Sharper Image Corporation

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

Complaint 116 F.T.C.

IN THE MATTER OF

SHARPER IMAGE CORPORATION, ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3443. Complaint, June 28, 1993--Decision, June 28, 1993

This consent order prohibits, among other things, a San Francisco-based retail chain and mail order company and its president from making false or unsubstantiated advertising claims for a telephone tap detector (Tap Detector V), an exercise device (Chest Maximizer), and an anti-fatigue nutritional supplement (Essential Factors) or similar products.

Appearances

For the Commission: C. Steven Baker and Alan E. Krause. For the respondents: Vincent A. Ruiz, Gutierrez & Associates, San Francisco, CA.

COMPLAINT

The Federal Trade Commission, having reason to believe that Sharper Image Corporation, a corporation, and Richard Thalheimer, individually and as an officer of said corporation ("respondents"), have violated the provisions of the 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. Respondent Sharper Image Corporation is a Delaware corporation, with its office and principal place of business located at 650 Davis Street, San Francisco, California. Respondent Richard Thalheimer is an officer and director of the corporate respondent. Individually or in concert with others, he formulates, directs and controls the acts and practices of the corporate respondent, including the acts and practices alleged in this

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complaint. His principal office or place of business is the same as that of the corporate respondent.

PAR. 2. Respondents have advertised, offered for sale, sold and distributed a product known as the Tap Detector V (previously known as the "Privacy Protector"), which product is advertised as a means of determining whether there is a tap on a telephone.

PAR. 3. Respondents have advertised, offered for sale, sold and distributed a product known as a Chest Maximizer, which product is advertised as a means of enhancing the effects of regular push-ups off the floor.

PAR. 4. Respondents have advertised, offered for sale, sold and distributed a product known as Essential Factors, which product is advertised as an anti-fatigue nutritional supplement. Essential Factors is a "food" or "drug" within the meaning of Sections 12 and 15 of the Federal Trade Commission Act.

PAR. 5. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

PAR. 6. Respondents have disseminated or caused to be disseminated advertisements for the Tap Detector V (previously known as the "Privacy Protector"), Chest Maximizer and Essential Factors, including, but not necessarily limited to, the attached Exhibits A-D. These advertisements contain the following statements:

1. "[The Tap Detector V's] Advanced circuitry even blocks extension phones from interfering with facsimile or computer modem transmissions." (Exhibit A) 2. "[TheTap Detector V is] FCC-approved." (Exhibit A) 3. "If you hired a detective agency to find a tap on your phone, that single service would cost about $300. But you can guard the privacy of your line even more effectively with the Privacy Protector™ -- for just $59." (Exhibit B) 4. "[The Chest Maximizer's] deep push-ups give you three times the results in fewer reps. . . ." (Exhibit C) 5. "Can you really get extra energy from a vitamin? This US-patented formula says yes. Oxy-Energizer™ is the first nutritional supplement ever to be granted a US patent. Supported by over 300 independent clinical trials, this anti-fatigue formula consistently demonstrates increases in stamina, endur-

Complaint 116 F.T.C.

ance, recovery time, and cardiovascular function -- results that simply can't be duplicated by any other nutritional supplement." (Exhibit D) 6. "The proof of patent #3,009,858. Oxy-Energizer contains a trade-secret blend of potassium, magnesium, and aspartic acid. People who take the formula feel more energetic throughout the day, especially at normal tired periods in midafternoon and early morning. Double-blind swimming, running, and aerobics studies consistently show improvements in stamina and endurance for subjects who regularly take the active ingredients in Oxy-Energizer. Taken daily, the formula can help you accomplish more at the office because you're not fighting tiredness. After work, you have more energy to enjoy sports or a late evening out. You may even feel less need for sleep (most test subjects do)." (Exhibit D)

PAR. 7. Through the use of the statements contained in the advertisements referred to in paragraph six, including but not necessarily limited to the advertisements attached as Exhibits A, B and D, respondents have represented, directly or by implication, that:

1. When the Tap Detector V is operational on a phone it prevents any extension phone from interfering with a data transmission on any other phone.

2. The Privacy Protector is more effective in detecting taps on a phone line than an inspection of the phone system by a detective. 3. The FCC has approved the Tap Detector V as effective. 4. The United States Government has accepted the active ingredient in Essential Factors as effective for relieving fatigue and providing extra energy.

PAR. 8. In truth and in fact:

1. When the Tap Detector V is operational on a phone it does not prevent any extension phone from interfering with a data transmission on any other phone.

2. The Privacy Protector is not more effective in detecting taps on a phone line than an inspection of the phone system by a detective.

3. The FCC has not approved the Tap Detector V as effective.

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4. The United States Government has not accepted the active ingredient in Essential Factors to be effective for relieving fatigue and providing extra energy.

Therefore, the representations set forth in paragraph seven were, and are, false and misleading.

PAR. 9. Through the use of the statements contained in the advertisements referred to in paragraph six, including but not necessarily limited to the advertisement attached as Exhibit C, respondents have represented, directly or by implication, that the use of the Chest Maximizer will produce three times the results that a person would get by doing fewer regular push-ups off the floor.

PAR. 10. Through the use of the statements contained in the advertisements referred to in paragraph six, including but not necessarily limited to the advertisements attached as Exhibits A-D, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraphs seven and nine, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 11. In truth and in fact, at the time they made the representations set forth in paragraphs seven and nine, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph ten was, and is, false and misleading.

PAR. 12. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices and the making of false advertisements in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act.

Complaint 116 F.T.C.

EXHIBIT A

Casio changes [illegible] [illegible] Analog elegance.

Digital convenience.

[illegible] equips this watch with luminous [illegible] and position markers—both burnished gold. But at the base of the dial, a [illegible] curved liquid crystal display gives [illegible] the modern conveniences.

Hourly and daily alarms remind you of appointments and wake you in time for early morning meetings. Dual-time feature gives you [illegible] [illegible] Alarm Chronograph #FC0710 $199 ($5.50)

Fourteen-karat symbol of your personal style. In ancient times, a philosopher wrote that every woman reflected four distinct qualities: romance, energy, nostalgia, and mystery. To symbolize these different styles, Sharper Image jewelry designers create four distinctive rings from rich 14K gold. The one your eye is drawn to first may say which quality is strongest in you.

The romantic Pearl Ring evokes an oyster opening its shell to offer its treasure. The 5-mm cultured pearl, birthstone for June, reflects light in the open setting.

The geometric lines of the Arrow Ring inspire feelings of drive and energy. The chevron shape is cut from a flattened strip of gold, which is then wrapped into ring form.

The Cigar Band Ring recalls the age when men gave cigar bands to their daughters to wear. Although nostalgic in inspiration, the medallion shape has a clean, contemporary look. It can be engraved by your jeweler or left smooth.

On the top of the Ridged Ring, a step pattern is repeated in a complex, twisting motion that reflects light. The ridges appear to wrap completely around the finger. Or do they? That's the mystery of this unusual ring.

All rings are available in full and half sizes 4-8. Select one today as a trademark of your personal style. [ ] Ladies 14K Gold Rings Pearl #FTG166 $299 ($5.50) Arrow #FTG159 $349 ($5.50) Cigar Band #FTG167 $299 ($5.50) Ridged #FTG169 $299 ($5.50)

You always get the best price.

[illegible]

When you're talking, who's listening? Tap Detector [illegible] detects the [illegible] [illegible] [illegible] [illegible] Tap Detector [illegible] [illegible]

SHARPER IMAGE CORPORATION, ET AL.

Complaint EXHIBIT B Spy spray [illegible] [illegible] this secret fluid [illegible] the paper [illegible] 30 seconds [illegible] of discoloration [illegible] [illegible] Fluid is non [illegible] Works with most paper [illegible] tains enough spray [illegible] This is the same [illegible] [illegible] Order today and [illegible] the veil of secrecy [illegible] personal and business [illegible] ■ Large X-ray Spray #EDT008 Was $39. Now $29 [illegible] PM000095 [illegible] when you're talking, who's listening? If you hired a detective agency to find a [illegible] detection level for your phone lines. [illegible] on your phone, that single service would [illegible] light advises you when line is clear. [illegible] about $300. But you can guard the pri- [illegible] Our exclusive model builds an elec- [illegible] [illegible] will [illegible] in order to block extension phones from [illegible] Privacy Protector [illegible] $59 [illegible] interfering with facsimile and computer [illegible] Privacy Protector installs in seconds [illegible] modem transmissions. [illegible] [illegible] your phone and wall jack with stan- [illegible] Just 3 1/4" L x 2" W x 3/4" D and 2 oz., it slips [illegible] [illegible] modular connections. And it never [illegible] into your pocket for use at home, office, or [illegible] [illegible] with normal phone operation [illegible] wherever you travel. Longer 6' phone cord is [illegible] [illegible] changes in line impedance, [illegible] easier to connect. Uses phone line voltage - [illegible] [illegible] signal, and no warning light alert [illegible] no battery is needed. Unbreakable PVC [illegible] to outside mechanical tampering, [illegible] approved. [illegible] [illegible] and a [illegible] Order the Privacy Protector today and [illegible] [illegible] sensitivity to an optimum [illegible] keep all your private calls private. [illegible] ■ Privacy Protector #EH0400 $59 (4.00) Invisible speakers that fill your room with sound. Now just $599 with trade-in.

Now you can enjoy the impact [illegible] without investing in expensive, high power amplifiers and roomdominating speakers. [illegible] In place of the large, radiating models of conventional speakers, the patented Bose AM-5 Acoustimass Speaker System launches sound into your room using four air masses. These air masses reinforce the bass, while cancelling harmonic distortion. Even at high volume levels, bass notes are clear and distortion free. Because the bass is omnidirectional, you can place the bypassed-sized module anywhere in your room, even under the furniture.

Latest triumph In Bose research.

All the sound appears to come from two tiny cube speakers. Each pair contains two 2 1/2" wide-range speakers, reproducing all the frequencies above 180 Hz. You hear the natural balance of direct and reflected sound of a live performance. For spacious symphonic pieces, rotate the cube speakers outward. For ensembles or soloists, turn the cubes toward you.

With their greatly reduced distortion, these speakers unlock the full potential of today's wide dynamic-range sound sources such as compact discs. They handle up to 100 watts, with built-in protection circuitry.

Cube arrays measure 7 3/4" H x 3" W x 4 1/2" D, weigh 2.4 lbs. Bass module measures 7 1/2" H x 19" W x 20" D, weighs 27 lbs. Black or white finish. Quality US construction backed by a five-year warranty. $100 trade-in offer from Bose.

Bring your old speakers into any Sharper Image store, and they will give you $100 toward the purchase of Bose Acoustimass Speakers. But you must act quickly, this offer expires May 1, 1986.

Writes Stereo Review: "Side-by-side with speakers costing three to five times as much, the AM-5 unquestionably produced more spacious and lifelike sound." Call now to order.

■ Bose AM-5 Speaker System #EJ5501 $699 (35.00)

Complaint 116 F.T.C.

EXHIBIT C

[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] This sporty pack goes from mountain trails to downtown streets with equal style—at a remarkable price for premium leather.

[illegible] Leather Fanny Pack #FK1141 $29 (3.50)

Fewer push-ups, faster results.

[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] Excel Chest Maximizer #FEN311 $39 (5.00)

For phone orders, please call:

800 344-[illegible] [illegible]

Lifeline makes the full-body workout fully portable.

[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible]

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606 Complaint

EXHIBIT D

Can you really get extra energy from a vitamin? This US-patented formula says yes.

O [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] The proof of patent #3,009,858.

[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] Nutrients are absorbed, not flushed away. [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible]

Where Kathy Smith gets extra energy.

[illegible] [illegible] [illegible] [illegible] [illegible] [illegible] [illegible]

Decision and Order 116 F.T.C.

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 Chicago 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 settlement 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, now in further conformity with the procedures prescribed in Section 2.34 of its Rules, the Commission hereby makes the following jurisdictional findings and enters the following order:

1. Respondent Sharper Image Corporation, is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business at 650 Davis Street, San Francisco, California.

Respondent Richard Thalheimer is an officer of said corporation. He formulates, directs and controls the policies, acts and practices of said corporation, and his principal office and place of business is located at the above stated address.

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606 Decision and Order

2. The acts and practices of the 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

I.

It is ordered, That respondents Sharper Image Corporation, a corporation, its successors and assigns, and its officers and directors; and Richard Thalheimer, individually and as an officer and director of said corporation, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale, sale, or distribution of the Tap Detector V (previously known as the "Privacy Protector"), or any substantially similar product, in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication, that:

A. Any such product will prevent any extension telephone from interfering with a data transmission on any other phone; or

B. Any such product is more effective in detecting taps on a telephone line than an inspection of the phone system by a detective.

It is further ordered, That respondents Sharper Image Corporation, a corporation, its successors and assigns, and its officers and directors; and Richard Thalheimer, individually and as an officer and director of said corporation, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale, sale, or distribution of the Chest Maximizer, or any exercise product, in or affecting commerce, as "commerce" is defined in the

Decision and Order 116 F.T.C.

Federal Trade Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication, that:

A. The use of the Chest Maximizer will produce three times the results that a person would get by doing fewer regular push ups off the floor; or B. Such product can achieve any result superior or comparable to that achieved with any other product or exercise;

unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. For purposes of this order, "competent and reliable scientific evidence" shall mean tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area, that has been 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.

III.

It is further ordered, That respondents Sharper Image Corporation, a corporation, its successors and assigns, and its officers and directors; and Richard Thalheimer, individually and as an officer and director of said corporation, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale, sale or distribution of any product in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, in any manner, directly or by implication, that:

A. The FCC has approved the Tap Detector as effective; B. Essential Factors with Oxy-Energizer has been accepted by the United States Government, or any agency or division thereof, as effective for relieving fatigue or providing extra energy; or

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C. Any such product has been accepted or approved by the United States Government, or any agency or division thereof, as effective.

IV.

It is further ordered, That for five (5) years after the date of the last dissemination of any representations covered by this order, respondents, or their successors and assigns, shall maintain in written form and upon request make available to the Federal Trade Commission for inspection and copying:

A. All materials which come into their possession from a vendor or any other source and that were relied upon in disseminating such representation; and

B. All materials, tests, reports, studies, surveys, demonstrations or other evidence which come into their possession or control from a vendor or any other source that contradict, qualify, or call into question such representation, or the basis relied upon for such representation, including complaints from consumers.

V.

It is further ordered, That respondents shall, within thirty (30) days after the date of service upon them of this order, and for three (3) years thereafter, distribute a copy of this order to each current and future officer, employee, agent and/or representative engaged in the preparation or placement of advertising or other promotional materials covered by this order and shall obtain from each such person a signed statement acknowledging receipt of the order.

VI.

It is further ordered, That respondents and their successors and assigns shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolu-

Decision and Order 116 F.T.C.

tion, 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 under this order and that respondents shall require, as a condition precedent to the closing of any sale or other disposition of all or substantial part of their assets, that the acquiring party file with the Commission, prior to the closing of such sale or other disposition, a written agreement to be bound by the provisions of the order.

VII.

It is further ordered, That for a period of five (5) years from the date of service of this order, the individual respondent named herein shall promptly notify the Commission in the event of the discontinuance of his present business or employment and of each affiliation with a new business or employment which involves the retail sale of consumer products through mail order catalogs, each such notice to include the individual respondent's new business address and a statement of the nature of the business or employment in which said respondent is newly engaged as well as a description of said respondent's duties and responsibilities in connection with the business or employment.

VIII.

It is further ordered, That respondents shall, within sixty (60) days after service upon them of this order, and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with the requirements of this order.

THE RIGHT START, INC., ET AL. 619

619 Complaint

IN THE MATTER OF

THE RIGHT START, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3444. Complaint, June 30, 1993--Decision, June 30, 1993

This consent order prohibits, among other things, a California-based mail-order company, and its president, from making false and unsubstantiated advertising claims regarding the "Air Purifier," a small electric air filter, and the "Travel Tray," a foam board tray that is used to hold children's snacks and toys when they are riding in an automobile. The respondents are prohibited from representing that the use of any air filtering device can reduce the risk, alleviate, prevent, or cure respiratory problems, unless the representations are substantiated by competent and reliable scientific evidence. In addition, the company is prohibited from representing that any product it sells has been approved or endorsed, unless the endorsement is supported by an objective test conducted by qualified persons.

Appearances

For the Commission: C. Steven Baker and Catherine R. Fuller. For the respondents: John Rawls, Blanc, Williams, Johnston & Kronstadt, Los Angeles, CA.

COMPLAINT

The Federal Trade Commission, having reason to believe that The Right Start, Inc. ("Right Start"), a corporation, and Stanley M. Fridstein, individually and as an officer of said corporation ("respondents"), have violated the provisions of the 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. Respondent Right Start is a California corporation, with its principal office or place of business located at 5334 Sterling Center Drive, Thousand Oaks, California.