TK-7 Corporation

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IN THE MATTER OF TK-7 CORPORATION, ET AL.

CONSEKT ORDER , ETC. , IK HEGAHD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 9224. Complaint, Feb. 1989-Decision, May, 1991 This consent order prohibits, among other things, a corporation, that manufactures and distributes fuel additive products, and its officer, Moshe Tal from making any representations concerning the efficacy of any fuel or engine additives, unless they possess competent and reliable scientific evidence that substantiates the representation.

Appearances For the Commission: William L. Haynes and Lydia B. Parnes, For the respondents: Moshe Tal, Presidenl Oklahoma City, OK. John A. Claro, Claro Johnston Oklahoma City, OK. Cm!PLAINT Pursuant to the provisions of the Federal Trade Commission Act, as amended, 15 L. C. 45 et seg. and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that respondents TK-7 Corporation (TK-7) and Moshe Tal, individually and as an officer of said corporation, hereinafter referred to as respondents, have 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 as follows:

PARAGRAPH 1. Respondent TK-7 Corporation is a Xevada corporation with its office and principal place Gf business located at 1300 N. 4th ST. , Oklahoma City, OK.

PAR. 2. Respondent Moshe Tal is the President of TK- 7. His business address is the same as that of the corporate respondent. At all times relevant to this complaint, he has formulated, directed and controlled the business acts and practices of respondent TK- PAR. 3. Respondents are now and for some time in the past have been engaged in the promotion, manufacture, distribution, marketing, 302 FEDERAL TRADE COMMISSIO:- DECISIO Complaint 114 F.

advertising and sale of various fuel additives known by the product name TK-7 (hereinafter "products ). These products are additives purported to improve engine performance.

PAR. 4. In the course and conduct of their business, respondents cause, and in the past have caused, said products to be transported from their place of business for sale to purchasers located in variOls states and territories of the Lnited States and the District of Columbia. Respondents maintain, and at all times relevant mentioned herein, have maintained a substantial course of trade in said products in or affecting commerce, as "commerce" is defined by the Federal Trade Commission Act as amended.

PAR. 5. In the course and conduct of their business, respondents have disseminated and caused the dissemination of advertisements and promotional material for their products by various means in or affecting commerce, including magazines distributed by the mail across state lines, for the purpose of inducing and which were likely toand induce, directly or indirectly, the purchase of said products. PAR. 6. In the course of their aforesaid business, respondents have made numerous representations in their advertising, promotional literature, and labels prepared and/or disseminated by respondents for use in selling respondents' products. Ilustrative and typical but not inclusive of the representations concerning aforesaid products are the advertisements attached as Exhibits A , B , C, and D. PAR. 7. Through those advertisements and others, respondents have made the following representations:

1. TK-7 provides top cylinder lubrication, reduces engine friction and extends engine life;

2. TK- 7 lowers engine operating temperatures; 3. TK- 7 protects spark plugs from fouling and prevents carbon build-up:

4. TK - 7 increases engine power:

5. TK- 7 boosts fuel octane levels;

6. TK-7 increases gasoline mileage. - PAR. 8. In truth and in fact, the representations set forth in paragraph seven are false, misleading and deceptive. PAR. 9. In making the representations set forth in paragraph seven respondents have represented, directly or by implication, that at the times of making the representations set forth in paragraph seven respondents possessed and relied upon a reasonable basis for making those representations.

TK-1 CORPORATION, ET AL. 303 301 Complaint PAR. 10. In truth and in fact, at the time of making the representations set forth in paragraph seven respondents did not possess and rely upon a reasonable basis for making those representations. Therefore, the representation set forth in paragraph nine was and is, false.

PAR. 11. The acts and practices of respondents alleged in- this complaint, have constituted and now constitute unfair and dcceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

The following is the form of order which the Commission has reason to believe should issue if the facts are found to be as alleged in the complaint. If, however, the Commission should conclude from record facts developed in any adjudicative proceedings in this matter that the proposed order provisions might be inadequate to fully protect the public, the Commission may order such other relief as it finds necessary or appropriatc.

ORDER It is ordered That respondent TK- 7 Corporation, a corporation; its successors and assigns, and its offcers, and Moshe Tal, individually and as an officer of the corporation, and respondents' representatives agents and employees, directly or through any corporation, subsidiary, division or other device, in connection with the production, labeling, advertising, offering for sale, sale or distribution of the gasoline fuel additive currently marketed under the name "TK- 7" 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.

A. That the additive provides top cylinder lubrication, reduces engine friction, and extends engine life;

B. That the additive lowers engine operating temperatures; C. That the additive protects spark !Jlugs from fouling and prevents carbon build-up;

D. That the additive increases engine power; E. That the additive boosts fuel octane levels; F. That the additive increases gasoline mileage. It is further ordered That respondent TK- 7 Corporation, a 304 FEDERAL TRADE COMMISSIOK DECISIONS Compaint 114 FTC.

corporation; its successors and assigns, and its officers, and Moshe Tal, individually and as an officer of the corporation, and respondents representatives, agents and employees, directly or through any corporation, subsidiary, division of other device, in connection with the production, labeling, advertising, offering for sale, sale or distribution of any fuel additive or engine additive ("additive ) 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, concerning the performance or efficacy of the product unless and only to the extent that, at the time of making such representation, respondents possess and rely upon a reasonable basis consisting of competent and reliable evidence which substantiates the representation.

For purposes of this provision, to the extent evidence consists of scientific or professional tests, analyses, research, studies or any other evidence based on expertise of professionals in the relevant area, such evidence shall bc "competent and reliable " only if those tests analyscs, research, studies, or other evidence are conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession or science to yield accurate and reliable results.

III.

It is further ordered That for three (3) years from the date that the representations to which they pertain are last disseminated, respondents shall maintain and upon request make available to the Federal Trade Commission or its staff for inspection and copying: A. All materials relied upon to substantiate any claim or representation covered by this order: and B. All test reports, studies, surveys or other materials in their possession or control that contradict, qualify or call into question such representation or the basis upon which respondents relied for such representation, including complaints from consumers. IV.

It is further ordered That respondent TK-7 Corporation and its successors and assigns shall forthwith distribute a copy of this order to each of its subsidiaries and divisions and to all present and future agents, representatives and employees having responsibility for advertising, production, packaging, quality control or corporate policy TK-7 CORPORATION, ET AL. 305 3111 Complaint with respect to the subject matter of this order, shall secure from each such person a signed and dated statement acknowledging receipt of the order and shall maintain such statement for three (3) years after the end of such person s employment by respondents. It is further- ordered That respondent Yloshe Tal promptly notify the Commission of the discontinuance of his present business or employment. ln addition, for a period of ten (10) years from the date of service of this order, respondent shall promptly notify the Commission of each affiliation with a new business or employment. Each such notice shall include respondent' s new business address and a statement of the nature of the business or employment in which respondent is newly engaged as well as a description of respondent' 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. VI.

It is further or-dered That respondent TK-7 Corporation and its successors and assigns notify the Commission at least thirty (30) days prior to any proposed change to itself, such as dissolution, assignment or sale resulting in the emcrgence of a successor corporation, the crcation or dissolution of subsidiaries or any other change which may affect compliance obligations arising out of this order. VII.

It is fi"r-ther order-ed That respondents and their successors and assigns shall, within sixty (60) days after service of this order upon it and at such other times as thc Commission may require, 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 114 F.T.C, EXHIBIT A EXHIBIT A TK-7 CORPORATION, ET AL. 3807 301 Complaint _SWEK-7 Corporation has developed a remarkable formula of organic comrc which release additional oxygen at engine temperatures to Increae F and improve engine performance while decreasing fuel consump- § The residue from buming TK-7 products form a type of synthetic lubri- ® Providing tep cytinder lubrication for your engine which results in " friction, protects epark plugs from fouling and prevents carbon on vaives and valve seats. TK-7's superior formula protects the ’ system from corrosion and acts as an anti-ge!. . ey cel S0NK-7 Products ‘contain no ‘lead.

everage | “Special formule designed for diese! engines (4,6,8 cylinder) Im- cylinder Jubrication, * A performance, easier staring, “engines. Master matceleration «wéspon aot MBOrder No.:3835-22 "| --sgNOrder No.-9835-23 308 FEDERAL TRADE COMMISSJOK DECISIOKS Complaint 114 F.

TK-7 CORPORATION, ET AL. 309 Complaint x (ENDORSED BY — SICHAMPIONS! | ‘The Legend “Big Daddy Garlits “Fop Fuel:Dragster -- y"BEDo i ie 7s wf wont fun without it...

Wd QF rank Hawley AMHRA 162-'83 ae Funny Car World Champion - ‘ : ies K-7.racing products to achieve best pert ince in my funny car the “Chi Town Hustler” 0 Care luse TK-7 octane boosters to get .

and eng! Protection by recelving top The more 1 use,-the better the sing ‘@appears in full color black'& white,*both in Nationa! jagazines. 4 Your TK-7 Distributor wcicans aitiencmese ¢.$For CARS, WRUCKS AV’ WBOATS, ETC. ..

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EXHIBIT B IN REFERANCE TO 4A & 6A CAR CRAFT - y 1985 rSSL:f.

TREAT YOUR ENGINE TODAY, BEFORE IT MISTREATS YOU TOMORROW! (,0 With Icday s low fuel grade you need TK-7 Products '0.:

. Reduce rlic!ion - cylinder lubrication . Eliminate pinging & dirseling .. EliminateClean water/anli-gelfuel system . . ImprOll1! mileage S'g Dilday Do" Coi". says I ",,,,, ! nm wlrllDul 'I We recommeno con""anl "se lor Ihe !"S! 4 "'earme"l! 10 Ic e ;e!1er ' II' ORDER TODAY. Cilil TOil Free '. 800-8J). FUEL ."O ' J ..., 10' 0""", I r"",.

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HERE IS THE ANSWER! TK.? is an amazing discovery that turns unleaded from pooper fuel to SUPER FUEL whelhlOr your car was made lor regular or unleaded, TK.

will give you higher octane performance. . better mileage. . . and lubrication for longer engine life ORDER TK-? NOW! w, '"'o ."o '"01,'''"' u" ," ,..". ", ,,.,,m,",, 10 ,,0,... .."" ",,", OAOER TODAY C " hll F,.. 1.aDCI.tI:JJ.FUEL ",o, J w"'" '0' """oN' ,':. a;o' SUPER OCTANE 8COSTER - '00'.00.", ".." ,"XQ'" GAS SA ER & CONO,110NE - 100'. "'",' ".." 2O. )l ESflFl'HSAVEA- 'Only"'''''''' '20''Oq.'' MaTCRC'CLE S;.PER O TANE BOOSaR I'-eyo,.)- 'COltX"'"'' ''''''O,''' TWC-5TRO"E SUPER OCTANE: BOOSTER- 'Oa, "'''''' ,,,'" ''' ''' "oc ".. 'MO' t" p,,,,, N,""

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C", - SIa'. - . Z,p C"ec' LJv,,. L"JMa",or,,'" An"oun C,,"NO E.p. O.,. S;c;n.,u.'o 800-833-FUEL0'00'0.," TK. 7 CORPORATION (702) 871-FUEL rm1 , 7J Pc .". A," " Su,'. 6 ' L., Voc;a. N 89'02 A:IO 'A: DRACS'jfR" - :-.ARC , AF?,IL, AHD !'Y :SSUES EXH12::T C 1"- )t::!)C9 . . .,.._.: , _... _ , .. , ,. , ... q,, ,,,.\.. ,,,,..,.. ,, ,, ,. ,.. ., ,. ,, ... . . Complaint 114 F. T.

EXHIBIT D EXi:IF. :T ;:

OCTANE BOOSTERS & FUEl CONDITIONERS Fer High Pericrr.ance & average Gasoline Eng.ines Diesei, MO' ofcycle, and y.fI Stroke Engines. Leaded or Unleaded Gasoline.

Big ::aocy ' c Gd'1115 says "TK. 7 as J:' 118S I h a: r. ,," e, c r e 3 5 e d h e ,r,C) lii In my 25 O'5Ppo",er V. S :;ooge :reme d8us' y. I wcn run wqhO 1 '!. The r"",'e I use. ,he bell!'rl!'ert'suIIS 7 Co'! .,.. O '.'o rom.,',.,. "''''"-001 0";""" ,"", DOud, r".' '.' M""' O"' o,';.

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dnc lu.r cco,U"'''''"O Th. OO' '''.r 0' "...MM'h""',..., 1 Cyl;ndf'( Lubrical;on 2 In reases Power J Bener Mileage 4 Elimirla:es Wat 5 Cleans FIJ I Sy !ems 6E..lel1dsEl1gil1elde (1 I 7 ReducesPil1gil1g I,(," MANUFACTURER' S INTROOUCTOFJ" OFFER! 0",",,, o." :1..', ,"",,, P'''O' ' '0 h '''' 00''0'' "'0.' 9".'0" ""0 ' SUPER OOANE BoosrE'I - n"' .- "'0"' "'u" o. "9 O '0 o. ... "" ","". o.,n' O' ,'c. '00''''''' "''''11''1''''"' 1 N TK.)0-."0GAS SAVER:00"' ANO CCN :TIONER - ''' "'0"9" "'I I ACC,"" 1 DtESEl ,UEI. SA ,R - "". ' Coil s,.," I,D 0_. '0..' , ,D -0 Q. COO(' v',. e.ta.c Amount' 1 "O'O CYC,E SUPU' DCANE BOOSTER- '.", c."O N E.c D. 0 . ," ,,-,. ," 0' ""' S'9 ."J'. -- 0'0" D." - A"'a (0'0''''0 , '''0 5'Qo.t ,""q Oc" E "OO,n IJDJ, "J.9,!1 16D ".".c.36J- O'0' IJn-6DD9 .., -"'0" o-.., pO, 1'0'1"-IrO'h.. COli; 1. 5595 J!JS 0' r1C1IH'. oa, 'JJ. 0,.."",," ".."1'01. TK- 7 COflPOI1"TIO,"

, '"'00'"0 '"" 'J "" . ' "" 0.'00''' J'70PO,.",A,. S"".9.Do,,'''P2'BS ""e J "n,. , 0""." 99'02 ", I!' fLIc:r:'fA:HS" )IJ010 TK- CORPORATION, ET AL. 313 301 Decision and Order DECISION AND ORDER The Commission having heretofore issued its complaint charging the respondents named in the caption hereof with violation of Section 5 of the Federal Trade Commission Act, as amended, and the respondents having been served with a copy of that complaint together with a notice of contemplated relief; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by the respondents 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 Secretary of the Commission having thereafter withdrawn this matter from adjudication in accordance with Section 3.25(c) of its Rules; and The Commission having considered the matter 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 3. 25(f) of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent TK- 7 Corporation is a corporation organized existing and doing business under and by virtue of the laws of the State of Kevada with its offce and principal place of business located at 200 Third Street, S. , in the City of Oklahoma City, State of Oklahoma.

Respondent :.oshe Tal is the President of said corporation. He formulates, directs and controls the policies, acts and practices of said corporation, and his address is the same as that of said corporation. 2. Thc Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondent TK- 7 Corporation, a corporation; its 314 FEDERAL TRADE COMMISSIO:\ DECISIOKS Decision and Order 114 F.

successors and assigns, and its officers, and Moshe Tal, individually and as an officer of the corporation, and respondents' representatives agents and employees, directly or through any corporation, subsidiary, division or other device, in connection with the production, labeling, advertising, offering for sale, sale or distribution of any fuel additive or engine additive ("additive ) in or affecting commerce, as "com: merce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from making any representation, directly or by implication, concerning the performance or efficacy of the additive including, but not limited to, representations A. That the additive provides top cylinder lubrication, reduces engine friction, and extends engine life;

B. That the additive lowers engine operating temperatures; C. That the additive protects spark plugs from fouling and prevents carbon build-up;

D. That the additive increases engine power; E. That the additive boosts fuel octane levels; and F. That the additive increases gasoline mileage unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation; provided, however, that for purposes of this provision, to the extent such evidence consists of any test analysis, research, study, or other evidence based on the expertise of professionals in the relevant area, such evidence shall be "competent and reliable" only if the test, analysis, research, study, or other evidence was conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results. II.

It is further ordered That for three (3) years from the date that the representation to which they pertain is last disseminated, respondents shall maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All materials relied upon to substantiate any representation covered by this order; and B. All test reports, studies, surveys or other materials in their possession or control that contradict, qualify or call into question such TK-7 CORPORATlO?-. ET AL. 315 301 Decision and Order representation or the basis upon which respondents relied for such representation, including complaints from consumers. It is further ordered That respondent TK- 7 Corporation shall distribute a copy of this order to each of its subsidiaries and divisions and to all present and future agents, representatives and employees having responsibiliy for advertising, production, packaging, quality control or corporate policy with respect to the subject matter of this order; shall secure from each such person a signed and dated statement acknowledging receipt of the order; and, shall maintain such statement for three (3) years after the end of such person employment by respondents.

IV.

It is further ordered That respondent Moshe Tal shall promptly notify the Commission of the discontinuance of his present business or employment and for a period often (10) years from the date of service of this order, respondent shall promptly notify the Commission of each affiliation with a new business or employment, each such notice to include respondent's new business address and a statement of the nature of the business or employment in which respondent is newly engaged as well as a description of respondent' s duties and responsibilities in connection with the business or employment. It is further ordered That respondent TK-7 Corporation and its successors and assigns shall notify the Commission at least thirty (30) days prior to any proposed change to itself, such as dissolution assignmcnt or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change which may affect compliance obligations arising out of this order.

VI.

It i8 further ordered That respondents and their successors and assigns shall, within sixty (60) days after service of this order upon 316 FEDERAL TRADE COMMISSIOK DECISIONS Decision and Order 114 F.

them, and at such other times as the Commission may require, fie with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. STRAWBRIDGE & CLOTHIER, I:.C. 317 317 Complaint