HAIR EXTENSION, INC., also trading as Hair TransCenter

Text (OCR of the scan at left; may contain errors)

IN THE Maner Of' HAIR EXTENSION OF BEVERLY HILLS, INC., ET AL. CONSENT ORDER, ETC. REGAlt TO ALLEGED VIOLATION OF SEe. 5 OF THE FEDERAL" TRADE COMMISSION ACT DoeJrtC-,3013. ' Comptdntj March 13, 1980 March13 1980 This consent order requires, among other things, two Califomiafirs and two indiVidualsE;ngaged in sale of hair replacmentseces to cease soliciting, sellng or perf()nninghair implants; and/ormisreprenting, inadverlisingor otheiwise, the ' safety oreffectiv'erieSsofthe hair implant pr0iri the treatrneritofbaldness, Should respondents engage in a.ny future haif replac ment . business; . they. must ' expend at. Ieast $8,00000 ,cOrrecve 'advertising warning consurnersthat"Hair Iinplants Ar Unsfe." Theordet also reuir that the Commission notify past hair implant customers that the Pro unsafe and that theyshouldscek prompt medical attention. Appearances For the Commission: George E. Schulman and Anne B. Roberts. For the respondents: Pro se.

COMPLANT 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 Hair Extension of Beverly Hils, Inc., a corporation, also trading and doing business as Hair Tral1sCenter;HairExtensiori Inc., a corporation, also trading and doing business as Hair TransCenter; Lee Marlow, individually and as an officer of said corporations; and Ann Marlow, individually and as an officer of said corporations, hereinafter sometimes referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by ifin respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect asfollows:

PAR. 1. Respondent Hair Extension of Beverly Hils, Inc. , also trading and doing business as Hair TransCenter, is a corporation organized, existing and doing business under andby virtue of the laws of the State of California. Its principal office and place of business is at . 8383 Wilshire Boulevard, Beverly Hills, California. Respondent Hair Extension, Inc., also trading and doing business as Hair TransCenter; is a corporation organized, existing arid doing. business under and by virtue of the laws of the State of California,. Its \74-'171 0- 24 QJ.

Complaint 95 F.

principal office and place of business is at 16152 Beach Boulevard Huntington Beach, California.

Respondent Lee Marlow is an officer of each of the corporate respondents named herein. He formulates, directs and controls the acts and practices of said corporate respondents, including the acts and practices hereinafter set fortb. His address is 16152 Beach Boulevard Huntington Beach, California.

Respondent Ann Marlow is an officer of each of the corporate respondents named herein. She formulates, directs and controls the acts and practices of said corporate respondents, including the acts and practices hereinafter set forth. Her address is 16152 Beach Boulevard Huntington Beach, California. She is the wife of Lee Marlow. The aforementioned respondents cooperate and act together carrying out the acts and practices hereinafter set forth. PAR. 2. Respondents are now, and for some time last past have been engaged in the advertising, offering for sale and sale to the general public of hair replacement products, processes, operations and surgical procedures, for the treatment of baldness, thinning hair or loss of hair or for the replacement of lost hair, including a process or operation which is known as a "hair implant" or "dermis inversion" process (lithe Hair Implant Process For the purpose of this complaint, the Hair Implant Process is defined as a hair replacement product, process, operation or surgical procedure which involves the insertion or placement of (1) synthetic fibers or filaments which simulate hair or (2) non-living human hairs into or under the scalp of the patient.

COUNT I Alleging violation of Section 5 of the Federal Trade Commission Act the allegations of Paragraphs One and Two are incorporated by reference herein as if fully set forth verbatim. PAR. 3. Respondents maintain, and have maintained, a substantial course of business, including the acts and practices as hereinafter set forth, which are in or affect commerce, as j'commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their said businesses, respondents are now making, and have made representations, orally and in writing, directly and indirectly, in commerce as "commerce" is defined in the Federal Trade Commission Act, for the purpose of inducing, and which are likely to induce, tbe purchase of the Hair Implant Process in commerce.

PAR. 5. Respondents represent, orally and in writing, directly and 361 Complaint indirectly, that the Hair Implant Process in general is safe and effective, and that the Hair Implant Process as performed by respondents or by their agents, representatives or employees is safe and effective for providing the purchaser with a natural looking head of hair, or for treating baldness, thinning hair or loss of hair, or for replacing lost hair, and wil not result in medical complications or infections.

PAR. 6. In truth and in fact, the Hair Implant Process is not generally recognized as safe and effective, and is not performed in a safe and effective manner by respondents. The Hair Implant Process both in general and as performed by respondents, does not result in a natural looking head of hair, and is not an effective method of treatment for baldness, thinning hair or loss of hair, or for the replacement of lost hair. The Hair Implant Process, both in general and as performed by respondents, results in medical complications and infections which may endanger the health of the purchaser. Therefore, the representations set forth in Paragraph Five were and are false misleading, deceptive and unfair. PAR. 7. There existed, at all times relevant hereto, no reasonable basis for making the representations set forth in Paragraph Five herein.

Therefore, the making of the representations as set forth in Paragraph Five herein, without a reasonable basis constituted and now constitutes unfair or deceptive acts or practices. PAR. 8. Respondents fail to dise1ose, either orally or in writing, directly or indirectly, that the Hair Implant Process, in general and as performed by respondents, is not a safe or effective method of treatment for baldness, thinning hair or loss of hair, or for the replacement of lost hair, and presents a high risk of infection or other medical complications which may endanger the health of the purchaser.

PAR. 9. In truth and in fact, the Hair Implant Process, both in general and as performed by respondents, is not generally recognized as a safe or effective method of treatment for baldness, thinning hair or loss of hair, or for the replacement of lost hair and preents a high risk of infection or other medical complications which may endanger the health of the purchaser.

Therefore, the failure to disclose that the Hair Implant Process is not a safe or effective method of treatment for baldness, thinning hair or loss of hair, or for the replacement of lost hair, and the failure to disclose that it presents a high risk of infection or other medical complications which may endanger the health of the purchaser constitutes unfair or deceptive acts or practices. Complaint 95 F.

COUNT II Alleging violation of Section 12 of the Federal Trade Commission Act, the allegations of Paragraphs One and Two are incorporated hy reference herein as if fully set forth verbatim. PAR. 10. In the course and conduct of their said businesses respondents have disseminated and caused the dissemination of certain advertisements concerning the Hair Implant Process through the United States mail and by various means in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, including, but not limited to, the insertion of advertisements in magazines and newspapers with national circulations, and advertisements in the form of a brochure entitled "Hair TransCenter" which was, and is, sent through the United States mail, for the purpose of inducing, and which is likely to induce, the purchase of respondents' Hair Implant Process and have disseminated and caused the dissemination of advertisements concerning said Hair Implant Process by various means, including but not limited to the aforesaid media, for the purpose of inducing and which are likely to induce, directly or indirectly, the purchase of said Hair Implant Process in commerce.

PAR. 11. Respondents represent directly and indirectly, in said advertisements, disseminated as previously des ribed but not necessarily inclusive thereof, that the Hair Implant Process is a safe and effective method for providing the patient with a natural looking head of hair, or for treating baldness, thinning hair or loss of hair, or for replacing lost hair, and that the Hair Implant Process is approved doctors, and will not result in medical complications or cause infections. PAR. 12. In truth and in fact, the Hair Implant Process, both in general and as performed by respondents, is not a safe or effective method for the treatment of baldness, thinning hair or loss of hair, or for the replacement of lost hair. The Hair Implant Process presents a high risk of severe infections or other medical complications which may endanger the health of the purchaser. The Hair Implant Process is not an effective method of treatment for baldness, thinning hair or loss of hair, or for the replacement of lost hair, because the implanted hairs fall out or break off shortly after inserted. In addition, due to the Hair Implant Process, frequently a patient loses his own hair. The Hair Implant Process is not approved by doctors relying on competent and reliable scientific evidence, and in fact, generally is recognized by doctors as an unsafe and ineffective method of treatment for baldness thinning hair or loss of hair, or for the replacement of lost hair. Therefore, the advertisements referred to in Paragraphs Ten and HAIR EXTENSION OF BEVERLY HILLS, INC., ET AL. 365 361 Dccision and Order Eleven, were and are misleading in material respects and constituted and now constitute, false advertisements.

PAR. 13. In the course and conduct of their business, and at an times mentioned herein, respondents have been, and now arc, in substantial competition in or affecting commerce with corporations, firms and individuals engaged in the sale of products and services of the same general kind and nature as the products and services sold hy respondents.

PAR. 11. The use by respondents of the aforesaid false, misleading, and deceptive statements, representations, acts and practices, directly or by implication, has had, and now has, the capacity and tendency to mislead members of the public into the erroneous and mistaken belief that said statements and representations were, and arc, true and complete, and into the purchase of substantial quantities of respondents' products and services by reason of said erroneous and mistaken belief.

PAR. 15. The acts and practices of respondents, as herein alleged were and are an to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act. The acts and practices of respondents, as herein alleged, arc continuing and will continue in the absence of the relief herein requested.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Los Angeles Regional Office proposed to present to the Commission for its consideration and which if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of a1! the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondents that the law has been violated as a1!eged in such complaint and waivers and other provisions as required by the Commission Rules; and The respondents ag-reed to provide to the Commission the names and Decision and Order 95 F.

addresses of their customers who underwent or paid money to undergo the Hair Implant Process and that the Commission may notify each said customer regarding the risks and problems involved in the Hair Implant Process and the fact that this order has been accepted by the Commission, such notice being substantially similar to the following letter:

Dear Hair Extension told us that you came to their office for hair implants. The FTC has reason to believe that the hair implant procss is not safe or effective at the present time. There is no medically safe way to do hair implants. Therefore, many of their customers have developed scalp infections.

Hair Extension has promised the Federal Trade Commission that they will not do any more hair implants until the Foo and Drug Administration approves a safe and effective procedure that protects future customers. However, we thought we should contact former customers to let them know the problems they could have with their implants.

Some people get infections right away. For others, an infection may develop months . later. A few may never have a problem.

Many people report severe symptoms-pain, noticeable scang, hairs breaking off scalp soreness, redness and swellng. However, others may have only a minor problem. A problem may not be too noticeable now but could develop into a more serious problem if not treated.

Therefore, for your own safety, you may want to see a doctor for an examination of your scalp and implants. If you do have any of these symptoms, you should go see a doctor immediately. The agreement which Hair Extension signed docs not provide refunds or money for your doctor bills. However, you might want to contat an attorney to find out whether Hair Extension may be liable for any costs or injury you have suffered. and, the Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have 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, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of its Rules, now in further comformity with the procedure prescribed Section 2.34 of its Rules, the Commission hereby issues its complaint makes the following jurisdictional findings and enters the following order:

1. Proposed respondent Hair Extension of Beverly Hils, Inc., also trading and doing business as Hair TransCenter, is a corporation organized, existing and doing business under and by virtue of the laws tllUlt ATl''1 ;:HU1'' Vl' tlli tllLLi: ll'ltJ. AL. 3tH 361 Decision and Order of the State of California. Its principal office and place of business is at 8383 Wilshire Boulevard, Beverly Hils, California. Proposed respondent Hair Extension, Inc., also trading and doing business as Hair TransCenter, is a corporation organized, existing and doing bosiness under and by virtue of the laws of the State of California. Its principal office and place of business is at 16152 Beach Boulevard, Huntington Beach, California.

Proposed respondents Lee Marlow and Ann Marlow are officers directors and stockholders of said corporations. They formulate, direct and control the policies, acts and practices of said corporations and their address is 16152 Beach Boulevard, Huntington Beach, California. They are husband and wife.

2. The Federal Trade Commission bas jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER For the purpose of this order, the following definition shall apply: The "Hair Implant Process" refers to any hair replacement product process, operation or surgical procedure which involves the insertion or placement of (1) synthetic fihers or filaments which simulate hair or (2) non-living human hairs, into or under the scalp of a patient. It is ordered That Hair Extension of Beverly Hills, Inc., Hair Extension, Inc., corporations, and Lee Marlow and Ann Marlow individuals, their successors and assigns, their officers, agents, representatives, employees and persons under respondents' control, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, offering for sale and sale of the Hair Implant Process, in or affecting commerce, as Hcommerce" is defined in the Federal Trade Commission Act, as amended, do forthwith cease and desist from:

1. Disseminating, or causing or permitting the dissemination of any advertisement or other representation or claim, express or implied that the Hair Implant Process is safe or effective in the treatment of baldness, thinning hair or loss of hair, or for the replacement of lost hair.2. Soliciting, recommending, promoting, offering for sale, selling, arranging for or performing the Hair Implant Process. Provided, howeve-r that nothing shall prevent respondents from filing with the Commission a petition to modify this order providd Decision and Order 95 F.

that respondents arc able to demonstrate to the satisfaction of the Commission by competent and reliable scientific tests that: 1. The Hair Implant Process is safe and effective (and affirmative approval by the Food and Drug Administration that the process is safe and effective shall be deemed sufficient proof of compliance with this provision), and 2. The Hair Implant Proces will be performed by respondents (or by persons recommended by or under the control of respondents) in a safe and effective manner (and affirmative approval by the Food and Drug Administration that named respondents wi1 perform the Hair Implant Process in a safe and effective manner shall be deemed sufficient proof of compliance with this provision. Pro"V'ided, Mwe"Ver that if the Commission determines, upon proper application of respondents, that the Hair Implant Process is safe and effective and that tbe Hair Implant Process wi1 be performed by respondents (or by persons recommended by or under the control of respondents) in a safe and effective manner, and such determination shall be based upon respondents' proof of compliance with the provisions set forth in the preceding paragraph, and if the Commission determines that further relief is necessary in the public interest, the Commission may require respondents to provide further relief. Said further relief may include, but is not limited to: (1) affirmative disclosures that there is a bigh probability of discomfort and pain and a high risk of infection, skin disease and scarring; that continuing special care is necessary to minimize the probabilities and risks referred to herein; and that such care may involve additional costs for medications and assistance; (2) a cooJing-off period, following execution of contracts for services; and (3) a recommended consultation with an independent duly-licensed physician before undergoing the Hair Implant Process.

It is further ordered That if Hair Extension of Beverly Hills, Inc. Hair Extension, Inc., corporations and Lee Marlow and Ann Marlow individuals, their successors and assigns, their officers, agents, representatives, employees and persons under respondents' control, directly or through any corporation, subsidiary, division or other device, are engaged in or affilated with any business which offers methods of treating baldness, loss of hair or thinning hair, or the replacement of lost hair, and if such business advertises in any media during a one year period commencing thirty (30) days after this order becomes final then respondents shall disclose in such advertising during that one year HAIR EXTENSION OF BEVERLY HILLS, INC., ET AL. 369 361 Decision and Ordcr period, clearly and conspicuously, in type no smaller than thc smallest type otherwise in the advertising or 10 point type, whichever is larger the following notice:

WARNING Hair implants, using artificial hair or human hair, are medically unsafe. We do not use this procedure.

It is further ordered That if Hair Extension of Beverly Hils, Inc. Hair Extension, Inc., corporations, and Lee Marlow and Ann Marlow individuals, their successors and assigns, their officers, agents, representatives, employees and persons under respondents' control, directly or through any corporation, subsidiary, division or other device, are engaged in any business which offers methods of treating baldness loss of hair or Lhinning hair, or the replacement of lost hair respondents shall place the following advertisement in the Los Angeles Times the Santa Ana Regist,er the Los Angeles Herald Examirwr and Los A ngdes Magaz';"Y,e.

HAIR IMPLANTS ARE UNSAFE Hair implants, the inserting of synthetic hairs or human hairs into the scalp, are medically unsafe.

Many hair ,implant patient.'i have developed scalp infections, noticeable scarrng and have lost the implanted hair.

The Fednal Tradr- Commissum advises anyone considering a hair implant-or any other "cure" for baldness-to see a doctor. If you had a hair implant and have developed any problems, you should go see a doctor immediately. This notice was prepared by the FTC and placed at the expense of Hair Extension Inc., a." part of a recent consent abrreement between it and the FTC. Federal Trade Commission Los Angeles Regional Office A. The placement of the advertisement in the newspapers shall be as follows:

1. Said advertisements shall appear at least once per month in each and every newspaper and magazine identified above, for six consecutive months commencing thirty (30) days after the date this order becomes final.

2. Said advertisement shall appear in the Sunday edition of each above-identified newspaper.

3. Respondents shall request placement of the advertisements in the Sports section of each newspaper.

Decision and Order 95 F.

B. The size of the advertisement shah be as foHows: 1. The advertisement to be placed in the Los Angeles Magazine shah be equal to or larger than one column in width and the fuHlength of the page.

2. The advertisement to be placed in the Los Angeles Times, Santa Ana Register and Herald Examiner shah be equal to or larger than two columns in width and four inches in length. C. Respondents shah endeavor to obtain bulk rates for placing said advertisements at the lowest possible rates. Respondents shah spend no less than $8 000.00 for placing thc advertisement required by this section.

D. The format, type size and type face of the advertisement shah be subject to the approval by the Commission or its representative prior to its use by respondents.

It is further ordered That respondents shah notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondents such as dissolution, voluntary bankruptcy, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporations which may affect compliance obligations arising out of this order. It is further ordered That for a period of five (5) years from the effective date of this order, each individual respondent shall promptly notify the Commission of the discontinuance of his/her present business or employment and of his/her affiliation with a new business or employment which is engaged, during the time of such employment or affiliation, in methods of treating baldness, thinning hair, loss of hair or of the replacement of lost hair. Such notice shall contain respondent' s current business address, a statement of the nature of the business or employment in which the respondent is newly engaged and a description of the respondent's duties and responsibilities in connection with the business or employment. The expiration of the notice provision of this paragraph shall not affect any other obligation arising under this order.

It is further ordered That respondents shall, within sixty (60) days after service upon them of this order, and within thirty (30) days after termination of the advertising required by Section III of this order, file with the Commission a report, in writing, settng forth in detail the manner and form in which they have complied with this order. 371 Complaint