Settlement Includes One Million Dollar Judgment
Lane Labs-USA, Inc., Cartilage Consultants, Inc. and their principals have agreed to settle Federal Trade Commission charges that they made unsubstantiated claims about the efficacy of two products -- BeneFin and SkinAnswer - in the prevention, treatment and cure of cancer. According to the FTC, the two companies engaged in a common enterprise to deceptively market BeneFin - a shark cartilage product -- and SkinAnswer - a skin cream - to consumers as cancer treatments. The FTC alleged that in addition to the unsubstantiated efficacy claims, the defendants falsely represented that clinical studies have shown that BeneFin and SkinAnswer are effective in preventing, treating, and curing cancer, and falsely represented that the Food and Drug Administration has evaluated the effectiveness of BeneFin. In separate settlements, both companies would be prohibited from making unsubstantiated health-related claims about any food, drug or dietary supplement. In addition, the proposed settlement with Lane Labs and its president Andrew J. Lane includes a $1,000,000 judgment.
The settlements announced today are part of "Operation Cure.All," an ongoing federal and state law enforcement and consumer education campaign targeting false and unsubstantiated health claims on the Internet. "Many consumers and caregivers dealing with diagnosis of cancer pin their hopes on treatments they find on the Internet," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "This settlement proves yet again that the FTC doesn't tolerate unfounded claims. We urge consumers to check with their physicians before they buy any products to prevent, treat or cure cancer -- or frankly any disease."
To date, the FTC has filed seven "Operation Cure.All" law enforcement actions, sent more than 800 advisory letters to Internet companies making questionable health claims, and distributed tips to consumers on how to spot cyber health fraud. These tips can be found on the Internet at www.ftc.gov/bcp/menu-health.htm.
The FTC's complaint names Lane Labs-USA, based in Allendale, New Jersey, and its president, Andrew J. Lane, and Cartilage Consultants, Inc., based in Short Hills, New Jersey, and its president, I. William Lane. The complaint alleges that Lane Labs manufactured and distributed the two products, and that Cartilage Consultants supplied consumers with information on how to use these products to treat cancer. According to the complaint, the defendants, acting as a common enterprise, advertised, promoted, sold and distributed BeneFin and SkinAnswer to consumers throughout the United States via the Internet and other means. The complaint also alleges that Lane Labs embedded terms such as "non-toxic cancer therapy," "cancer treatment" and "cancer survivor" in its Web site's "metatags," thereby increasing the likelihood that consumers searching the Internet for information about effective cancer treatments would find information about BeneFin, SkinAnswer, and other Lane Labs products.
The FTC alleged that, through advertising and promotional materials, including the Lane Labs Web site metatags, the defendants represented that BeneFin was effective in the prevention, treatment, and/or cure of cancer, and that SkinAnswer was effective in the prevention, treatment, and/or cure of skin cancer, without having adequate scientific substantiation. The FTC also alleged that the defendants falsely represented that BeneFin and SkinAnswer were clinically proven to treat and/or cure cancer, and that the Food and Drug Administration had evaluated the effectiveness of BeneFin.
The FTC has filed two Stipulated Final Orders (one with Lane Labs and Andrew Lane and the other with Cartilage Consultants and William Lane) in settlement of the charges. Both orders would prohibit the defendants, when marketing any food, drug or dietary supplement, from:
- representing that BeneFin or any other shark cartilage product prevents, treats or cures cancer, unless they have evidence to substantiate such claims;
- representing that SkinAnswer, or any other glycoalkaloid product, prevents, treats or cures skin cancer, unless they have evidence to substantiate such claims; or
- making any unsubstantiated health-related claims about any food, drug or dietary supplement.
The orders also would prohibit the defendants from making false claims about the existence, content or results of any tests, studies, or research in connection with the marketing of any food, drug, or dietary supplement, and from misrepresenting that any government agency has evaluated the efficacy or safety of any food, drug, or dietary supplement when marketing such product.
In addition, the order with Lane Labs includes a $1 million judgment, which requires the company to pay $550,000 to the FTC within 10 days after the stipulated order is entered by the court and to use the remaining $450,000 to pay for shark cartilage and a placebo in a clinical study of shark cartilage sponsored by the National Cancer Institute and Lane Labs.
The settlements also contain various record keeping provisions to assist the FTC in monitoring the defendants' compliance.
The Commission vote authorizing staff to file the complaint and stipulated final orders was 5-0, with Commissioner Orson Swindle issuing a separate statement concurring in part and dissenting in part and Chairman Robert Pitofsky and Commissioner Mozelle Thompson issuing a separate statement. According to Commissioner Swindle's statement, although he agrees that spending money on cancer research promotes the general welfare, he does not support allowing Lane Labs to use its assets to fund a clinical trial of shark cartilage. Commissioner Swindle explained that "instead of requiring that Lane Labs pay the entire $1,000,000 judgment into a fund for consumer redress, the Commission allows Lane Labs to use $450,000 of the judgment to pay for a clinical trial that could help substantiate its efficacy claims." The Commission therefore is permitting "an advertiser that abused consumers to use proceeds from its abuse" to pay for testing that the advertiser was legally obligated to conduct before it ever made its claims. "In my view," Commissioner Swindle said, "it is not in the public interest for the Commission to create an incentive for advertisers to violate the law" by not substantiating their claims prior to dissemination.
In their statement, Chairman Pitofsky and Commissioner Thompson said that they "appreciate the concerns raised by Commission Swindle regarding an order provision that allows defendant Lane Labs-USA, Inc. to pay $450,000 to provide shark cartilage for the National Cancer Institute's ("NCI") clinical trial to determine whether shark cartilage is effective in treating cancer. When NCI undertakes a clinical trial, the government funds the study after extensive review but does not typically fund acquisition of the product." In their view, "it is highly unusual - and likely to remain the exception - to direct money to help fund clinical trials." Given the importance of evaluating shark cartilage as a therapy, however, they believe "the public interest is best served by the approach taken here."
The proposed settlements were filed in the U.S. District Court, District of New Jersey in Newark on June 28, 2000 and are subject to court approval.
Bernstein also expressed the agency's appreciation for the assistance of the New Jersey Attorney General's Office and the Office of the U.S. Attorney for the District of New Jersey in its investigation.
NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Final orders have the force of law when signed by the judge.
Copies of the complaint and stipulated final orders will be available shortly. Copies of the news release, Commissioner Orson Swindle's statement, and the statement of Chairman Robert Pitofsky and Commissioner Mozelle Thompson are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); 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 3558)
(Civil Action No.: Not Available at Press Time)
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