Formu-3 International, Inc

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

IN THE MA TTER OF FORMU-3 INTERNATIONAL, INC., ET AL.

CONSENT ORDER, ETC. , IN REGARD TO ALLEGED VIOLA TION OF SECS. 5 AND J 2 OF THE FEDERAL TRADE COMMISSION ACT Docket 3568. Complaint, April 1995--Decision, April, 1995 This consent order prohibits, among other things, the Ohio weight-loss centers from misrepresenting the performance, effcacy or safety of any weight-loss program they offer, or the competence or training of their personnel, in the future. The consent order requires the respondents to possess scientific evidence to substantiate future claims, and, in addition, to make certain disclosures in conjunction with weight-loss and safety maintenance claims in the future. Appearances For the Commission: Brenda Doubrava, Phillip Broyles and Christian White.

For the respondents: Robert 1. Newbold Canton. OH. COMPLAINT The Federal Trade Commission, having reason to believe that Fonnu-3 International, Inc. , a corporation, Fonnu-3 of Northern Ohio, Inc., a corporation, and Formu-3 of Southern Ohio, Inc. , a corporation (referred to collectively herein as respondents or Fonnu 3) have violated the provisions of the Federal Trade Commssion Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges: PARAGRAPH I. Respondent Fonnu-3 International, Inc., is an Ohio corporation with its office and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. Respondent Fonnu-3 of Northern Ohio, Inc. , is an Ohio corporation with its office and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. Respondent Formu-3 of Southern Ohio, Inc. , is an Ohio corporation with its offce and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. Complaint 119 FTC. PAR. 2. Respondents advertise, offer for sale, sell, and otherwise promote throughout much of the United States weight loss and weight maintenance services and products, which respondents make available to consumers at respondents' numerous " Form-You- Weight Loss Centers " (centers) in many states. These products also include "food" within the meaning of Sections 12 and 15 of the Federal Trade Commission Act. Through franchised and companyowned centers, respondents are engaged in the sale and offering for sale of low-calorie diet programs providing 800 calories or more per day.

PAR. 3. 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. 4. Respondents have disseminated. or have caused to be disseminated, advertisements for Form-You-3 Weight Loss Centers (also referred to herein as "Formu-3 Weight Loss Centers ) services and products, including but not necessarily limited to the attached Exhibits A through M.

PAR. 5. The advertisements referred to in paragraph four including but not necessarily limited to the attached Exhibits A- K contain the following statements;

A. LORA JOHNSON LOST 15 '/2 POUNDS IN 20 DA YS' (Total Weight Loss 119 Pounds) (Exhibit A) B. At Formu-3 Weight Loss Centers you can lose l SIZE before summer ever gets here - and another 3 SIZES before summer ends! A nutritiously balanced step program that s EASY-TO-FOLLOW and guaranteed to work if followed as directed. DEBRA: BEFORE SHE LOST 50 POUNDS WITH FORMU- 3 (Exhibit B) e. Five Months Ago People Said I Was A Heavyweight. Now They Say I'm a Knockout! LOSE UP TO 30-40 POUNDS BY SPRING! ROSANNE BERNDT LOST 30 POUNDS IN 60 DA YS'" BEFORE: 170 POUNDS (Exhibit C) D. MARY GRIFFIN LOST 85 POUNDS AND 85 INCHES ON THE FORMU-3 PROGRAM.

Call Fonnu-3 TODAY and lose 20lb-351b by THE FIRST OF St.MMER' That s at least 3 SIZES SMALLER than you are now SAFE, EFFECTIVE AND NUTRITION ALL Y BALANCED' (Exhibit D) E. LOSE UP TO 25.50 POUNDS IN 10 WEEKS' SHARON SPEIGLE LOST 66 1/2 Pounds Safe, effective and nutritionally balanced! (Exhibit E) F. LOSE UP TO 15.30 POUNDS IN 30 DAYS' . . . . FORMU-3 INTERNATIONAL, INe., ET AL. 451 449 Complaint KATHY KLAY LOST 22 POUNDS IN 30DAYS! TOTAL WEIGHT LOST: 42 Pounds ' (Exhibit F) G. JULIE NARANCIC LOST 21 POUNDS IN 6 WEEKS! You Can Lose Up To 30 Pounds By Summer! (Exhibit G) H. JENELLE LOST 15 POUNDS IN 30 DAYS' FROM SIZE 16 TO 12 IN 30 DA YS! BEFORE FORMU-3 180 POUNDS NOW' 125 POUNDS Extensive Life Modification program to help KEEP your weight off! (Exhibit I. "1 went from size 36 to a size 7 in five months! And I've kept it off for a year and a half because of the Fonnu-3 program. I was taught how 1: cat right - and I didn t have to depend on pre-packaged foods like a girl friend of mine did on another program. She had to spend $50 a week on THEIR pre-packaged food. The Formu program works using real grocery store food. " Barbara Schenkel GUARANTEED if program is followed as directed. (Exhibit I) J. We ll show you how to keep your weight and extra inches off permanently. In fact, we ve helped many long-time, unsuccessful djeters achieve their goal and stay trim for years. (Exhibit J) K. YOU' RE JUST ONE CALL A WAY FROM ONE OF AMERICA'S MOST AFFORDABLE WEIGHT LOSS PROGRAMS.... A PROGRAM THAT WORKS' IT'S EASY AT FORMU-3 BECAUSE OF OUR COMMITTENT (sic) TO YOU WE'LL BE THERE TO MAKE SURE YOU LOSE THA T EXTRA WEIGHT... AND TO MAKE SURE YOU KEEP IT OFF' (Exhibit K) PAR. 6. Through the use of the statements contained in the advertisements referred to in paragraph five, including but not necessarily limited to the statements in the advertisements attached as Exhibits A- , respondents have represented, directly or by implication, that:

A. Form-You-3 Weight Loss Centers customers typically are successful in reaching their weight loss goals; B. Form-You-3 Weight Loss Centers customers typically are successful in maintaining their weight loss achieved under the Form- You-3 Weight Loss Centers diet program; and C. Form-You-3 Weight Loss Centers customers typically are successful in reaching their weight loss goals and maintaining their weight loss either long-term or permanently. PAR. 7. Through the use of the statements contained in the advertisements referred to in paragraph five, including but not necessarily limited to the statements in the advertisements attached Complaint J 19 FTC. as Exhibits A- , respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph six, respondents possessed and relied upon a reasonable basis that substantiated such representations. PAR. 8. In truth and in fact, at the time respondents made the representations set forth in paragraph six, they did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, respondents' representation as set forth in paragraph seven was, and is, false and misleading.

PAR. 9. The advertisements referred to in paragraph four including but not necessarily limited to the attached Exhibits E, F and I contain the following statements:

A. LOSE UP To 25-50 POUNDS IN 10 WEEKS' (Exhibit E) B. LOSE UP TO 15-30 POUNDS IN 30 DAYS! (Exhibit F) e. Lose up to 15-30 pounds in 30 days' GUARANTEED if program is followed as directed. (Exhibit I) PAR. 10. Through the use of the statements contained in the advertisements referred to in paragraph nine, including but not necessarily limited to the statements in the advertisements attached as Exhibits E, F, and I, respondents have represented, directly or by implication, that:

A. An appreciable number of consumers on the Form- Y ou- Weight Loss Centers program lose weight at an average rate of fifty pounds in ten weeks; and B. An appreciable number of consumers on the Form-You- Weight Loss Centers program lose weight at an average rate of thirty pounds in thirty days.

PAR. II. In truth and in fact:

A. An appreciable number of consumers on the Form-You- Weight Loss Centers program do not lose weight at an average rate of fifty pounds in ten weeks; and B. An appreciable number of consumers on the Form-You- Weight Loss Centers program do not lose weight at an average rate of thirty pounds in thirty days.

FORMU-3 INTERNATIONAL, INe., ET AL. 453 449 Complairn Therefore, the representations set forth in paragraph ten were, and are, false and misleading.

PAR. 12. Through the use of the statements contained in the advertisements referred to in paragraph nine, including but not necessarily limited to the statements in the advertisements attached as Exhibits E, F, and I, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph ten, respondents possessed and relied upon a reasonable basis that substantiated such representations. PAR. 13. In truth and in fact, at the time respondents made the representations set forth in paragraph ten, they did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, respondents' representation as set forth in paragraph twelve was, and is, false and misleading. PAR. 14. The advertisements referred to in paragraph four including but not necessarily limited to the attached Exhibit J, contain the following statement:

A. What other weight loss program helps you Jose 3 to 5 lbs. a week without expensive pre-packaged foods, required supplements, strenuous exercise, shots. pius or drugs? (Exhibit J) PAR. 15. Through the use of the statements contained in the advertisements referred to in paragraph fourteen, including but not necessarily limited to the statement in the advertisement attached as Exhibit J, respondents have represented, directly or by implication, that consumers on the Form- Y ou-3 Weight Loss Centers Program typically Jose weight at an average rate of three to five pounds per week.

PAR. 16. In truth and in fact, consumers on the Fonn-You- Weight Loss Centers Program do not typically lose weight at an average rate of three to five pounds per week. Therefore, the representation set forth in paragraph fifteen was, and is, false and misleading.

PAR. 17. Through the use of the statements contained in the advertisements referred to in paragraph fourteen, including but not necessarily limited to the statement in the advertisement attached as Exhibit J, respondents have represented, directly or by implication that at the time they made the representation set forth in paragraph Complaint I J9 F. fifteen, respondents possessed and relied upon a reasonable basis that substantiated such representation.

PAR. 18. In truth and in fact, at the time respondents made the representation set forth in paragraph fifteen, they did not possess and rely upon a reasonable basis that substantiated such representation. Therefore, respondents' representation as set forth in paragraph seventeen was, and is, false and misleading. PAR. 19. In the routine course and conduct of their business respondents have represented during initial sales presentations that consumers wil typically reach their desired weight loss goal within the time frame computed for their weight loss program by Form- Y au- 3 Weight Loss Centers personnel.

PAR. 20. Through the use of the statements described in paragraph nineteen, and others not specifically set forth herein respondents have represented, directly or by implication, that at the time they made the representation set forth in paragraph nineteen respondents possessed and relied upon a reasonable basis that substantiated such representation.

PAR. 21. In truth and in fact, at the time respondents made the representation set forth in paragraph nineteen they did not possess substantiated suchand rely upon a reasonable basis that representation. Therefore, respondents' representation as set forth in paragraph twenty was, and is, false and misleading. PAR. 22. The advertisements referred to in paragraph four, including but not necessarily limited to the attached Exhibits D-H and , contain the following statements:

A. Safe, effective and nutritionally balanced! (Exhibits D and E) B. Safe, effective & nutritionally balanced! (Exhibit F) e. SAFE and nutritionally balanced (Exhibits G and H) D. FORMU-3 IS ONE OF THE NATIONS (sic) MOST AFFORDABLE WEIGHT LOSS PROGRAMS. AND IS DESIGNED TO GET YOUR WEIGHT OFF AS OUICKL Y AS IS SAFELY POSSIBLE FOR AN AVERAGE WEEKLY COST OF ONLY $7.65! (Exhibit L) PAR. 23. In the routine course and conduct of their business respondents provide their customers with diet instructions that require said customers inter alia to come in to a Form-You-3 Weight Loss Center several times per week for monitoring of their progress, including weighing in.

FORMU-3 INTERNATIONAL, INe. , ET AL. 455 449 Complaint PAR. 24. Through the use of the statements contained in the advertisements refelTed to in paragraph twenty-two, including but not necessarily limited to the statements in the advertisements attached as Exhibits D-H and L, and through the conduct of the monitoring described in paragraph twenty-three, respondents have represented directly or by implication, on an ongoing basis to each customer that customers on respondents' weight loss program lose weight safely and do not experience an increased risk of developing health complications.

PAR. 25. In the course of regularly monitoring their customers weight loss progress, respondents, in some instances, are presented with weight loss results indicating that a customer is losing weight significantly in excess of his or her expected rate of weight loss which is an indication that the customer may not be consuming all of the calories prescribed by his or her diet instructions. Such conduct could, if not Collected promptly, result in health complications. PAR. 26. When presented with the weight loss results described in paragraph twenty-five, respondents on many occasions have not disclosed to the customers that failing to follow the diet instructions and consume all of the calories prescribed could result in health complications. This fact would be material to consumers in their purchase and use decisions regarding the diet program. In light of the representation set forth in paragraph twenty-four, said failure to disclose was, and is, a deceptive practice. PAR. 27. The advertisements refelTed to in paragraph four including but not necessarily limited to the attached Exhibits B, G and contain the following statements: A. $50 OFF' OUR REGULAR PROGRAM PRICE' At Formu-3 Weight Loss Centers you can Jose SIZE before summer ever gets here and another 3 SIZES before summer ends Average cost is $7.65 (includes everything) per week. During this special average weekly cost is lower. (Exhibit B) B. You Can Lose Up to 30 Pounds By Summer! A VG. COST OF: $7.65 PER WEEK.

INCLUDES EVERYTHING' (Exhibit G) e. DON'T P 'ic.... YOU STILL HA VE A FEW MONTHS! CALL A FORMU- WEIGHT LOSS CENTER TODAY AND USE THAT TIME TO TAKE OFF UP TO 25 TO 30 POUNDS .... UP TO 35 INCHES .... AND UP TO FOUR DRESS SIZES BEFORE YOU HANG YOUR FIRST HOLIDAY ORNAMENT' FORM-3 IS ONE OF THE NATIONS (sic) MOST Complaint 1!9 F.TC. AFFORDABLE WEIGHT LOSS PROGRAMS AND IS DESIGNED TO GET YOUR WEIGHT OFF AS OUICKL Y AS IS SAFELY POSSIBLE FOR AN A VERAGE WEEKLYCOSTOFONLY$7.65' (Exhibit L) PAR. 28. Through the use of the statements contained in the advertisements referred to in paragraph twenty-seven, including but not necessarily limited to the statements in the advertisements attached as Exhibits B , G, and L, respondents have represented directly or by implication, that the total cost of losing weight on the Form-You-3 Weight Loss Centers program is the advertised average weekly price multiplied by the number of weeks required for a program participant to achieve his or her weight loss goal. PAR. 29. In truth and in fact, the total cost of losing weight on the Form-You-3 Weight Loss Centers program is an amount equal to the advertised average weekly price for one full year, or the advertised average weekly price multiplied by fifty-two. Therefore, respondents representation set forth in paragraph twenty-eight was, and is, false and misleading.

PAR. 30. In advertising the Form-You-3 Weight Loss Centers program, respondents have represented that the total cost of losing weight on the Form-You-3 Weight Loss Centers program is the advrtised average weekly price multiplied by the number of weeks required for participants to achieve their weight loss goals. respondents have failed to disclose to consumers that the total cost of losing weight on the Form-You-3 Weight Loss Centers program is the advertised average weekly price for one full year, or the advertised average weekly price multiplied by fifty-two. This fact would be material to consumers in their purchase decisions regarding in light of thethe program. The failure to disclose this fact, representation made, was, and is, a deceptive practice. PAR. 31. In the routine course and conduct of their business, respondents provide participants in their weight loss program with diet instructions that contain inter alia diet menus. Said diet menus for respondents' program include two food products sold by respondents to be consumed by participants each day. Respondents have given additional diet instructions to participants who choose not to purchase and consume respondents' food products, directing them to substitute certain foods for the two food products listed in the diet menus. Said additional diet instructions, attached as Exhibit M contain the following statements:

. .

FORMU-3 INTERNATIONAL, INe. , ET AL. 457 449 Complaint A. WHY SHOULD I USE FORMU-FAST FOOD PRODUCTS? Because they.

. Decrease calories by at least 33% daily. . Decrease fat by at least 7% daily. (Exhibit M) PAR. 32. Through the use of the statements referred to in paragraph thirty-one, respondents have represented, directly or by implication, that participants who consume two Formu-Fast food products instead of substituting the foods specified in the additional instructions will decrease daily caloric intake by at least 33% and daily fat intake by at least 70%.

PAR. 33. In truth and fact, participants who consume two Fonnu- Fast food products instead of substituting the foods specified in the additional instructions will not decrease daily caloric intake by at least 33% and daily fat intake by at least 70%. Therefore, the representations set forth in paragraph thirty-two were, and are, false and misleading.

PAR. 34. Through the use of the statements described in paragraph thirty-one, respondents have represented. directly or by implication, that at the time they made the representations set forth in paragraph thirty-two, respondents possessed and relied upon a reasonable basis that substantiated such representations. PAR. 35. In truth and in fact, at the time respondents made the representations set forth in paragraph thirty-two they did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, respondents' representation as set forth in paragraph thirty-four was, and is, false and misleading. PAR. 36. The advertisements referred to in paragraph four including, but not limited to the attached Exhibit J, contain the following statement:

A. At Formu-3 a certified counselor monitors your progress, offers helpful suggestions and provides ongoing motivation and moral support to keep you on track. (Exhibit J) PAR. 37. Through the use of the statements contained in the advertisements referred to in paragraph thirty-six, including but not necessarily limited to the statement in the advertisement attached as Exhibit J, respondents have represented, directly or by implication that counselors employed by Form- Y ou-3 Weight Loss Centers are Complaint I ! 9 T.C. certified, through an objective evaluation process, in the treatment of obesity.

PAR. 38. In truth and fact, few, if any, counselors employed by Form- You-3 Weight Loss Centers are certified, through an objective evaluation process, in the treatment of obesity. Therefore, the representation set forth in paragraph thirty-seven was, and is, false and misleading.

PAR. 39. In providing advertisements and promotional materials such as those referred to in paragraph four to its individual franchised cen ters for the purpose of inducing consumers to purchase their weight loss services and products, respondent Formu- 3 International Inc., has furnished the means and instrumentalities to those centers to engage in the acts and practices alleged in paragraphs five through thirty-eight.

PAR. 40. The acts and practices of respondents as alleged in this complaint constitute deceptive acts or practices in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act.

_..: , . .. . , : : ):: FORMU-3 INTERNATIONAL. INC.. ET AL. 459 449 Complaint EXHIBIT A THERE' S STILL TIME TO lDSE.

1 SIZE (10 Ibs.

BY DIE I HOIDAYS! :S)\ 7gQfl l'$ Th_,II m.rc ICY uI"10 aol OY m. more ..oyn nc'ic" o!2 OJO 10 ",cunr; eon mc olrl",.nc:" ",In."'ov you IClo.l ..nQlidav...nl rth E,ibitA WEIGHT loss CENTl1l r."'''-- ;;... , . / ;;. ;; , Complainl J 19 FTC. EXHIBIT B OFF! 50 OUR REGULAR PROGRAM PRICE' I At Fonnu' 3 Weight Loss Centers you can lose . I l sIzbefore sumer ever gets here - and another 3 sumer SIZS before . Enjoy regl.ua:engrocery store rooe! . A. nucrriouslv balanced 5-Sted progr thar's Easy- FOliOW and guarreed to work if followed as dieCted.

. Average COSt is 57.

(includes every per week. Dunng special, average weekly COSt lower.

I ' - =:'C::R1"flJ1!1C1.' E.hibi!!3 .... . , FORMU-3 INTERNATIONAL, INe., ET AL. 461 449 Complaint EXHIBIT C Five Months Ago People Said I Was A HeavyeIght.

,Now They Say I'm A Knockout!, !WSA.'mBERSDTLOS! JOPDl'SO' 0 S il .'f !Nroom' lei Pounds B 11 .. prrg. . E.lt Reguar Groer::

SWre Food! . SAfEBaJced!and :'utrrionallv.

. Includes a Comprehensive LI ,WDt!c.mO\ PROGRAM'd designed to make YOll feel good about yoe! eve.JOD,eC.men' "o-,""_D ro SHTEIl SERVE YOU! WEIGHT LOSS CENTERS" ;'99 "'""J j N,na Exhibit C . . ,. , .

Complaint 119 FTC. EXHIBIT D UP TO 3 DRESS SIZES ORLOSE "'AnGZO' 35' ,,:::;u I'" 'QUNOSANO NCH S ON BY THE FIRST 1" ' JI " I! :!formu. OF SUMMER! QG;UM. 2.pj tl SU M THE FIR PRE ;:Y' OF SUMMER! That's ::t least 3 SIZES Smaller then you ere right now! . tcs UP TO 1S-JO POUNDS YOUR First JC DAYS' . EA. REGULA.: G:1CC CRE FOCC' . '10 KICCEN EXliAS Oli .;":UIRED ?URCHASE:! . SAf:, :':;:;:CiIVE AN!: NI.7;(ITICNAI.Y !ALANC,D! . UP TO 6S':. LESS Than C :;( NAnCNA:.Y ADV i1TISm "\lEIGi-T Less PRCGOlAMSI i CJ"C on::;j 0..."0 pcr;rcm, CALL TODAY!!! E;ohibitO OVER 300 LOCATIONS 10 ".."".._..,,0"'''''',__'r"'.__'/o BETTER SERVE "lQU! WEIGHT LOSS CENTERS' : ........ _.

FORMU-3 INTERNATIONAL, INC., ET AL. 463 449 Complaint EXHIBIT E SHARON SP iGLE LOST Pound:s LOSE BEFORE Z5.

POUNDS IN 10 WEEKS! UP TO 6=% LESS THAN OTHER NATlONAUY ADVEIlSED WEIGHT LOSS PQOGRAMS.

(Based on 52-Week Programs AVG. S. PER COST WEEK! I.

INCLUDES EVERYTHING Weight Loss Stcbililc11cn and Maintenance lor BClJanc8 01 One Veaf. . Lose L.8 to 15.30 DOLmds .. Eat regu.icr grocery store r first 30 dcysi feod! . SC76, e active and . No hidcen. e rcs or ',ie clly calanesel required pL:rchoses: )l117U(f WEIGHT LOSS CENTERS. OVER JOD .ClCAT/ONS IETI1 SEJlV YOU' ___J'n_"'" ,.,., , ..,., .. . ,. Complaint J 19 FTC. EXHIBIT F LOS", ".!C POtNDSIN !C DAYS , INCLUDES EVERYTHING . NO hieden . Ec! regulcr gtocerycosts!store foce! . Scfe, effective & nutritionclly balanced! ,. . NO rec;uired KATH IU.AY ' lost 22 POUNDS ' IN:W T"QS':DAYS! . TO"'I.WUG purchases!-+ 7 ffid"' .: "'..a" WEIGHT LOSS CENTERS' '"c.""y"""""" """9'O_o1"" OVER JOO LOCATIONS . 0"'.. elt.- BETTER Seine YOU! J","m"""tll" Exhib;tF () : : .::: \ : \ .: _,, FORMU-3 INTERNATIONAL, INe. , ET AL. 465 449 Complaint EXHIBIT G AT rORMU. 3 WEIG HT LOS S CENTERS You Can I Lose Upto I 30 Pounds .

IBysumer.. COSTOF:

$7.

I INCLUDES EVERYTHING! I. Eat reguar grocery store food! . SAFE and nurrtionaly balanced . Afordable for everyone! CALL TODAY! I OR CALL '- 800.J33-NEWU t l CENTER I : ""ibi,G . ?\ . , Complaint 119 F.T. EXHIBIT H A, FORMU. 3 WEIGHT LOSS CENTERS I 30 DAYS CAN MA IA BIG DIFRENCE! I ..1). ..W(\ 1S' ' 0,; \ n-..-tw.- Po(.Ynsi! \&J --1) DAYS I 0M FOR 30 DOLL! Eat food! . SAFE. and nutrtiona bacedf gu grery sto I .. S--\\"E up to 73% over orner nationay adverted weight los progr baed on 40 pounds wei off I . Extensive Lie Modicarlon progr ro help KEP four NO HIDEN COSTS!!! I '7 OVEfJOOLOCATlO,"S "Q'''II_ roSE'IlSfIlVEYOUI WEIGtiffUQTLOSSCENTERS ,-""mv_--_CM. uMibitH I Into\. FI'. ?: . ,., . . , :: :,,,,,..,,:::: ,\ FORMU-3 INTERNATIONAL, INe., ET AL. 467 449 Complaint EXHIBIT! .._ra I went from size 36 to a size 7 in five months! And I've kept it for a yeer and a hcJf because ot the Fcrmu-3 program. . . 1 WC5 taught how te . The Formu-J progrc:m eel rir;nf - end I d!c:n COST ue Ie 6a less hcve to daj:end on than other weight loss pre-j:cckc:gad !cees programsl like c girl friend ot . No hicden costs mine cid on onother . No required food pror;rcm. She hod to supplementsl scel".C: SSO 0 week on . Lose lJe to THEIR ;:re-pockoQed 15-30 pounds rood. ihe F-rmu- in 30 dayl prcgrc:m works lJing . GUANTEED real grocery store ilprcgrcmi. food. follow as Scrbora Ser,snke! direced. NO REQUIRED FOOD SUPPLEMENTS ..ne"'.., '..c",n""nv""rmu' JW9'," C"'C."" c1ca'"_.. IIQss --0 /'7/i!Q I,\ ..""c:o...JQO""-10,._14.."" WEIGHT LOSS CENTERS. I Exhibitl : .: #;.;..). ::.. : , . ... ...... ... ., ),, . . .,.. .,. : . . . .,\ .. .. Complaint ! 19 FTC. EXHIB IT J .t f!.. :;":rc- r; , l.(, c" 1IIIili ii/Iii A .. 2)!i ilili s:s:.J r( o .. ;n- C1 J;f; e:a;OCh a.r JEII J. - , UilllIiltQUeuc: 0 .: 0 ro.. ;: WIIIIIIIII/I/IIII r:.. 0"':: c:e,u.c:U , 0 - .. ..c. ... =- ooV;-CJ CJ;:

IlldJ t iJ:5 Jj JI!IIIj, !llll! ........ ? ; : ...... , ) FORMU-3 INTERNATIONAL, INe., ET AL. 469 449 Complaint EXHIBIT K FINE ADVERTISING AND l'rEDIA SERVICES 2 SUMMIT PAID DR., J,EPE:'DENCE, CHILD '4:!:n FAX 6'12-1179 (2:!6) 642-3830 COpy CLIENT: FORMU 3 WEGHT LOSS CENTE SPOr; : FWL- RADIO: :52 ('IlITH :06 LIVE TAG) TITLE: COMMITMENT DATE : D:CEMSER 4 , 1991 ;i.

ARE YOU F. EADY TO \LAKE A CCM rti TO LOSE Weight 7HIS YEAR? 'NE:.L.!j= YOU ARE. A!.!. YCL.. !-AVE TO C0 is MA. KE or,l;= SIMPLE CALL M;S:C 33:

LL A FORMU-3 WSIGHT LOSS CSNT,,;; TODAY AND TAKE THE FI;;ST STEP TO 5ECOMING TH" YOU! 7HATS;;!GHT.......YOU' ?,S JUST ONE CALL AWAY FROM ONE OF AMEi'ICA' S MOST F=O?DA8l = THT WORKS! !T'S WEIGHT LOSS PROGRAS............A PROGRAM =AS AT FORMU-3 BECAUSE 0.= OUR COMMITTMENT TO XQ! WEIGriT.............. WE' LL 5= THE?= TO MAKE SUP.E YOU LOSE TriAT EX AND TO MAKE SURE YOU IT OFF! STORE FOOD WHILE YOU' LL EAT REGULAR GROCERY ON Trie FORMU-3 PROGPAM........t, PRE-PACKAGED ENTP.EES THAT CAN COST UP TO SEVEN\, FIVE DOLLAP, EXTPA EVERY WEEK! SO CALL FORMU- TODAY AND FOR THE NEXT FEW W=EKS WS'LL EVEN 'TAKE =!FT DO ARS OFF Trie REGULAR PROGRAM PRICE. THAT'S LIKE LOSING T=N POUNDS FREE ! !F YOU' RE TO MAKE THE COMMITTMENT TO BE LOSE Weight.....WE'L MAKE YOU DO.......AND YOU WII L CALL FORMU.3 TODAY............ MON.... CALL US! (:07 Lrv"E T.;;) fJhibil K f!n""

Complaint 119 FTC. EXHIBIT L FINE AD R."using AND MEDIA SERVICES 2 SL'M!HT(216)PARK642-3630DR., INDEPENDDICE,FAX 642-1179CHILD 44122 COP Y CLIENT: FORMU.3 WEIGHT LOSS Centers SPOT. , FWL.

RADIO: :53 (WITH :07 LIVE TAG) TITLE: LOSE WEIGHT BY THE HOLIDAYS DATE : AUGUST 16, '99' DID YOU KNOW THAT FALL :S WHEN MOP. E PEOPLE DECIDS TO LOSE WE,GHT THAN AT ANY OihEri TIME? THATS PR08ABl.Y BECAUSE THE holidays ARE JUST AROUND Te;" CORNErI......... M.IC EO:

DON'T PANIC........YOU Still HAVE A FEW MONTe;SI CALL A FORMU- WEIGHT LOSS CENTER AND USE THAT TIME TO TAKE OFF IQ UP TO 25 TO 30 POUNDS.....UP TO 35INCHES......AND UP TO FOUR DRESS SIZES BEFORE YOU HANG YOUR FIRST HOLIDAY ORNAMENT! FORMU-3 IS ONE OF THE NATIONS MOST AFFORDABLE WEIGHT LOSS PROGP.AMS, AND IS DESIGNED TO GET YOUR WEIGHT OFF AS OIJICKL Y AS IS SAFELY POSSIBLE FOR AN AVEF\GE WEEKLY COST OF Only$7.651 NOW.... PICTURE YOURSELF THIS DECEMBER; IP YOU' RE A SIZE 18, SE" YOURSELF IN A SIZE 12. IF YOU' RE A SIZE 16, PICTURE YOURSEL UNDER THE MISTLETOE IN A SIZE IC! IT CAN BE YOU..... IT 8E YOU! FALL IS THE PERFECT TIMS TO START LOSING WEIGHT. CAll FORMU-s TODAY AND GET YOUR HEAD START ON THE HOLIDAYS I C'MON....CALl USI (:07 LIVE TAG) Wibi!L I,...J) t':

._..

FORMU-3 INTERNATIONAL, INe. . ET AL. 471 449 Complaint EXHIBIT M SUBSTITUTION OF FORMU. FAST' FOOD PRODUCTS AS a. subSttutil" forr-9 Breakas .tO Lunch Formu-Fasl" Food: , r::c:uC".. on Lavels 1 2. and J. ace: tne follewing"

LUNCH 40%. ?::uit/SeiUood AND 1 Slice High-Fiber Lo-Galcrie Wheal Bread PUE !tar 'N SIlJtubng ti oul su 8l IId hlr!I Fomr.F8 Fl CI I sjQWIT"" Ili mr CI. W'an Mmlug!t &m. yell rI PrllIutblIrUY. IfI!S1Il 1InvDa \'M8/1 gtaIoFaFo Uy.

WHY SHOULD I USE FORMU.FAST" FOOe PROOUC1 Bese they...

. Deaase QUries 1Jy at leas 3J"f aail.

. Decas ta by it leas . daly.

. Tasegnatl . Apase t8mpat:cn by providing dessef it&m.

. H ycu 00'11110:) rrore contl 10 acieve quicer!'SUIt.

. Create it feeling 01llness by providing lte bodywi heaJttl nueru.

. PJ"earaid smcOttritntrmolr eat hait to rew eit hait.

. Help yeu Ie resist the tempn co eatrmre faenin lood when ding ou.

. Can be easily prepared anme . Profie lte Des! resutt possibleonan!'f I , t,..

tb;M Dccision and Order J 19 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 Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commssion, 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 had violated the said Act, and that a 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 confonnty 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;

I. Proposed respondent Formu-3 International, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the state of Ohio, with its offices and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. 2. Proposed respondent Formu-3 of Northern Ohio, Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the state of Ohio, with its offces and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. 3. Proposed respondent Formu-3 of Northern Ohio, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the state of Ohio, with its offices and principal place of business located at 4790 Douglas Circle N. , Canton, Ohio. FOR.\IU-3 INTERNATIONAL, INC, ET AL. 473 449 Decision and Order 4. 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 DEFINITIONS For the purposes of this order, the following definitions shall apply:

A. 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 relevant profession or science to yield accurate and reliable results;

B. Weight loss program shall mean any program designed to aid consumers in weight loss or weight maintenance; C. A broadcast medium shall mean any radio or television broadcast, cablecast, home video or theatrical release; D. For any order-required disclosure in a print medium to be made "clearly and prominently" or in a "clear and prominent manner, it must be given both in the same type style and in: (1) twelve point type where the representation that triggers the disclosure is given in twelve point or larger type; or (2) the same type size as the representation that triggers the disclosure where that representation is given in a type size that is smaller than twelve point type. For any order-required disclosure given orally in a broadcast medium to be made " clearly and prominently" or in a " clear and prominent manner, the disclosure must be given at the same volume and in the same cadence as the representation that triggers the disclosure. E. A short broadcast advertisement shall mean any advertisement of thirty seconds or less duration made in a broadcast medium.

It is ordered That respondents, Formu- 3 International, Inc. , a corporation, Formu-3 of Northern Ohio, Inc. , a corporation, and Decision and Order t 19 FTC. Formu-3 of Southern Ohio, Inc. , a corporation, their successors and assigns, and their offcers, and respondents' agents, representatives and employees, directly or through any corporation, subsidiary, division or other device, including franchisees or licensees, in connection with the advertising, promotion, offering for sale, or sale of any weight loss program in or affecting commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

A. Making any representation, directly or by implication, about the success of participants on any weight loss program in achieving or maintaining weight loss or weight control unless, at the time of making any such representation, respondents possess and rely upon competent and reliable scientific evidence substantiating the representation, provided, further, that for any representation that: I. Any weight loss achieved or maintained through the weight loss program is typical or representative of all or any subset of participants using the program, said evidence shall, at a minimum, be based on a representative sample of:

a. All participants who have entered the program, where the representation relates to such persons; provided, however, that the required sample may exclude those participants who dropped out of the program within two weeks of their entrance, or who were unable to complete the program due to illness, pregnancy, or change of residence; or b. All participants who have completed a particular phase of the program or the entire program, where the representation only relates to such persons;

2. Any weight loss is maintained long-term, said evidence shall, at a minimum, be based upon the experience of participants who were followed for a period of at least two years from their completion of the active maintenance phase of respondents' program or earlier termination, as applicable; and 3. Any weight loss is maintained permanently, said evidence shall, at a minimum, be based upon the experience of participants who were followed for a period of time after completing the program that is either:

FORMU-3 INTERNATIONAL, INe. , ET AL. 475 449 Decision and Order a. Generally recognized by experts in the field of treating obesity as being of suffcient length for predicting that weight loss will be permanent, or b. Demonstrated by competent and reliable survey evidence as being of sufficient duration to permit such a prediction. B. Representing, directly or by implication, except through endorsements or testimonials referred to in paragraph I.E. herein, that participants of any weight loss program have successfully maintained weight loss, unless respondents disclose, clearly and prominently, and in close proximity to such representation, the statement: "For many dieters, weight loss is temporary. ; provided, further, that respondents shall not represent, directly or by implication, that the above-quoted statement does not apply to dieters in respondents weight loss program; provided, however, that a mere statement about the existence, design, or content of a maintenance program shall not without more, be considered a representation that participants of any weight loss program have successfully maintained weight loss. C. Representing, directly or by implication, except through short broadcast advertisements referred to in paragraph I.D. herein, and except through endorsements or testimonials referred to in paragraph I.E. herein, that participants of any weight loss program have successfully maintained weight loss, unless respondents disclose, clearly and prominently, and in close proximity to such representation, the following information: I. The average percentage of weight loss maintained by those participants;

2. The duration over which the weight loss was maintained measured from the date that participants ended the active weight loss phase of the program, provided, further, that if any portion of the time period covered includes participation in a maintenance program(s) that follows active weight loss, such fact must also be disclosed; and 3. If the participant population referred to is not representative of the general participant population for respondents' programs: a. The proportion of the total participant population in respondents' programs that those participants represent, expressed in terms of a percentage or actual numbers of participants, or Decision and Order 119 FTC. b. The statement: "Form-You-3 Weight Loss Centers makes no claim that this (these) result(s) is (are) representative of all participants in the Form-You-3 Weight Loss Centers program. Provided, further, that compliance with the obligations of this paragraph LC. in no way relieves respondents of the requirement under paragraph LA. of this order to substantiate any representation about the success of participants on any weight loss program in maintaining weight loss.

D. Representing, directly or by implication, in short broadcast advertisements, that participants of any weight loss program have successfully maintained weight loss, unless respondents: I. Include, clearly and prominently, and in immediate conjunction with such representation, the statement: "Check at our centers for details about our maintenance record.

2. For a period of time beginning with the date of the first broadcast of any such advertisement and ending no sooner than thirty days after the last broadcast of such advertisement, comply with the following procedures upon the first presentation of any form asking for information from a potential client, but in any event before such person has entered into any agreement with respondents: a. Give to each potential client a separate document entitled Maintenance Information " which shall include all the information required by paragraph LB. and subparagraphs LC.I-3 of this order and shall be formatted in the exact type size and style as the example form below, and shall include the heading (Helvetica 14 pt. bold), lead-in (Times Roman 12 pt.), disclosures (Helvetica 14 pt. bold), acknowledgment language (Times Roman 12 pt.) and signature block therein; provided. further, that no information in addition to that required to be included in the document required by this subparagraph LD.2 shall be included therein: FORMU-3 INTERNATIONAL, INe. , ET AL. 477 449 Decision and Order MAINTENANCE INFORM A TION You may have seen our recent ad about maintenance success. Here s some additional information about our maintenance record. (Disclosure of maintenance statistics goes here xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.

For many dieters, weight loss, is temporary. I have read this notice.

(CJient Signature) (Date) b. Require each potential client to sign such document; and c. Give each client a copy of such document; and 3. Retain in each client file a copy of the signed maintenance notice required by this paragraph;

Provided, further, that:

(i) Compliance with the obligations of this paragraph I.D. in no way relieves respondents of the requirement under paragraph I.A. of this order to substantiate any representation about the success of participants on any weight loss program in maintaining weight loss; and (ii) Respondents must comply with both paragraph I.D. and paragraph I.c. of this order if respondents include in any such short broadcast advertisement a representation about maintenance success that states a number or percentage, or uses descriptive terms that convey a quantitative measure such as " most of our customers maintain their weight loss long-term; and Provided, however, that the provisions of paragraph I.D. shall not apply to endorsements or testimonials referred to in paragraph I.E. herein.

E. Using any advertisement containing an endorsement or testimonial about weight loss success or weight loss maintenance success by a participant or participants of respondents' weight loss g.

Decision and Order 119 FTC. programs if the weight loss success or weight loss maintenance success depicted in the advertisement is not representative of what participants in respondents' weight loss programs generally achieve unless respondents disclose, clearly and prominently, and in close proximity to the endorser s statement of his or her weight loss success or weight loss maintenance success:

I. What the generally expected success would be for Form- You- Weight Loss Centers customers in losing weight or maintaining achieved weight Joss; provided, however, that in determining the generally expected success for Form-You- 3 Weight Loss Centers customers, respondents may exclude those customers who dropped out of the program within two weeks of their entrance or who were unable to complete the program due to illness, pregnancy, or change of residence; or 2. One of the following statements:

a. "You should not expect to experience these results. b. "This result is not typical. You may not do as wel!." c. "This result is not typical. You may be less successful." d. tI s success is not typical. You may not do as well." e. s experience is not typical1. You may achieve less. f. "Results not typical."

Results not typical of program participants. Provided, further, that if the endorsements or testimonials covered by this paragraph are made in, a broadcast medium, any disclosure required by this paragraph must be communicated in a clear and prominent manner and in immediate conjunction with the representation that triggers the disclosure; and Provided, however, that:

(i) For endorsements or testimonials about weight loss success, respondents can satisfy the requirements of subparagraph I.E. !. by accurately disclosing the generally expected success in the following phrase: "Form- Y ou-3 Weight Loss Centers clients lose an average of pounds over an average week treatment period" ; and (ii) If the weight loss success or weight loss maintenance success depicted in the advertisement is representative of what participants of a group or subset clearly defined in the advertisement generally FORMU-3INTERNATIONAL, INe. , ET AL. 479 449 Decision and Order achieve, then, in Jieu of the disclosures required in either subparagraph I.E. I. or 2. herein, respondents may substitute a clear and prominent disclosure of the percentage of al1 of respondents customers that the group or subset defined in the advertisement represents.

F. Representing, directly or by implication, the average or typical rate or speed at which participants or prospective participants in any weight loss program have lost or will lose weight, unless at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence substantiating the representation.

G. Representing, directly or by implication, that participants or prospective participants in respondents. weight loss programs have reached or will reach a specified weight within a specified time period, unless at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence substantiating the representation.

H. Failing to disclose, clearly and prominently, either (I) to each participant who, after the first two weeks on the program, is experiencing average weekly weight loss that exceeds two percent (2%) of said participant s initial body weight, or three pounds whichever is less, for at least two consecutive weeks, or (2) in writing to al1 participants, when they enter the program, that failure to follow the diet instructions and consume the total caloric intake recommended may involve the risk of developing serious health complications.

I. Representing, directly or by implication, the daily, weekly, or monthly price at which any weight loss program can be purchased unless respondents disclose, clearly and prominently, and in close proximity to such representation, either: (I) the number of days weeks, or months participants wi1 be obligated to pay the weekly price represented; or (2) the total cost of the weight loss program; Provided. further, that in broadcast media, if the representation that triggers any disclosure required by this paragraph is oral, the required disclosure must also be made orally.

Dccision and Orde.r 119 F.TC. J. Misrepresenting, directly or by implication, the competence skill, training, credentials or expertise of any of respondents employees or any of the employees of respondents' franchisees. K. Misrepresenting, directly or by implication, through numerical or descriptive terms or any other means, the existence or amount of calories, fat, or any other nutrient or ingredient in any food product or otherwise misrepresenting the performance, efficacy, safety, nutritional composition, or benefits of any food or drug, as those terms are defined in Section 15 of the Federal Trade Commission Act.

L. Misrepresenting, directly or by implication, the performance effcacy, price, or safety of any weight loss program. II.

Nothing in this order shall prohibit respondents from making any representation that is specifically permitted in labeling for any such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990, or by nutrition labeling regulations promulgated by the Department of Agriculture pursuant to the Federal Meat Inspection Act or the Poultry Products Inspection Act. Nothing in this order shall prohibit respondents from making any representation for any drug that is permitted in labeling for any such drug under any tentative final or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration. IV.

It is further ordered That respondents shall notify the Commission at least thirt (30) days prior to the effective date of any proposed change in the respondents such as dissolution, assignment, or sale resulting in the emergence of a successor corporation(s), the creation or dissolution of subsidiaries, or any other change in the corporation that may affect compliance obligations arising out of this order.

FORMU-3 INTERNATIONAL, INe. , ET AL. 481 449 Decision and Order It is further ordered, That for three (3) years after the last date of dissemination of any representation covered by this order respondents, or their successors and assigns, shall maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All materials that were relied upon in disseminating such representation; and B. All tests, reports, studies, surveys, demonstrations or other evidence in their possession or control that contradict, qualify, or call into question such representation, or the basis relied upon for such representation, including complaints from consumers. VI.

It isfurther ordered, That respondents shall distribute a copy of . representativesthis order to each of their officers, agents independent contractors and employees, who are involved in the preparation and placement of advertisements or promotional materials or in communication with customers or prospective customers or who have any responsibilities with respect to the subject matter of this order; and, for a period of five (5) years from the date of entry of this order, distribute same to all future such offcers agents, representatives, independent contractors and employees. VII.

It is further ordered, That:

A. Respondent Formu-3 International, Inc., shall distribute a copy of this order to each of its franchisees and licensees and shall contractually bind them to comply with the prohibitions and affrmative requirements of this order; respondent may satisfy this contractual requirement by incorporating such order requirements into its current Operations Manual; and B. Respondent Formu-3 International, Inc., shall further make reasonable efforts to monitor its franchisees ' and licensees compliance with the order provisions; respondent may satisfy this Decision and Order 119 F.T. requirement by: (1) taking reasonable steps to notify promptly any franchisee or licensee that respondent detennnes is failing materially or repeatedly to comply with any order provision; (2) providing the Federal Trade Commission with the name and address of the franchisee or licensee and the nature of the noncompliance if the franchisee or licensee fails to comply promptly with the relevant order provision after being so notified; and (3) in cases where that franchisee s or licensee s conduct constitutes a material or repeated violation of the order, diligently pursning reasonable and appropriate remedies available under its franchise or license agreement and applicable state law to bring about a cessation of that conduct by the franchisee or licensee.

Provided, however, that respondent Fonnu-3 International, Inc. compliance with this Part shall constitute an affirmative defense to any civil penalty action arising from an act or practice of one of respondent's franchisees or licensees that violates this order where respondent: a) has not authorized, approved or ratified that conduct; b) has reported that conduct promptly to the Federal Trade Commission under this Part; and c) in cases where that franchisee or licensee s conduct constitutes a material or repeated violation of the order, has diligently pursued reasonable and appropriate remedies available under the franchise or license agreement and applicable state law to bring about cessation of that conduct by the franchisee or licensee.

VIII.

It is further ordered That respondents shall, within sixty (60) days after the date of service of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

DEL MONTE FOODS COMPANY. ET AL. 483 483 Complaint