[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4046]
[[Page Unknown]]
[Federal Register: February 23, 1994]
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FEDERAL TRADE COMMISSION
[Dkt. 9251]
Synchronal Corporation, et al.; Proposed Consent Agreement With
Analysis To Aid Public Comment
agency: Federal Trade Commission.
action: Proposed consent agreement.
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summary: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, Thomas L. Fenton, a former officer of
Synchronal Corporation, from disseminating a purported baldness cure
infomerical, for a product called Omexin; from misrepresenting that any
commercial is an independent program; and from making unsubstantiated
claims for any food, drug or device in the future.
dates: Comments must be received on or before April 25, 1994.
addresses: Comments should be directed to: FTC/Office of the Secretary,
room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
for further information contact: Lisa Kopchik, FTC/S-4002, Washington,
DC 20580. (202) 326-3139.
supplementary information: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 3.25(f) of
the Commission's Rules of Practice (16 CFR 3.25(f)), notice is hereby
given that the following consent agreement containing a consent order
to cease and desist, having been filed with and accepted, subject to
final approval, by the Commission, has been placed on the public record
for a period of sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order To Cease and Desist
In the matter of:
Synchronal Corporation, Synchronal Group, Inc., Smoothline
Corporation, and Omexin Corporation, corporations,
Ira Smolev, individually and as a former officer and director of
Synchronal Corporation and Synchronal Group, Inc.,
Richard E. Kaylor, individually and as a former officer and director
of Synchronal Corporation, Synchronal Group, Inc., Smoothline
Corporation, and Omexin Corporation,
Thomas L. Fenton, individually and as a former officer and director
of Synchronal Corporation and Synchronal Group, Inc., and
Ana Blau a/k/a Anushka, and Steven Victor, M.D. individually.
The agreement herein, by and between Thomas L. Fenton, individually
and as a former officer and director of Synchronal Corporation and
Synchronal Group, Inc., hereinafter sometimes referred to as
respondent, and his attorneys, and counsel for the Federal Trade
Commission, is entered into in accordance with the Commission's Rule
governing consent order procedures. In accordance therewith the parties
hereby agree that:
1. Respondent Thomas L. Fenton is or was at relevant times herein
an officer and director of Synchronal Corporation and Synchronal Group,
Inc. He formulated, directed, and controlled the policies, acts and
practices of said corporations. His home address is 160 East 38th
Street, New York, New York 10036.
2. Respondent has been served with copies of the complaint and the
amended complaint issued by the Federal Trade Commission charging him
with violations of Sections 5(a) and 12 of the Federal Trade Commission
Act and the provisions of the Postal Reorganization Act, 39 U.S.C.
3009, and has filed an answer to said complaint denying said charges.
3. Respondent admits all the jurisdictional facts set forth in the
Commission's complaint and amended complaint in this proceeding.
4. Respondent waives:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
(d) Any claim under the Equal Access to Justice Act.
5. This agreement shall not become a part of the public record of
the proceeding unless and until it is accepted by the Commission. If
this agreement is accepted by the Commission it will be placed on the
public record for a period of sixty (60) days and information in
respect thereto publicly released. The Commission thereafter may either
withdraw its acceptance of this agreement and so notify the respondent,
in which event it will take such action as it may consider appropriate,
or issue and serve its decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by respondent of facts, other than
jurisdictional facts, or of violations of law as alleged in the
complaint and the amended complaint issued by the Commission.
7. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of 3.25(f) of the Commission's
Rules, the Commission may without further notice to respondent, (1)
issue its decision containing the following order to cease and desist
in disposition of the proceeding, and (2) make information public in
respect thereto. When so entered, the order to cease and desist shall
have the same force and effect and may be altered, modified or set
aside in the same manner and within the same time provided by statute
for other orders. The order shall become final upon service. Delivery
by the U.S. Postal Service of the decision containing the agreed-to
order to respondent's address as stated in this agreement shall
constitute service. Respondent waives any right he might have to any
other manner of service. The complaint and the amended complaint may be
used in construing the terms of the order, and no agreement,
understanding, representation, or interpretation not contained in the
order or in the agreement may be used to vary or contradict the terms
of the order.
8. Respondent has read the complaint, the amended complaint and the
order contemplated hereby. He understands that once the order has been
issued, he will be required to file one or more compliance reports
showing that he has fully complied with the order. Respondent further
understands that he may be liable for civil penalties in the amount
provided by law for each violation of the order after it becomes final.
Order
For the purposes of this Order:
1. ``Competent and reliable scientific evidence'' shall mean tests,
analyses, research, studies, or other evidence based on the expertise
of professionals in the relevant area that has been conducted and
evaluated in an objective manner by persons qualified to do so, using
procedures generally accepted by others in the profession to yield
accurate and reliable results.
2. ``Video advertisement'' shall mean any advertisement intended
for dissemination through television broadcast, cablecast, home video,
or theatrical release.
I
It is ordered, That respondent Thomas L. Fenton, individually and
as a former officer and director of Synchronal Corporation and
Synchronal Group, Inc., and respondent's agents, representatives and
employees, directly or through any partnership, corporation,
subsidiary, division or other device, in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale or
distribution of any product or service in or affecting commerce, as
``commerce'' is defined in the Federal Trade Commission Act, do
forthwith cease and desist from selling, broadcasting or otherwise
disseminating, or assisting others to sell, broadcast or otherwise
disseminate, in part or in while, the program-length television
advertisement for Omexin described and identified in the Complaint as
``Can You Beat Baldness?''
II
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., and respondent's agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, do forthwith cease
and desist from:
A. Representing, directly or by implication, in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale or
distribution of Omexin or any other substantially similar hair loss
treatment product or service in or affecting commerce, as ``commerce''
is defined in the Federal Trade Commission Act, that:
1. Such product or service contains an ingredient that can or will
curtail hair loss for a large majority of balding men and women;
2. Such product or service contains an ingredient that can or will
promote the growth of significant numbers of new, pigmented terminal
hairs where hair has previously been lost for a large majority of men
and women;
3. Such product or service contains an ingredient that has been
scientifically proven to curtail hair loss for a large majority of men
and women;
4. Such product or service contains an ingredient that has been
scientifically proven to promote the growth of new, pigmented terminal
hairs where hair has previously been lost for a large majority of men
and women; or
5. Such product or service has successfully curtailed hair loss and
promoted new hair growth for thousands of balding men and women.
For purposes of this Order a ``substantially similar hair loss
treatment product or service'' shall be defined as any product or
service that is advertised or intended for sale over-the-counter to
treat, cure or curtail hair loss and which contains omentum or any
extract thereof.
B. Representing, directly or by implication, in connection with the
advertising, packaging, labeling, promotion, offering for sale, sale or
distribution of any other product or service in or affecting commerce,
as ``commerce'' is defined in The Federal Trade Commission Act, that:
1. The use of the product or service can or will prevent, cure,
relieve, reverse, or reduce loss of hair;
2. The use of the product or service can or will promote the growth
of hair where hair has already been lost;
3. The product or service is an effective remedy for hair loss in a
substantial number of cases; or
4. Any test or study establishes that the product or service
relieves, cures, prevents or reverses hair loss,
unless such representation is true and unless, at the time of making
such representation, respondent possesses and relies upon competent and
reliable scientific evidence that substantiates the representation.
C. Advertising, packaging, labeling, promoting, offering for sale,
selling, or distributing any product that is represented as promoting
hair growth or preventing hair loss, unless the product is the subject
of an approved new drug application for such purpose under the Federal
Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq., provided that,
this subpart shall not limit the requirements of Part II.A and B
herein.
III
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., and respondent's agents,
representatives, and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the advertising, packaging, labeling, promotion, offering for sale,
sale or distribution of any product or service in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from misrepresenting, in any manner,
directly or by implication, the contents, validity, results,
conclusions, or interpretations of any test or study.
IV
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., and respondent's agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the advertising, packaging, labeling, promotion, offering for sale,
sale or distribution of any product or service in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from making any representation,
directly or by implication, regarding the performance, benefits,
efficacy or safety of any food, drug or device, as those terms are
defined in Section 15 of the Federal Trade Commission Act, 15 U.S.C.
55, unless, at the time of making such representation, respondent
possesses and relies upon competent and reliable scientific evidence
that substantiates the representation.
V
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., and respondent's agents,
representatives, and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the advertising, packaging, labeling, promotion, offering for sale,
sale or distribution of any product or service in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from creating, producing, selling,
or disseminating:
A. Any advertisement that misrepresents, directly or by
implication, that it is not a paid advertisement;
B. Any commercial or other video advertisement fifteen (15) minutes
in length or longer or intended to fill a broadcasting or cablecasting
time slot of fifteen (15) minutes in length or longer that does not
display visually, in a clear and prominent manner and for a length of
time sufficient for an ordinary consumer to read, within the first
thirty (30) seconds of the commercial and immediately before each
presentation of ordering instructions for the product or service, the
following disclosure:
The program you are watching is a paid advertisement for [the
product or service].
Provided that, for the purposes of this provision, the oral or visual
presentation of a telephone number or address for viewers to contact to
place an order for the product or service shall be deemed a
presentation of ordering instructions so as to require the display of
the disclosure provided herein.
VI
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., and respondent's agents,
representatives and employees, directly or through any partnership,
corporation, subsidiary, division or other device, in connection with
the advertising, packaging, labeling, promotion, offering for sale,
sale or distribution of any product or service in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from representing, directly or by
implication, that any endorsement (as ``endorsement'' is defined in 16
CFR 255.0(b)) of the product or service represents the typical or
ordinary experience of members of the public who use the product or
service, unless such is the fact.
VII
It is further ordered, That respondent Thomas L. Fenton,
individually and as a former officer and director of Synchronal
Corporation and Synchronal Group, Inc., shall, for three (3) years
after the date of the last dissemination to which they pertain,
maintain and upon request make available to the Federal Trade
Commission or its staff for inspection and copying:
A. All materials that were relied upon by respondent in
disseminating any representation covered by this order; and
(B) All reports, tests, studies, surveys, demonstrations or other
evidence in respondent's possession or control that contradict,
qualify, or call into question such representation, or the basis upon
which respondent relied upon for such representation, including
complaints from consumers.
VIII
It is further ordered, That respondent Thomas L. Fenton shall, for
a period of ten (10) years from the date of entry of this Order, notify
the Commission within thirty (30) days of the discontinuance of his
present business or employment and of his affiliation with any new
business or employment. Each notice of affiliation with any new
business or employment shall include the respondent's new business
address and telephone number, current home address, and a statement
describing the nature of the business or employment and his duties and
responsibilities. The expiration of the notice provision of this Part
VIII shall not affect any other obligation arising under this Order.
IX
It is further ordered, That respondent shall, within sixty (60)
days after service of this Order, and at such other times as the
Federal Trade Commission may require, file with the Commission a
report, in writing, setting forth in detail the manner and form in
which he has complied with this Order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted an agreement to a
proposed consent order from Thomas L. Fenton.
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement and take other appropriate action or make
final the agreement's proposed order.
This matter concerns advertising and promotional practices related
to the sale of the Omexin System for Hair (``Omexin''), which was
advertised on the ``Can You Beat Baldness?'' infomercial.
The Commission's Amended Complaint, issued on October 13, 1993,
charges that respondent Fenton falsely represented that Omexin will
curtail hair loss, will promote hair growth, is scientifically proven
to curtail hair loss and promote hair growth, and has successfully
curtailed hair loss and promoted hair growth for thousands of balding
men and women.
According to the allegations of the Amended Complaint, the
infomercial was falsely represented to be independent programming,
rather than a paid advertisement. The Amended Complaint further charges
that consumer testimonials on the infomercial were falsely represented
to reflect the typical experience of members of the public who used the
product.
The proposed consent order contains provisions which are designed
to remedy the advertising violations charged and to prevent the
respondent from engaging in similar acts and practices in the future.
Part I of the proposed order prohibits respondent from disseminating
the ``Can You Beat Baldness?'' infomercial.
With regard to Omexin or any substantially similar product, Part
II.A prohibits Fenton from making the claims alleged in the Complaint
to be false. Part II.B prohibits him from representing that any product
or service will prevent or reduce hair loss, will promote hair growth,
is an effective remedy for hair loss, or is proven through any test or
study to relieve hair loss unless the claim is true and substantiated
by competent and reliable scientific evidence. Part II.C forbids this
respondent from advertising or promoting any hair loss product unless
it is the subject of an approved New Drug Application by the Food and
Drug Administration.
Part III of the proposed order prohibits respondent from
misrepresenting the validity, results, conclusions, or interpretations
of any test or study. Part IV prohibits him from making any
representation about the performance, benefits, efficacy, or safety of
any food, drug, or device unless he possesses competent and reliable
scientific evidence that substantiates the representation.
Part V.A of the proposed order prohibits Fenton from disseminating
any advertisement that misrepresents that it is not a paid
advertisement. Part V.B requires that any advertisement fifteen minutes
or longer display visually, in a clear and prominent manner and for a
length of time sufficient for an ordinary consumer to read, within the
first thirty seconds of the commercial and immediately before each
presentation of ordering instructions, the following disclosure: ``The
program you are watching is a paid advertisement for [the product or
service].'' Part V.B specifies that an oral or visual presentation of
an ordering address or telephone number shall also require the display
of this disclosure.
Under the terms of Part VI, Fenton may not represent that any
endorsement of a product or service represents the typical or ordinary
experience of members of the public, unless such is the fact.
Parts VII, VIII, and IX relate to respondent's obligation to
maintain records, notify the Commission of changes in business or
employment status, and file compliance reports with the Commission.
The purpose of this analysis is to facilitate public comment on the
proposed order. It is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
Donald S. Clark,
Secretary.
[FR Doc. 94-4046 Filed 2-22-94; 8:45 am]
BILLING CODE 6750-01-M