Spanish Telemarketing Industries, Inc

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b; THE MATTER OF SPANISH TELEMARKETING I:\DUSTRIES, INC., ET AL. CONSENT ORDER, ETC. , IN REGARD TO ALLEGED VIOLATION OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT Docket 33.53. Complaint, Dec. 20, 1991-Decision, Dec. 20 , 1991 This consent order prohibits, among other things, three California telemarketing companies and an individual, that produce Spanish-language television advertisements for a weight loss product, from representing that any weight control food drug, product, device, or service causes weight loss without increased physical activity and/or decreased caloric intake. Appearances For the Commission: Sylvia J. Kundig. For the respondents: Alan Weil, ATmato, Gaims, Weil, West & Epstein Los Angeles, CA.

COMPLAINT The Federal Trade Commission, having reason to believe that Spanish Telemarketing Industries, Inc. , a corporation, Nickolas Telemarketing Industries, Inc. , a corporation, and Sylvia George, Inc. a corporation, and Stewart Brown, individually and as an officer and director of Spanish Telemarketing Industries, Inc. , Nickolas Telemarketing Industries, Inc. , and Sylvia George, Inc. respondents have violated the provisions ofthe Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges: PARAGRAPH 1. (a) Respondent Spanish Telemarketing Industries Inc. , is a corporation organized, existing and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road, Los Angeles, California. (b) Respondent Nickolas Telemarketing Industries, Inc. , is a corporation organized, existing and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road, Los Angeles, California. (c) Respondent Sylvia George, Inc. , is a corporation organized SPANISH TELEMARKETING INDUSTRIES , INC. , ET AL. 755 754 Complaint existing and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road Los Angeles, California.

(d) Respondent Stewart Brown is an individual who has been, and is now, an officer and director of Spanish Telemarketing Industries, Inc. Nickolas Telemarketing Industries, Inc., and Sylvia George, Inc. At all times material to this case, he has formulated, directed, and controlled the acts and practices of the corporate respondents, including the acts and practices alleged in this complaint. His principal place of business is located at 3219 San Fernando Road, Los Angeles, California. PAR. 2. Respondents have directed, participated in, and assisted others in the offering for sale, sale and distribution of a weight loss regimen ("Faja Fantastica ). Respondents also have directed, participated in, and assisted others in the creation and dissemination to the public of Spanish language advertisements and promotional materials that offer for sale the Faja Fantastica.

PAR. 3. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce " is defined in the Federal Trade Commission Act. PAR. 4. Faja Fantastica consists of an approximately seven-inch wide nylon covered rubber belt and a moisturizing cream. In their advertisements, respondents refer to the Faja Fantastica as a weight-removal plan " and a "fat-removal plan. " The respondents refer to the nylon covered rubber belt as a "corset" ; and the moisturizing cream is referred to as the "fat-removal cream. " As advertised, Faja Fantastica is a "drug" and/or "device" within the meaning of Section 12 of the Federal Trade Commission Act. PAR. 5. Typical of respondents' advertising for Faja Fantastica, but not necessarily all-inclusive thereof, are Spanish language commercials aired nationwide on television stations that have foreign language programming ("the commercials ). Translated texts of the commercials are attached to this complaint as Exhibit A. PAR. 6. The commercials contain inter alia the following claims: (a) " L€t the Weight-Removal plan go to work for you by ridding you of those undesirable excess pounds and inches.

(b) " ight or day, the Fat" Rernoval plan helps you achieve that figure you always dreamed of, without the need for diets or strenuous exercises. With the Fat- Removal plan you lose pounds and inches from where you most need it!" (c) "Just take a small amount of the Fat-Removal Cream, apply vigorously where you d like to slim down, allow for your skin to absorb, and then, put on your corset!" Complaint II4 F.

(d) "Lease those extra pounds and inches! Achieve a total reduction (lossJ of pounds and inches without starving to death and without strenuous exercises. (e) "Just apply to those areas where you want to lose inches the fastest. The fantastic Corset's plan works better in the areas where your overweight accumulates the most. It dramatically reduces those extra inches and it helps you lose those undesirable pounds.

PAR. 7. By and through the use of the statement referred to in paragraph six, and others of similar import and meaning in other advertisements or promotional materials not specifically set forth in this complaint, respondents have represented, directly or by implication, that use of Faja Fantastica wil cause an individual to lose weight without an increase in physical exercise and! or a decrease in caloric intake.

PAR. 8. In truth and in fact, use of Faja Fantastica will not cause an individual to lose weight without an increase in physical exercise andor a decrease in caloric intake. Therefore, respondents' representation as set forth in paragraph seven was, and is, false and misleading.

PAR. 9. In the commercials, respondents feature the following consumer endorsements or testimonials;

(a) LUnidentified woman) "I already lost my first 12 pounds and without any effort, (b) Mrs. Flores) "The more I use my Fat-Removal, the better I look. I've already lost fifteen pounds and four inches from my waist." PAR. 10. By and through the use of the statements referred to in paragraph nine, and others of similar import and meaning in other advertisements or promotional materials not specifically set forth in this complaint, respondents have represented, directly or by implication, that the consumer endorsements or testimonials are representative of what consumers will generally achieve using Faja Fantastica in actual, although variable, conditions of use. PAR. 11. In truth and in fact, the consumer endorsements or testimonials are not representative of what consumers wil generally achieve with Faja Fantastica in actual, although variable, conditions of use. Therefore, the respondents' representation as set forth in paragraph ten was, and is, false and misleading. PAR. 12. By and through the use of the statements in paragraphs six and nine and others of similar import and meaning in Exhibit A or in other advertisements or promotional materials not specifically set SPANISH TELEMARKETING INDUSTRIES , INC. , ET AL. 757 754 Complaint forth in this complaint, respondents have represented, directly or by implication, that at the time the respondents made the representations set forth in paragraphs seven and ten, they possessed and relied on a reasonable basis for the representations. PAR. 13. In truth and in fact, at the time the respondents made the representations set forth in paragraphs seven and ten, respondents did not possess and rely on a reasonable basis for the representations. Therefore, the representation set forth in paragraph twelve was, and , false and misleading.

PAR. 14. The acts or practices of respondents, as alleged in this complaint, were and are to the prejudice and injury of the public and dissemination by respondents of the aforesaid false and misleading representations constituted and now constitutes unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act and false advertisements in violation of Section 12 of the Federal Trade Commission Act. Commissioner Yao not participating.

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Complaint 1I4 F.

EXHIBIT A F3.Cl. 1 ! START , .sylV10iraJa OIJ G.oorgeta Peso ': Fe 0va- C:r e':l 60 See Spc Job No. C- Qu:':a S peke =-SO!' 1 (Hs Plla" Ve:c€s) F 11 a:r Ve rOes 'ioi.T' Colomblar, and Comme r, ta t.) r Are you one of these people who )las be en a"cuously ':rYlnq to 10s at exce :. ner, '. 5 :::rom your 'ralst, hlpS, 0: thlghs? rat Re;nova Course t Then. allow me to recc mend you somethlng very, very spec:al des:.gned to remove that undesirab:e f t very fast, the Fat-Removal cor The surprls:.ng body- slimmer Which helps yo;. to get rlc of that undeslrable excess tat! I the Ips you to qUlckly g t r:.d of pxc:e s s fat! EX::IBI!: f..

SPANISH TELEMARKETING INDUSTRIES . INC., ET AL. 759 754 Complaint Sylvla George Q\.lta ?es0 P.3 '; 612 See S;oot Job No. C- ta-60 Spokeperson 2 Has alrea y lost 12 pou r have already lost my flrst tl.e: ve pcunds. wl h no etfort at all! S;:oxesperson 1 ! 11 5 ' r des ) Let the Weight- Removal ?l n 90 to wor IJ r ycu ty rlddlng you 0: those underSlrJble exces. pounds ar, d inches.

The fat- Removal Cc rset ? hel 5 au be more Sl nde:! Look and feel uch more 91amourous! under r ar 5: rOLLO\, THE DIREC::ONS! 7he Fat-Removal Plan could qlve you the success you need to be slender.

! the M extra-inch"

51 i rnme r.

Ca 11, and order right now! Complaint II4 F, Sylvla George Quita Peso Pa1 Job No. C- Qulta-60 fat-Removal Co r se t Call Right O..

800- 829- 2111 Voice 2 One-Eight Hund re - E 1 gh t -Twe n ty Nine-T..entv jne-Eleven One-Elght Hund red - E 1 gh t Twe nt y Nine-Twenty One-Eleven One- Elght Hund re d - E 1 qh t- Twenty Nine-Twenty :rne-E even Or, e-Eight H u nd red - E 1 9 h t - rwe n t y Nine-Twenty One- Eleven SPANISH TELEMARKETING INDUSTRIES, INC., ET AL. 761 754 Complaint Sylvia George Fat Removal Corset Page i 92 Sec Spot Job No. C-Quita-9@ Use translation to Job C-Quita-6@ as follows: (i1} Page 1 up to ia — (ii) Then, start from translation A, page 2 follow to end of page 4.

(iil) Use Page 3 of C-60.

Complaint 114 F.T.C 9@ Sec Spot Job No. C-Quita-9 Page 2 Translation A Spokesperson 3 [ Aftidavits on File | It’s a pleasure to wake up every morning feeling more thin and siender, knowing that my Fat-Removal Corset is working! Spokesperson 2:

| Has already lost 1° pounds | tT have already lost ny first twelve pounds, with no effort at all:

Spokesperson 1: (Ms Verdes) Night or day, the Fat-Removal plan helps you achieve that figure you've always dreamed of!, without the need for diets or strenuous excersices. With the Fat-Removal plan you lose pounds and inches from where you most need it! | Lose Weight where you most need 1t! | SPANISH TELEMARKETING INDUSTRIES, IXC., ET AI" 763 754 Complaint Job90 S'!cSo.Spot(- Qulta-90 r.) C; Spokesperson 4 The more I us'! my " Fat- Removal I the better I 100)(. ve already lost fifteen pounds and tour Inches from my waist.

Mrs, Flores has already lost 15 ounds And lost 4 Inches of Waist! I My husband IS enjoying watchlnq me n my new warCrobe! Complaint 114 F.T.C.

9@ Sec Spot Job No: C-Quita-9@ Page 4 Spokesperson 1 (Ms Verdes):

Let the fat removal plan go to work for you by ridding you of those undesireable excess pounds and inches.

Just take a small amount of the Fat-Removal Cream, apply vigourously wnere you'd like to slim down, allow for your skin to absorb, and then, put on your corset! The Fat-Removal Corset'’s Plan helps you be more slender! Look and feel much more glamorous! The Fat-Removal plan could give you the success you need to be slencer and slicmer. | Follow the Directions | Call, and order right now! Page 3 of C-Quita-6@ numbers read 3 times. SPANISH TELEMARKETING INDUSTRIES, INC.. ET AL. 765 754 Complaint SylVld George 1 Hlnute Spot Pa q fantastlc Corset Job No: frf- RR-SO Va i ce 1 This lS the rnlra ulous corset that helps you become slender qUlckly! LOSE WEIGHT NOW I s the Fantastic Corset! The corset can be used at any tlme and anywhere be CRuse s very comfortable.

HARGARI TA HORAN I The corset easlly adjusts to your body and automatically shapes (molds) your flgU:':. SLIH-DOWN 14 HOURS A DAY The advantage of the Fantastlc Corset ' 5 5urprlslng sllmmlng power.

INCREDIBLE SLIHHING POWER' Achieve that beautiful and shapely figure anc that beautiful waist.

Complaint II4 F, Sylvia George Fantastlc Corset Pa g 1 Hlnute Spot Job No, frf-RR- AchleVe that beautlful and shapely fu;ure! Lose those extra pounds and inches! Achieve a total reduction (loss J of pounds and inches wlthout starvlng to death and without strenuous excerSlces.

Works even better wlth the FANTASTIC CREAM Start to lose inches to achieve a new and beautiful body almost immedlately.

LOSE WEIGHT NOW And Now! The Corset s (worJnngJ plan works even better with the FANTASTIC CR because it lntenslfies Istrengthens, amplifies) the corset ' 5 incredible sllrnrnlng powers to help you become slender, quickly! And it s so easy to use.

SPANISH TELEMARKETING INDUSTRIES , INC. , ET AL. 767 754 Complaint Sylvla Georg Fantastic Corset Page j 1 MInute Spot Job No; frf-RR-tio Voice 2 Call right now! One-EIght Hundred-EIght-Twenty nine-T entry One-Eleven.

One-Eight Hundred-E19ht-Twenty, NIne-Twenty One- E 1 even.

Don lose this opportunity. Call right now! One-EIght Hundred-tight-Twenty NIne-Twenty One- Eleven.

CALL Right NOW! 1-8 -829-211I and receive two for the price a f one! . this week only 768 FEDERAL TRADE CO !MISSION?- DECISIONS Complaint II4 F.

Sylvla Georg :2 Hlnute SprJt Paq Farnastlc Cors Job o, FRF-RR-120 Use pages 1 dnd 2 completely the translatlon of Jot No. FRf-RR-SO Stlll VOlee 1:

(mlsslng the plural s 10SpanlshJ st apply to those areas whe;e you ant to lose Inches the fastest, The Fantastlc Corset ' s plan works better 1n the Works even better wlth the FANTASTIC CREAH areas where your overwelght accumulates the ose ost. It dramatically redu=es t extra inches and It helps you lose those deslrable pounds.

Va 1 ce For this week, and this week. only you recelve t o corsets with their creams tor the price of one, This fabulous otter IS only valid this week.

CHL RIGHT NOW! 1-800-829-2111 and r celVe two for the price of one . this week only SPANISH TELEMARKETING INDUSTRIES, INC., ET AL. 769 754 Complaint Sylvia George 2 Minute Spot Page 2 Fantastic Corset Job No: FRF-RR-1202 Spokesperson:

If you seriously want to look real good, then you can't be left without your Fantastic Corset! The Fantastic Corset guarentees suprising results starting from day one! All my family wears it! My best friends [female gender: amigas] wear 1t:

Y wear 1t! You, teo, should wear it! Voice 2:

CALL RIGHT NOW! 1-800-829-2111 and receive two for the price of one! * this week only ° Don't forget to order it to receive tw corsets with their creams for the price of one! But, call right now, because this offer is valid this week only! Complaint II4 F.

sylvla George fantaS':lC Corset Pa q 2 t-\nute Spot ...... rct". CC. ")(J Spokesperson The fantastic Corset s plan lS guaranteed Order your fant3stlc Corset ' s plan flght now! And. If for any reason whatsoever you re not completely s tlsf:ed wlth your c rset send It back. and keep your cream wlth no further obl1qatlons.

Voice 2:

CALL RIGHT NOW! Bee-829-2111 and recelve two for the price ot one! . this week only.

Call rlqht no ! One-Eight Hundred-Elght- -Twenty Nine Twenty One- Eleven. One ti9ht Hundred-Eight-Twenty Nine-Twenty One-Eleven. Don t lose this opportunity. Call this mlnute One-Eight Hundred-Elght-Twenty Nine-Twenty On -Eleven.

SPANISH TELE)!MARKETING INDUSTRIES , INC. , ET AL. 771 754 Decision and Order DECISIO"i A:\D 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 San Francisco 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, their attorney, 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 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 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 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 no comments having been filed thereafter by interested parties pursuant to Section 2.34 of its Rules now in further conformity with the procedure prescribed in Section 34 of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order: 1. a. Spanish Telemarketing Industries, Inc. , is a corporation organized, existing, and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road, Los Angeles, California.

b. Nickolas Telemarketing Industries, Inc., is a corporation organized, existing, and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road, Los Angeles, California.

c. Sylvia George, Inc. , is a corporation organized, existing, and doing business under the laws of the State of California. Its offices and principal place of business is 3219 San Fernando Road, Los Angeles, California.

d. Stewart Brown is an individual who is, and at all material times Decision and Order II4 F. was, an officer and director of Spanish Telemarketing Industries, Inc. Nickolas Telemarketing Industries, Inc. , and Sylvia George, Inc. His principal place of business is located at 3219 San Fernando Road, Los Angeles, California.

2. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act.

3. The 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 corporate respondents, their successors and assigns and their officers; and Stewart Brown, individually and as an officer of corporate respondents; and respondents ' representatives agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of Faja Fantastica, a moisturizing cream and/or girdle, any substantially similar products devices, or combination of such products or devices in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, that the product wil cause an individual to lose weight without increased physical activity and/or decreased caloric intake. II.

It is further ordered That corporate respondents, their successors and assigns and their officers; and Stewart Brown, individually and as an officer of corporate respondents; and respondents' representatives agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale, sale, marketing, or other promotion of any weight control product, device or service, in commerce, as "commerce " is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, directly or by implication the performance or efficacy of any weight control product, device or service. For purposes of this order, weight control product, device, or service shall SPANISH TELEMARKETING INDUSTRIES , lnc. , ET AL. 773 754 Decision and Order include any food, drug, product, device, or service designed or used to prevent weight gain or to produce weight loss, reduction or elimination of fat, slimming, or a caloric deficit in a user of the food, drug, product, device, or service.

It is further ordered That corporate respondents, their successors and assigns and their officers; and Stewart Brown, individually and as an officer of corporate respondents; and respondents' representatives agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any food, drug, product, device, or service, in or affecting commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, that the food drug, product, device, or service wil cause an individual to lose weight without a prominent disclosure that weight loss can only be obtained through increased physical activity and/or decreased caloric intake. The disclosure shall be in the same language as the advertisement or commercial for the food, drug, device, product, or service and in close proximity to the representation.

IV.

It is further ordered That corporate respondents, their successors and assigns and their officers; and Stewart Brown, individually and as an officer of corporate respondents; and respondents' representatives agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any food, drug, product, device, or service, in or affecting commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication that the food drug, product, device, or service wil, can, or may provide or help provide any health-related benefit, unless, at the time of making the representation, respondents possess and rely on a reasonable basis consisting of competent and reliable scientific evidence that substantiates the representation. For purposes of this order, scientific evidence shall mean tests, analyses, research, studies, or other evidence Decision and Order II4 F. conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the relevant profession to yield accurate and reliable results. It is further ordered That corporate respondents, their successors and assigns and their officers; and Stewart Brown, individually and as an officer of corporate respondents; and respondents' representatives agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, offering for sale, sale, or distribution of any product or service, in or affecting commerce, as "commerce " is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Using, publishing, or referring to any endorsement (as endorsement is defined in 16 CFR 255(b)) unless respondents have good reason to believe that at the time of the use, publication, or reference the endorsement reflects the honest opinions, findings, beliefs, or experience of the endorser and contains no representation which would be false or unsubstantiated if made directly by respondents; and B. Representing, directly or by implication, that any endorsement of the product or service represents the typical or ordinary experience of members of the public who use the product or service, unless that is the case.

VI.

It is further ordered That respondents are jointly and severally liable for consumer redress in the amount of one hundred thousand dollars ($100 000) and shall, within five (5) days of the date that this order becomes final, deposit the sum of one hundred thousand dollars ($100 000) into an escrow account established and managed by the Commission. These funds shall be used to provide redress to consumers who were injured by respondents or others in connection with the acts and practices alleged in the complaint, and to pay any attendant costs of administration. The final determination of eligibility for, and amount of, refunds to be paid to consumers shall rest with the Commission. If the Commission determines that the direct payment of said funds to eligible consumers is wholly or partially impracticable then, in lieu of making direct consumer redress, the Commission shall SPANISH TELEMARKETING INDUSTRIES , INC. , ET AL, 775 754 Decision and Order cause said funds to be paid to the United States Treasury. Respondents shall be notified as to how the funds are disbursed, but shall have no right to contest the manner of distribution chosen by the Commission. No portion of the payment as herein described shall be deemed a payment of any fine, penalty, or punitive assessment. VII.

It is further ordered That respondents shall, for at least three (3) years after the date of service of this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying, at a place designated by the Commission, complete records regarding respondents' compliance with this order, such records to include, but not be limited to:

A. All advertisements, promotional materials, documents, or other materials covered by this order;

B. All materials relied on to substantiate any claim or representation covered by this order;

C. All materials in their possession, custody, or control that contradict, qualify, or call into question such representation or the basis on which respondents relied for such representation; and D. All materials that demonstrate respondents' compliance with this order.

VII.

It is further ordered That the respondents shall, for three (3) years from the date of entry of this order, distribute a copy of this order to each present and future managerial employee. IX.

It is further ordered That respondents shall notify the Commission at least thirty (30) days prior to the proposed change, of any proposed change in the corporate respondents 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 that may affect compliance obligations arising out of the order.

776 FEDERAL TRADE COM !ISSJO:\ DECISIONS Decision and Order II4 F. It is further ordered That respondent Stewart Brown shall, for a period of five (5) years from the date of service of this order, promptly notify the Commission, in writing, of his discontinuance of his affiliation with any corporate respondent, or his new affilation with any other business or employment that engages in any acts or practices covered by any provision of this order. For each such new affiliation, the notice shall include the name and address of the new business or employment, and a description of respondent' s duties and responsibilities.

XI.

It is further ordered That respondents shall, within one hundred and twenty (120) days after the date of service of this order upon 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. Commissioner Yao not participating.

KREEPY KRAULY USA, INC. 777 777 Complaint