other products, broader product coverage is appropriate."

In a joint statement, Commissioners Roscoe B. Starek, III, and Christine A. Varney said that they also believed, given the circumstances of this case, that a broader order could have been justified. Nonetheless, they said the negotiated order appears appropriate because, among other reasons, "broad product coverage arguably weighs more heavily on an ad agency such as JWT that handles accounts for a diverse assortment of products and services, than on a manufacturer or advertiser offering a limited range of products."

The proposed consent agreement will be published 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 FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an 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. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint, the proposed consent agreement and the statements by Commissioners Azcuenaga, Starek and Varney are available 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 FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials are also available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(FTC File No. 942 3294)

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