John Treadwell

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

IN THE MATTER OF JOHN TREADWELL d/b/a TRANS-CONTINENTAL INDUSTRIES CONSENT ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3165. Complaint, Sept. 2.1 1985-Decision, Sept. , 1985 This consent order requires John Treadwell, doing business as 'frans-Continental Industries, to cease, among other things, making any performance claims for any gasoline additive without competent and reliable evidence; claiming that tests support any performance claims without proper substantiation; and misrepresenting the results or conclusions of any tests pertaining to gasoline additives or the potential profits or marketing assistance that wil be provided for distributors of respondent' s products. Further, respondent is required to maintain records of substantiation for three years; file a compliance report with the Commission within 60 days; and notify the Commission of the discontinuance of his present employment and any future employment in similar areas for five years. Appearances For the Commission: Paul R. Roark. For the respondent: Pro se.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act as amended, and by virtue of the authority vested in it by said Act the Federal Trade Commission, having reason to believe that John Treadwell, an individual doing business as Trans-Continental Industries, hereinafter sometimes 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 John Treadwell is an individual doing business as Trans-Continental Industries ("TCI"), a sole proprietorship with its offce and principal place of business located at 2489 Burlingham Place, Simi Valley, California.

PAR. 2. Respondent is now, and at all times relevant to this complaint has been, engaged in the manufacturing, offering for sale, sale and distribution to the public of a product known as 20% PLUS ORGANIC FUEL CATALYST ("20% Plus ) and other gasoline and Complaint 106 F.

fuel additives. Respondent, in connection with his offering these products for sale, has also published and disseminated, and now publishes and disseminates, advertisements and other sales promotional material for the purpose of promoting their sale. 20% Plus is a gasoline additive advertised to be a means of substantially improving fuel economy in automobiles and other motor vehicles. PAR. 3. In the course and conduct of his said business, respondent has disseminated and caused the dissemination of certain advertisements for 20% Plus and other gasoline and fuel additives by various means in or affecting commerce, as " commerce" is defined in the Federal Trade Commission Act, including, but not limited to, the sending of promotional materials through the mail the direct solicitation of individuals by telephone calls from California to nu-and merous other states, for the purpose of inducing and which are likely to induce, directly or indirectly, the purchase of these products in or affecting commerce.

PAR. 4. Among the advertisements and other sales promotional materials disseminated by respondent are those identified as Exhibits A and B, which are attached hereto.

PAR. 5. In the advertisements and sales promotional materials referred to in Paragraph Four and other advertisements and sales promotional materials, and in statements made orally to prospective purchasers by telephone, respondent has stated that: 20% PLUS ORGANIC FUEL CATALYST PROVEN IN TESTING TO- Deliver marked improvement of fuel effciency and mileage.

LABORATORY AND FIELD TESTING BOOKLET" (Exhibit A) 2. "20% PLUS organic fuel catalyst has been designed to improve combustion of normally unused and unburned fuel. In carefully controlled tests it has proven to aid fuel effciency and reduce fuel consumption. It has effectively reduced fuel costs 20 to 25% in cases tested." (Exhibit B) b. "To give you an idea of the money to be made as a distributor. . . . Back in January, 1982, . . . we had 46 distributors. 42 of those distributors made in excess of $6200.00 net, . . . . In fact (name ), this is the only business that I know of that you can literally double your ""''''''H .. t:r\ .... ", n.. 1..",,, " 163 Complaint c. Trans-Continental Industries will assist distributors of 20% Plus and other TCI products in reselling those products by placing advertising in local and national print and broadcast media and by soliciting accounts by telephone and referring those accounts to the local distributors.

PAR. 6. By and through the use of these and other statements, respondent has represented, directly or by implication, that: a. Laboratory and road tests prove that 20% Plus reduces motor vehicle fuel costs 20 to 25%.

b. Forty-two out of forty-six distributors made in excess of $6200 profit in January 1982 by reselling 20% Plus, and distributorships are, in general, very profitable.

c. Respondent would assist distributors of 20% Plus in resellng it. PAR. 7. In truth and in fact, contrary to respondent's representations set forth in Paragraph Six:

a. Laboratory and road test results do not prove that 20% Plus reduces motor vehicle fuel costs 20 to 25%. Laboratory test reports used by respondent in promoting 20% Plus were, in fact, altered test reports relating to tests conducted for another company and for different purposes. Such reports were used without authorization from either the testing company or the company for which the tests were conducted, and such reports do not prove or in any way substantiate the fuel cost reduction claims made by respondent. b. Forty-two out of forty-six distributors did not make in excess of $6200 in January 1982. Most distributors have made little or no profit from the resale of respondent' s products.

c. Respondent has not assisted distributors of20% Plus in reselling it. Respondent has not placed advertisements in the media and does not conduct telephone solicitations for the benefit of its distributors. Therefore, said advertisements and other sales promotional materials disseminated by respondent and oral statements made by respondent were and are false and misleading.

PAR. 8. By disseminating Exhibits A and B and other advertisements and sales promotional materials, respondent has represented directly or by implication, that respondent possessed and relied upon a reasonable basis for making, at the time they were made, the representations alleged in part a. of Paragraph Six. In truth and in fact respondent had no reasonable basis for such representations. Therefore, said advertisements and other sales promotional materials disseminated by respondent are false and misleading. PAR. 9. The use by respondent ofthe aforesaid false and misleading representations has had and now has the capacity and tendency to mislead members of the consuming public into the erroneous and Complaint 106 F.

mistaken beliefthat said representations were and are true and into the purchase of substantial quantities of products sold by respondent by reason of said erroneous and mistaken belief. PAR. 10. The aforesaid acts and practices of respondent, as herein alleged, were and are all to the prejudice and injury ofthe public, and constituted and now constitute unfair and deceptive acts or practices in or affecting commerce in violation of Section 5 ofthe Federal Trade Commission Act. The acts and practices of respondent, as herein alleged, are continuing and wil continue in the absence of the relief herein requested.

163 Complaint EXHIBIT A (15 C\l 2:D (i,\l 225.:

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, ower 9J COmbuslion re:Jl.. has oeem", ,, it .... C"i,lor-\lJ ';J05e", prove ";;1 anti-icing horsep,erarea " le5!S :p\. " lre, elfecli'ely Jd nQ 30' arid '/a, 10 "JI\\I'\J .,d has jdCaSQ\, ajnlaln"PPerCyiond .wea, :!I;:1! II GUARANTEED) Sl_ 3 ccnlralle,J 5;"1. harml . n h y ,e. arHi' " ,. ,...00'" ll' able; designedlul' storeand Catalyst ,,,, llJtJrlcaleu prevenl " ,e' cerl ca.. IOglve 16./ o. has h , -prOleC!lor!" OJ -" :: Q\e.,,,ed" ,e cons\J:npl\ ,st. TJSFACTION ., Fuel: " " fuel. \D- , rti, fuel T (SA catalyst ,, i:''i' J5S 'reduce !)(o, tti\r ,,;\\ g'"'"' . fuelunbucned i;: , and TRANS-CONTINENTAL andy !OVeage IOlloUu!iI1::\" Organic ,CO'" 1' ,,e rnTt.fmols!ur 'O",..e organic ..,,... lic,en SYs.tsm unused Results. e(\q, s dO" e - , u;.p,,,NTI2(sa PLUS . 8a",'Oj fuel ,. TestPLUS'" 20%normallyaiccosis20to2S%incaseSlesled ltic1 SCIENTIFIC c\"an ;.orejflJal Tct :S1-:- .\ :jr ;'C i%'.f;-,!i!Olrr ,,,,,,.,,..;;. Proven20%NEWDEVELOPMENT 163 Decision and Order 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 Los Angeles Regional Offce 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 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent John Treadwell is an individual doing business as Trans-Continental Industries, a sole proprietorship, with its offce and principal place of business located at 2489 Burlingham Place Simi Valley, California.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and ofthe respondent, and the proceeding is in the public interest.

ORDER It is ordered That respondent John Treadwell, an individual doing business as Trans-Continental Industries or under any other name or names, his successors and assigns, and respondent's agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, in connection with the man- Decision and Order 106 F. ufacturing, advertising, labeling, offering for sale, sale or distribution of the gasoline additive known as 20% PLUS ORGANIC FUEL CATALYST ("20% Plus ) or any other gasoline, oil, or fuel-saving product, in or affecting commerce, as " commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: a. Representing, directly or by implication, that any such product will or may result in fuel economy improvement when used in an automobile, truck, recreational vehicle or other motor vehicle unless at the time of making such representation, respondent possesses and relies upon written results of competent and reliable testing that isolates the effects of the product and substantiates the representation. Respondent may use such tests as the then current urban dynamometer driving schedule (40 CFR 86, Appendix I) or the then current highway fuel economy driving schedule (40 CFR 600, Appendix I) established by the Environmental Protection Agency or other tests of an equivalent competency and reliabilty;

b. Representing, directly or by implication, that any performance claim about any such product is based upon any competent and reliable test(s) or survey(s), unless such representation is true; c. Misrepresenting, directly or by implication, the purpose, content or conclusion of any test or survey pertaining to any such product; d. Misrepresenting, directly or by implication, the past, present or future sales, profits or earnings available from the resale of respondent's products, or misrepresenting, directly or by implication, the past or present sales, profits or earnings of respondent's sales agents; e. Misrepresenting, directly or by implication, the advertising or promotional efforts to be undertaken by respondent to assist distributors in the resale of respondent's products. For the purposes of Part I, a competent and reliable test means one in which persons qualified to do so conduct the test and evaluate its results in an objective manner using procedures that ensure accurate and reliable results.

It is further ordered, That respondent, his successors and assigns in connection with the manufacturing, advertising, labeling, offering for sale, sale or distribution of any gasoline, oil, or fuel-saving product in or affecting commerce, as ucommerce" is defined in the Federal Trade Commission Act, shall for at least three years after the last date of dissemination by respondent either directly or through any business entity of any representation about any such product maintain and upon reauest make available to the Federal Trade Commission 163 Decision and Order for inspection and copying, copies of, and dissemination schedules for all advertisements, labels, sales promotional materials and post-purchase materials for such product and copies of all test materials and results upon which such representation is based. It is further ordered, That respondent forthwith distribute a copy ofthis order to all present or future personnel, agents or representatives of respondent having sales, advertising, or policy responsibilities with respect to the subject matter of this order, and that respondent secure from each sucb person a signed statement acknowledging receipt of said order and maintain that statement in its files for at least three years.

It is further ordered That respondent shall promptly notify the Commission ofthe discontinuance of his present business or employment and that for a period of five (5) years from the date of service ofthis order respondent shall promptly notify the Commission of each affliation with a new business or employment in telephone sales, or in connection with the manufacturing, advertising, labeling, offering for sale, sale or distribution of any gasoline additive or any other gasoline, oil, or fuel-saving product, each such notice to include the new business address of respondent and a statement of the nature of the business or employment in which the respondent is newly engaged, as well as a description ofthe respondent' s duties and responsibilities in connection with the new business or employment. It is further ordered That respondent shall within sixty (60) days after service upon him ofthis order, file with the Commission a report, in writing, setting forth in detail the manner and form in which he has complied with this order.

Complaint 106 F.