Two Florida companies and three individuals who marketed and sold laundry detergent substitutes have settled Federal Trade Commission charges that they made false and unsubstantiated advertising claims for their two products -- "The Laundry Solution" and "The SuperGlobe." According to the FTC's complaint, the defendants falsely touted the products as effective substitutes for laundry detergents that not only clean laundry but do so without polluting the earth's waterways by emitting a negative charge or by means of "structured water" or "IE crystals." In three separate settlements, TradeNet Marketing, Inc., L.W. Cooper, Erwin Richard Annau, Top Marketing Business Consulting, Inc. and Alberto Guerrero would be prohibited from claiming that The Laundry Solution, The SuperGlobe, or any similar product cleans as well as conventional laundry detergent and would be required to pay $155,000 in satisfaction of monetary judgments. These funds are to be divided equally among the FTC and eleven states that participated in this action: Arizona, Arkansas, Hawaii, Idaho, Illinois, Michigan, Missouri, Nebraska, Nevada, New York, and Oklahoma.
"These companies appealed to consumers' desire to help the environment and save some money," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Today, on Earth Day, many consumers will be looking for green products and may believe these products are better for the environment. Before tossing out their tried and true detergents, consumers should think twice. Tests show that these gadgets do little more than clean out your wallet. At best, they're marginally better than washing clothes in hot water alone, and not as effective as washing them with laundry detergent. At worst, the products are completely useless."
According to the FTC's complaint detailing the charges, the defendants manufactured, marketed, and distributed The Laundry Solution -- a small plastic ball filled with allegedly "structured water" -- and The SuperGlobe -- a ball divided into two parts, one part of which contained a blue liquid that TradeNet marketed as containing "IE crystals" or "IE structures." Both products sold for approximately $80. The defendants advertised on the Internet, in promotional materials, and in face-to-face solicitations. Cooper, Guerrero and Annau formed TradeNet, developed the products' promotional materials, and sold the products to purchasers; Annau formed Top Marketing to develop a multilevel marketing structure that sold the products through a network of distributors. Their promotional materials included statements such as "The Laundry Solution replaces detergent" or "This is the 21st Century detergent replacement."
The FTC alleged that through the use of statements made in their ads, the defendants made false claims about The Laundry Solution's efficacy as compared to conventional laundry detergent; the way in which The Laundry Solution cleans clothes; the chemical contents of both The Laundry Solution and The SuperGlobe; and the available scientific evidence regarding efficacy, method of action, and active ingredients of both products. The complaint also alleged that the defendants did not have adequate substantiation for the claims they made about both products' environmental attributes. In addition, according to the complaint, testimonials that appeared to reflect the typical or ordinary experience of users of both products were misleading.
The three separate settlements, which require the court's approval to become binding, are with L.W. Cooper and TradeNet Marketing; Erwin Richard Annau and Top Marketing Business Consulting; and Alberto Guerrero. The proposed settlements, in addition to prohibiting defendants from making the efficacy claims alleged in the complaint about The Laundry Solution, The SuperGlobe, or any substantially similar product, would require the defendants to have substantiation for claims about any product's comparative or absolute efficacy, benefits, mechanism of action, or performance. The settlements would also prohibit the defendants from misrepresenting the results of any tests, studies or research and would prohibit them from assisting others in performing the activities prohibited by the orders.
Moreover, the proposed settlements would bar the misleading use of testimonials and would require any atypical testimonial to be accompanied by a disclosure that the result is not typical or a statement as to what the generally expected result is for the products at issue.
In their individual settlements, TradeNet and Cooper have agreed to jointly pay a monetary judgment of $100,000, with an avalanche clause in the amount of $300,000, if the financial disclosure information given to the FTC proves to be false. Top Marketing and Annau have agreed to pay a monetary judgment of $30,000, with an avalanche clause in the amount of $100,000. Guerrero has agreed to pay a monetary judgment of $25,000 with an avalanche clause of $50,000.
The FTC has published a new Consumer Alert, "Wash Daze: Laundry Gadgets Won't Lighten the Load," that cautions consumers to get the facts before throwing away their regular laundry detergent. In addition, the FTC, along with the Environmental Protection Agency, has published a brochure for consumers, "Sorting Out 'Green' Advertising Claims," to help them understand various environmental marketing claims.
The Commission vote to authorize staff to file the complaint and proposed settlements was 4-0. The complaint and stipulated final judgments were filed in the U.S. District Court for the Middle District of Florida, Tampa Division, on April 21, 1999.
NOTE: These consent judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the news release and the consumer brochures are available from the FTC's web site at http://www.ftc.gov and copies of the consent judgments will be available shortly from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. 982 3018)
(Civil Action No. 99-944-CIV-T-24B)
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Constance M. Vecellio
Pablo M. Zylberglait