Shaklee Corporation

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eae In THE MATTER 0 oF /SHAKLEE CORPORATION S CONSENT. ‘ORDER, ETC, IN REGARD TO ALLEGED VIOLATION OF : i: THE FEDERAL TRADE, COMMISSION | ACT | oe o Docket C-2613,. “Complaint, Dee. 5, 1974 - Decision, L Dee. 5, 1974 Consent order. requiring an | Emeryville Calif, distributor of. food supplements, cosmetic os and bath, and household. products, among other things to cease misrepresenting the “nutritional value of. its concentrated protein. supplement; failing to include a. disclo: sure notice in advertisements which warns against the use of the product by infants . under 1 year of.age without prior consultation with a physician; misrepresenting the nutritional content of. its product;..and furnishing means. or instrumentalities of me misrepresentation or deception to its distributors: : . Appearances For the ‘Commission: Harrison J. Sheppard, Robert B. Galler and Barry I. Miller.

For the ‘respondents L.G. Farren, Emeryville, Calif. ‘COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and~ by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Shaklee Corporation, a cor- . poration, hereinafter referred to as respondent, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent. Shaklee Corporation is a corporation - organized, existing and doing business under and by virtue of the laws - of the State of California, with its principal office and place of business . _ located.at 1900 Powell Street, Emeryville, Calif. Par. 2. Respondent is engaged in the advertising, offering. for sale, and sale of food supplements, cosmetic and bath products, and household products. The products are manufactured by respondent or by others according to respondent’s specifications, and are marketed through over. 100,000 sales persons, who operate businesses designated “Distributorships,” “Assistant Supervisorships” and “Supervisorships,” located in all fifty states, and who sell to consumers at their homes and offices. In the course and conduct of the aforesaid business, respondent is now and for sometime past has been engaged in the publishing,

SHAKLEE CORPORATION ome 1593 Complaint Not all who are old in years are old in spirit and appearance. Some are full of life—full of energy and desire to accomplish their purpose. On the other hand, certain ones of advanced years are marked by symptoms which typify old age. Why is this? What is the underlying cause? It may lie in living habits, lack of interest in hobbies, etc.— but it may also be aggravated by prolonged and complex deficiencies of protein, vitamins and minerals.

* * * * * * * For optimum nutrition during childhood—during the prime of life—in the twilight years—your body needs ALL of the essential amino acids for repair and maintenance. It will get them from only one source: the food you eat. Your present and your future are up to you.

ONE OUNCE PER DAY (approx. three tablespoonfuls) as a dietary supplement supplies Protein (96.6% Dry Basis) ......... 15 grams MDR* LECITHIN .................. 13 grams 6-12 1-6 Adult Years Years Vitamin B-1, primary grown yeast . . 20mg. 200% 266% 400% Vitamin B-2, primary grown yeast . . ‘ 2.0 mg. 166% 222% 222% Vitamin B-6, primary grown yeast .. 0.5 mg. ** ** ** Niacin, primary grown yeast .... . 10.0 mg. 100% 133% 200% Pantothenic Acid, primary grown yeast Se ee eee 2.0 mg. ** ** * Calcium .. 21... - 2. ee eee 500.0 mg. 67% 67% 67% Phosphorus ............-26- 250.0 mg. 33% 33% 33% Tron... ee ee 120mg. 120% 120% 160% *Minimum Daily Requirement **Minimum Daily Requirement (MDR) has not been established The protein ingredient of one ounce of Instant Protein w/ Cocoa Bean provides approximately the following amounts of the essential amino acids:

Methionine .........-2-.00-- 135 mg.

Isoleucine . 2... ee ee ee 690 mg.

Leucine .. 1.2... ee ee eee 1170 mg.

Phenylalanine. .......-..-0-- 780 mg.

Lysine 2... 2.2 ee eee 855 mg.

Threonine .......--..00++05- 540 mg.

Tryptophan .........--++-06-- 165 mg.

Valine 2.2... ce ee ee eee 675 mg.

“1598. Le /PEDERAL TRADE COMMISSION DECISIONS: aS Decision and Order ae = A ‘84 APT. is : disclose material facts, as aforesaid, ‘has had, and now: has, the capacity. 7 and tendency to mislead members of the purchasing public into the. — 2 erroneous and mistaken belief that said statements and representations were, and are, true and complete, into the. purchase of substantial. = quantities of Said: products by” reason of said erroneous and mistaken oe _ belief, and into taking unnecessary risks with respect to. their health and ae well-being and that of others. :

Par. 11. The respondent's acts and practices alleged herein ¢ are to the prejudice and injury of the purchasing public, and’ to respondent’s. competitors, and constitute unfair methods of competition i in commerce; and unfair and deceptive acts or practices in commerce, in violation of Sections 5 and 12 of the Federal Trade Commission Act: DECISION AND ORDER The Federal Trade Commission having initiated an investigation ‘of certain acts and practices of the respondent. named in the caption hereof, and the respondent having been furnished thereafter. with a copy of a draft of complaint which the San Francisco Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and.

The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order; an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes. only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission’s rules; and ‘The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the. following order:

1. Proposed respondent Shaklee Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of California, with its office and principal place of business located at 1900 Powell Street, Emeryville, Calif. 1593 Decision and Order 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest. ‘ ORDER For purposes of this order, the term “Instant Protein” refers to the product of that name presently marketed by respondent and any other concentrated protein product for infant use. For purposes of this order, a “concentrated protein product for infant use” is any protein food product marketed for general public or family use which (a) contains ten or more grams of protein per ounce in the form in which it is sold at retail and (b) is readily ingestible by infants one year of age or less (when taken as is or when added to water, juice, or milk) in quantities sufficient to provide at least fifty percent of the infant’s daily protein needs (RDA).

It is ordered, That respondent Shaklee Corporation, a corporation, its successors and assigns, and its officers, and respondent’s agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, or through its distributors or franchisees, if any, in connection with advertising and labeling, offering for sale, or sale of “Instant Protein,” in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Representing, directly or by implication, that, in the absence of medical authorization “Instant Protein” should be added to the diets of infants under one year of age.

B. Failing to disclose the following warning clearly and conspiciously, verbatim on the label of “Instant Protein:” NOTICE: Should not be used by infants under one year of age without consulting a physician.

For purposes of this order, the above notice shall be deemed to be clear and conspicuous if the smallest letter of the notice is no smaller than one-sixteenth of an inch and the notice is in no way obscured by background contrast, obscuring designs or vignettes, or crowding with other written, printed, or graphic matter. C. Failing to disclose for a period of two years from the effective date of this order, the following warning clearly and conspicuously (in print of a size and type no less prominent than the majority of the text of the document in which it is required to be contained), verbatim, in any advertising and promotional materials (excluding labels) for “Instant Protein,” excepting only those advertisements or promotional materials whose text relating to “Instant Protein” is Decision and Order 84 F.T.C.

limited to the name and price of the product and a general description of the product of no more than one sentence or phrase: NOTICE: Should not be used by infants under one year of age or persons with liver or kidney diseases without consulting a physician; Provided, however, That the words “or persons with liver or kidney diseases” may be omitted unless the particular advertising or promotional material is directed in whole or in part, directly or by implication, toward promoting the use of “Instant Protein” by the elderly as a specific consumer age group; and Provided further, That, in any advertisement or promotional material (other than the kinds of limited advertising previously referred to in this paragraph of this order) consisting of no more than four sentences of text relating to “Instant Protein,” and not directed, explicitly or by implication, to infants, young children or the elderly as users of the product, the notice may be limited to the following: Use as directed by label.

D. Misrepresenting in any manner the percentage of protein in “Instant Protein.”

E. Representing, directly or by implication, that health problems of the elderly, including but not limited to those involving lack of energy and desire to accomplish goals, can be alleviated by consumption of “Instant Protein;” Provided, however, That this provision shall not bar the representation that the use of “Instant Protein” may be helpful in combating protein deficiency in the elderly.

It is further ordered, That:

F. Respondent, which has heretofore recalled its IP-14 leaflet advertising “Instant Protein,” take any and all actions necessary and available to it to obtain the return to it of all copies, if any, of said leaflet remaining in the possession of its distributors of which respondent’s officers or counsel have or obtain actual knowledge. G. Respondent shall not be in violation of this order as the result of actions of its distributors or franchisees, if any, unless respondent’s officers or counsel obtain actual knowledge that an act, which would otherwise be a violation by the respondent of the other provisions of this order, has been committed by such distributor or franchisee and respondent has failed within a reasonable period to take such action as respondent deems appropriate to cause such acts to be terminated; Provided, That respondent shall be in violation of this order if respondent’s officers or counsel obtain actual knowledge that an act which would otherwise be a violation by the Decision and Order respondent of the other provisions of this order has been committed on more: than one occasion (at least one of which occasions having occurred after respondent took appropriate action under the preceding clause) by such distributor or franchisee and respondent has failed within a reasonable period to take any and all actions, including but not limited to termination of such distributor or franchisee, necessary and available to it to cause such acts to be terminated.

H. Respondent shall be in compliance with any provision of this order which is the subject of any of the provisions of a Trade Regulation Rule hereafter adopted by the Commission regulating the advertising or labelling of concentrated protein products such as “Instant Protein,” if respondent is in compliance with such provisions of such Trade Regulation Rule. I. Respondent shall forthwith cease and desist from furnishing distributors or others with any means, instrumentalities, directions or instructions whereby the public may be misled or deceived as to any of the matters or things prohibited by this order. J. Respondent shall notify the Commission at least 30 days prior to any proposed change in the respondent corporation such as dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of the order.

K. Respondent shall forthwith distribute (1) a copy of this order to each of its operating divisions; and (2) a notice to each of its distributors and franchisees, if any, notifying them of the provisions of Paragraphs A, D, E and G of this order. L. Respondent shall within sixty (60) days after service upon it of this order file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

Complaint 84 F.T.C.