Orders Defendants To Pay Up To $87 Million
The federal district court in Chicago has ruled for the Federal Trade Commission in its case against the marketers of the Q-Ray ionized bracelet following a bench trial earlier this summer. In a decision issued September 8, the court found that advertising by Que Te (Andrew) Park and his companies was false and misleading in representing that the bracelet provides immediate, significant, and/or complete pain relief, and that scientific tests proved that it relieves pain.
The court also found that the defendants deceptively advertised their refund policy. Although the court has not yet issued a final judgment order, it stated that it will require the defendants to turn over $22.5 million in net profits and pay up to $87 million in refunds to consumers. The court also stated that it will impose a permanent injunction to prevent them from engaging in such deceptive conduct in the future.
“This is an egregious example of false advertising," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. "These defendants lied about the so-called medicinal benefits of their product, and deceived people in pain. The judgment against them is a real victory for all consumers."
The FTC filed the case in May 2003, alleging that the defendants had misrepresented that the Q-Ray ionized bracelet “provides immediate significant or complete relief from various types of pain, including, but not limited to, musculoskeletal pain, sciatic pain, persistent headaches, sinus problems, tendinitis, or injuries,” and that “tests prove that the Q-Ray bracelet relieves pain.” The FTC also alleged that they falsely represented that defendant QT Inc.’s 30-day satisfaction guarantee permits "consumers to readily obtain a full refund of the purchase price if they return the Q-Ray bracelet within 30 days.”
The court found that defendants QT Inc., Q-Ray Company, and Bio-Metal, Inc., located in Illinois, and their owner, Que Te Park, also known as Andrew Q. Park, had engaged in misleading and false advertising in violation of Sections 5 and 12 of the FTC Act. The court did not find defendant Jung Joo Park (Que Te Park’s wife) liable.
From September 2000 through June 2003, the Q-Ray bracelet was advertised on infomercials shown on cable TV channels, such as the Golf Channel, the Learning Channel, USA Network, and the Discovery Channel, as well as on Internet Web sites and at trade shows. Retail prices for the bracelets ranged from $49.95 to $249.95 – a mark-up of over 650 percent, according to the court’s findings. Net sales to consumers, during the time the infomercials ran, were $87 million.
The court found that pain relief claims of the type made by the defendants should be supported by competent and reliable scientific evidence consisting of at least one well-conducted, placebo-controlled, randomized, double-blind clinical study. The court held that the FTC met its burden of proof in establishing that the defendants did not have or rely upon any such data. The court also ruled that the claims were not supported even if some studies showed that the bracelets had a placebo effect, noting that, for a placebo to work, “the consumer must be duped” and that “the advertiser must trick the customer into believing that an inherently ineffective bracelet actually relieves pain.”
The defendants’ advertising described the Q-Ray bracelet as “ionized,” but the court found no evidence that the bracelet has any properties different from any other bracelet made of the same metals. Instead, it stated, “The Q-Ray bracelet was marketed as an ‘ionized bracelet’ as part of a scheme devised by Que Te Park and the corporate defendants to defraud consumers out of millions of dollars by preying on their desire to find a simple solution to alleviate their physical pain.”
The court also concluded that the defendants promoted the relationship between the Q-Ray bracelet and Eastern medicine as a marketing device, “which is a disservice to the practitioners of this ancient art.” The court found that Que Te Park had made up the theory and that “he had no testing or studies to support this theory and that he testified that anyone can find the theory on Google.” The court found that, “Defendants have sought to clothe the Q-Ray bracelet with the credibility of Traditional Chinese Medicine and thereby deceive consumers.”
The court has advised that it will require the defendants to pay a minimum of $22.5 million, representing their profits from January 2000 to June 2003. They also will be required to provide up to an additional $64.5 million in refunds to consumers who bought the bracelets during that time period. The court will issue a final judgment on September 28, 2006.
The FTC has set up a hotline number, 202-326-2063, for consumers with questions about the court’s opinion and order. Details about the refund program will be made available as they become known.
Copies of the decision and minute order 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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. 032-3011)
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