[Federal Register Volume 63, Number 95 (Monday, May 18, 1998)]
[Notices]
[Pages 27294-27296]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13140]


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FEDERAL TRADE COMMISSION

[File No. 952-3235]


Bogdana Corporation, et al.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.


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ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before July 17, 1998.

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:
Joel Winston, FTC/S-4002, Washington, D.C. 20580. (202) 326-3153.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the above-captioned 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. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for May 12, 1998), on the World Wide Web, at ``<a href="http://www.ftc.gov/os/
actions97.htm">http://www.ftc.gov/os/
actions97.htm</a>.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue NW, 
Washington, DC 20580, either in person or by calling (202) 326-3627. 
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 Section 4.9(b)(6)(ii) of the 
Commission's Rules of Practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Bogdana Corporation; and Joseph L. Gruber 
and Bogda Gruber, Individually and as officers of Bogdana Corporation.
    The proposed consent order has been placed on the public record for 
sixty (60) days for receipt 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 or make final the agreement's proposed order.
    This matter involves alleged deceptive representations for two 
dietary supplements: Cholestaway, capsules or wafers purported to lower 
serum cholesterol; and Flora Source, a powdered supplement purported to 
replace natural intestinal flora, thereby boosting the immune system 
and providing other health benefits. Advertisements for the products 
included 30-minute television infomercials, 30-minute radio 
infomercials, 60-second television commercials, and catalogs.
    According to the FTC complaint, by using the trade name 
``Cholestaway,'' and through the advertisements, the respondents made 
claims that Cholestaway: significantly lowers serum cholesterol levels; 
significantly lowers serum cholesterol levels without changes in diet; 
significantly lowers serum cholesterol levels and causes significant 
weight loss even if users eat foods high in fat, including fried 
chicken and pizza; substantially reduces or eliminates the body's 
absorption of dietary fat; lowers low density lipoprotein cholesterol 
and improves the high density lipoprotein cholesterol to low density 
lipoprotein cholesterol ratio; is effective in the treatment of 
hardening of the arteries and heart disease; causes significant weight 
loss; causes significant weight loss without changes in diet; 
significantly reduces blood triglyceride levels; significantly reduces 
elevated blood pressure; and is scientifically proven to lower serum 
cholesterol levels and reduce elevated blood pressure significantly; 
and that testimonials from consumers appearing in the advertisements 
for cholestaway reflect the typical or ordinary experience of members 
of the public who use the product. The complaint alleges that the 
respondents did not have a reasonable basis for any of these 
representations at the time they were made.
    The complaint also alleges that the respondents misrepresented 
radio infomercials for Cholestaway to be independent radio programs 
rather than commercial messages.
    The complaint further alleges that the respondents made claims, 
without a reasonable basis, that Flora Source: replaces the natural 
intestinal flora that are lost due to illness, prescription drugs or 
antibiotics, thereby reducing the risk of developing illnesses such as 
chronic fatigue syndrome (Epstein-Barr syndrome) and other 
immunosuppression diseases, including AIDS: improves the body's 
absorption of nutrients, including B vitamins; enhances the body's 
immune response and is effective in the treatment of immunosuppression 
diseases, including AIDS; prevents weight gain; and is effective in the 
prevention or treatment of anorexia and gastrointestinal disorders and 
symptoms, including food sensitivities, constipation, diarrhea, 
dyspepsia, abdominal pain, bloating and gas.
    The consent order contains provisions designed to prevent the 
respondents from engaging in similar acts and practices in the future.
    Part I of the order prohibits the respondents from making the 
representations about Cholestaway challenged in the complaint, unless 
they possess and rely upon competent and reliable scientific evidence 
that substantiates the representation. Part II of the order contains 
similar provisions with regard to the challenged representations about 
Flora Source.
    Part III prohibits respondents from making any representation about 
the efficacy, performance, safety or benefits of any food, dietary 
supplement or drug unless they possess and rely upon competent and 
reliable scientific evidence that substantiates the representation.
    Part IV prohibits the respondents from using the name 
``Cholestaway'' or any other name that represents that the product will 
lower serum cholesterol levels unless they have substantiation.
    Part V prohibits the respondents from misrepresenting the 
existence, contents, validity, results, conclusions or interpretations 
of any test, study, or research.
    Part VI prohibits the respondents from representing that the 
experience represented by a user testimonial or endorsement of the 
product is the typical or ordinary experience of users of the product 
unless the representation is substantiated or they disclose what the 
generally expected results would be or that consumers should not expect 
the same results.
    Part VII prohibits the respondents from disseminating any 
advertisement that misrepresents that it is not a paid advertisement, 
and requires disclosures, during television ads fifteen minutes in 
length or longer and radio ads five minutes or longer, that the program 
is a paid advertisement.
    Part VIII allows the respondents to make representations for any 
drug that are permitted in labeling for that drug

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under any tentative final or final Food and Drug Administration 
(``FDA'') standard or under any new drug application approved by the 
FDA.
    Part IX allows the respondents to make representations for any 
product that are specifically permitted in labeling for that product by 
regulations issued by the FDA under the Nutrition Labeling and 
Education Act of 1990.
    Parts X through XII and XIV require the respondents to keep copies 
of advertisements making representations covered by the order; to keep 
records concerning those representations, including materials that they 
relied upon when making the representations; to provide copies of the 
order to certain of the corporate respondents' personnel; to notify the 
Commission of changes in corporate structure; and to file compliance 
reports with the Commission. Part XV provides that the order will 
terminate after twenty (20) years under certain circumstances.
    Part XIII requires that the Grubers notify the Commission of any 
change in their business or employment.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-13140 Filed 5-15-98; 8:45 am]
BILLING CODE 6750-01-M