Zygon International, Inc

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

ZYGON INTERNATIONAL, INC., ET AL. 195

195 Complaint

IN THE MATTER OF

ZYGON INTERNATIONAL, INC., ET AL.

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

Docket C-3686. Complaint, Sept. 24, 1996--Decision, Sept. 24, 1996

This consent order prohibits, among other things, a Washington-based company and its owner, that manufacture and advertise learning accelerating, memory enhancing, weight loss, and vision improving products and devices, from making any claims concerning the performance, benefits, efficacy, or safety of any product or service they market, unless they possess competent and reliable evidence to substantiate such claims, and requires the respondents to pay $195,000 into escrow accounts for consumer redress programs.

Appearances

For the Commission: Dean C. Forbes and Lesley Anne Fair. For the respondents: Margaret Feinstein and Peter Kadzik, Dickstein, Shapirro & Morin, Washington, D.C.

COMPLAINT

The Federal Trade Commission, having reason to believe that Zygon International, Inc., a corporation, and Dane Spotts, 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 Zygon International, Inc. is a Washington corporation, with its principal office or place of business at 18368 Redmond Way, Redmond, WA.

Respondent Dane Spotts is an officer 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 complaint. His principal office or place of business is the same as that of the corporate respondent.

PAR. 2. Respondents have manufactured, advertised, labeled, offered for sale, sold, and distributed consumer products through radio and print advertisements, the Zygon International "SuperLife"

Complaint 122 F.T.C.

mail-order catalog, and the Internet's World Wide Web. These products include, but are not limited to the "Learning Machine" and the "SuperMind," devices that purportedly accelerate learning; the "SuperBrain Nutrient Program," pills that purportedly enhance memory, intelligence, attention, and concentration levels; "Fat Burner" pills, which purportedly induce weight loss; and "Day and Night Eyes," purported vision improvement pills.

The Learning Machine, SuperMind, SuperBrain Nutrient Program, Fat Burner pills, and Day and Night Eyes pills are "foods," "drugs," or "devices" within the meaning of Sections 12 and 15 of the Federal Trade Commission Act.

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.

LEARNING MACHINE

PAR. 4. Respondents have disseminated or have caused to be disseminated advertisements for the Learning Machine, including, but not necessarily limited to, the attached Exhibits A through E. These advertisements contain the following statements:

A. "Amazing Digital Headset Teaches You Foreign Languages Overnight" [Exhibit A: Zygon's SuperLife catalog]

B. "Knowledge really is power. But learning using traditional study methods is slow and boring. Imagine putting on a digital headset hooked up to an ordinary CD player. When you push play it fires a programmed sequence of light and sound, opening a window into your mind. Then like magic it downloads new information directly onto your brain cells. No, it's not science fiction. High-tech learning is now science fact. It's called the Learning Machine™. A profound breakthrough that will revolutionize how you learn and acquire new skills." [Exhibit A: Zygon's SuperLife catalog]

C. "Plus you can try the Learning Machine risk free for 30 days. During your risk free trial, you'll be able to learn 4 languages, triple your reading speed, boost your vocabulary, improve your memory, and reprogram one or two bad habits." [Exhibit A: Zygon's SuperLife catalog]

D. "Let's say... you'd like to quit smoking or lose weight. Pop in an Inner-Mind™ Programming Disc. The sensory stimulation matrix opens a window into your unconscious mind. Then by infusing your 'inner mind' with positive programming, you can rescript negative, self-defeating attitudes." [Exhibit B: USA Today, January 23, 1995]

E. "Let's say you want to learn a foreign language, quadruple your reading speed, or increase your math skills. Or give your children a powerful edge in school, learning 300%-500% faster than their peers. You select a specially programmed Learning Disc™ in the area you want to study. Plug it into any

ZYGON INTERNATIONAL, INC., ET AL. 197

195 Complaint

ordinary CD player. Then attach your Learning Machine digital headset into the headphone jack. Push play and a few moments later your mind is launched into a pre-programmed learning session. In a fun, almost effortless way, the Learning Disc lesson plan unfolds its program and transfers the knowledge into your mind." [Exhibit A: Zygon's SuperLife catalog; Exhibit C: US AIR magazine, July 1994; and Exhibit D: Longevity magazine, August 1994]

F. "The Learning Machine goes beyond virtual reality. It's the most advanced accelerated learning tool in the world! Absolutely mind blowing! What if you could flip a switch inside your mind to instantly activate your imagination? Speak foreign languages. Expand your mental skills . . . And pour into your mind the genius of an Einstein or a Socrates. Find out how the Learning Machine boosts mental powers . . . Get a Photographic Mind, Instant Motivation, Speak Foreign Languages, and More!" [Exhibit E: The Learning Machine Home Page, World Wide Web, January 18, 1996]

PAR. 5. Through the use of the statements contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits A through E, respondents have represented, directly or by implication, that the Learning Machine:

A. Enables users to learn foreign languages overnight. B. Enables users to quadruple their reading speed. C. Enables users to improve their math skills. D. Enables children to learn at a rate of 300% to 500% faster than their peers. E. Enables users to lose weight.

F. Enables users to quit smoking.

G. Substantially improves users' ability to learn and retain information. H. Enables users to learn four languages, triple their reading speed, improve their vocabulary, and improve their memory in thirty days.

PAR. 6. Through the use of the statements contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisements attached as Exhibits A through E, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph five, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 7. In truth and in fact, at the time they made the representations set forth in paragraph five, respondents did not

Complaint 122 F.T.C.

possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph six was, and is, false and misleading.

SUPERMIND

PAR. 8. Respondents have disseminated or have caused to be disseminated advertisements for the SuperMind, including, but not necessarily limited to, the attached Exhibits F and G. These advertisements contains the following statements:

A. "Based on hard scientific evidence which associates states of consciousness with dominant brainwave activity, this machine coaxes your brain into an Alpha/Theta pattern (brainwaves in the 4-10 Hz range), which is associated with deep meditation and mental imagery. . . Developed by the Mind Research Laboratory, now anyone can enter profound mental states at the push of a button. . . . I take it with me on business trips to beat stress and jet lag. A 20-minute session gives me the equivalent of 8-hours sleep and helps reset my biological clock.

Boost Brainpower

Listen: Training your brain to generate Theta activity for even a few minutes each day has enormous benefits, including boosting the immune system, enhancing creativity, I.Q., and psychic abilities, along with increasing feelings of psychological well-being. For a little black box to do all that to your brain in 20 minutes is amazing enough, but it's only part of the story. Because this machine can also be used to accelerate learning and modify negative self-defeating behavior.

Automatic Hypnosis

Let's say you wanted to quit smoking, enhance your self-esteem, lose weight, or play a better game of golf. . . . [B]y plugging into the SuperMind™, you could induce a hypnotic trance in a matter of seconds. Then, while your subconscious is primed for psychological programming, you play prerecorded behavioral mindscripts, and these new success patterns become transferred onto your brain." [Exhibit F: Longevity magazine, July 1993]

B. "Instant Speed Learning Plus, you can use this machine for speed learning. Tests at the University of California have revealed the effects of Theta frequencies on learning. During their study a group of 20 students learned 1,800 words of Bulgarian in 120 hours while using Theta stimulation programs. In about 1/3 the normal time they spoke and wrote the new language." [Exhibit F: Longevity magazine, July 1993]

C. "Speak French, Spanish, German, & Italian Overnight Using the amazing accelerated language learning system, these four Instant Language courses are also bundled with your SuperMind™ computer. Each course

ZYGON INTERNATIONAL, INC., ET AL. 199

195 Complaint

works with software built into your SuperMind™ to imprint a super-fast working knowledge of these languages into your memory. Edited to accelerate learning time, words and phrases for speaking in each country are imprinted directly onto your brain cells. No verbs to conjugate or grammar to learn." [Exhibit F: Longevity magazine, July 1993]

E. "Speak four languages almost overnight. Instant French. Instant Spanish. Instant German & Instant Italian use the SuperMind computer to stimulate the optimum brain-state for learning. Each language soundtrack imprints new words and phrases directly onto your brain cells. A second tape included with each course uses a special reinforcement system to lock the language session into permanent memory. There are no verbs to conjugate or grammar to learn." [Exhibit G: Omni magazine, January 1994]

PAR. 9. Through the use of the statements contained in the advertisements referred to in paragraph eight, including but not necessarily limited to the advertisements attached as Exhibits F and G, respondents have represented, directly or by implication, that the SuperMind:

A. Effectively treats users' stress.

B. Effectively treats users' jet lag.

C. Gives users the equivalent of eight hours of sleep after twenty minutes of use. D. Enables users to lose weight.

E. Enables users to quit smoking.

F. Enabled 20 students to learn 1800 words of Bulgarian in 120 hours in tests at the University of California. G. Improves the functioning of users' immune system. H. Increases users' I.Q.

I. When used in conjunction with the Instant Language courses, enables users to learn foreign languages overnight. J. Substantially improves users' ability to learn and retain information.

PAR. 10. Through the use of the statements contained in the advertisements referred to in paragraph eight, including but not necessarily limited to the advertisements attached as Exhibits F and G, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph 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 paragraph nine, respondents did not

Complaint 122 F.T.C.

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. Through the use of the statements contained in the advertisements referred to in paragraph eight, including but not necessarily limited to the advertisement attached as Exhibit F, respondents have represented, directly or by implication, that the SuperMind has been proven in tests conducted at the University of California to teach users to speak and write foreign languages in about one-third the time of traditional methods of study.

PAR. 13. In truth and in fact, tests conducted at the University of California have not proven that the SuperMind teaches users to speak and write foreign languages in about one-third the time of traditional methods of study. Therefore, the representation set forth in paragraph twelve was, and is, false and misleading.

SUPERBRAIN NUTRIENT PROGRAM

PAR. 14. Respondents have disseminated or have caused to be disseminated advertisements for the SuperBrain Nutrient Program, including, but not necessarily limited to, the attached Exhibit H. This advertisement contains the following statements:

A. "Recently I received a news clipping about a Florida medical doctor who takes a daily dose of 'smart pills' to increase memory, improve intelligence, and energize his brain. The article went on to tell of his incredible claim that these super pills not only made him smarter, but his 4-year-old son was turned into a genius because his wife took the pills when she was pregnant." [Exhibit H: Zygon's SuperLife catalog]

B. "I...started taking them myself. Instantly I was zooming....In other words, my brain was thinking at warp speed.

Smart Pill Breakthrough

So how can a 'pill' enhance cognition? Several ways. By increasing blood supply and oxygen to the brain. Enhancing brain cell metabolism. Inhibiting free radical damage to brain cells. And stimulating neuro-transmitter hormones. My goal was to design a powerful brain formula made entirely of natural substances.

Waking Up Your Brain

We hired the hottest pharmaceutical research lab in the country. The result is the Brain Cognition Formula. Twenty-six ingredients each tested for maximum purity and potency are loaded into a gelatin capsule.

ZYGON INTERNATIONAL, INC., ET AL. 201

195 Complaint

Look: Popping a few pills won't make you an Einstein, but if your experiences are like mine, you'll notice an improvement in attention, focus, concentration, and mental energy. Because subtle or even major improvements in cognitive functioning often go unnoticed, it's important to have some way of measuring your progress. So included in your package will be a special report called The Mental Boost that shows you how to measure your mental progress. You'll be instructed how to look for changes in alertness, mental energy, concentration, memorization, productivity, organization and planning, verbal skills, problem solving ability, mood, sexual desire, and overall health." [Exhibit H: Zygon's SuperLife catalog]

PAR. 15. Through the use of the statements contained in the advertisements referred to in paragraph fourteen, including but not necessarily limited to the advertisement attached as Exhibit H, respondents have represented, directly or by implication, that the SuperBrain Nutrient Program:

A. Enables users to improve their memory. B. Enables users to improve their intelligence. C. When taken by pregnant women, will cause their children to have enhanced intelligence. D. Enhances cognition, increases blood supply and oxygen to the brain, enhances brain cell metabolism, inhibits free radical damage to brain cells, and stimulates neuro-transmitter hormones of users. E. Enables users to improve their cognitive and mental functions, including attention and concentration levels, problem solving abilities, and verbal skills.

PAR. 16. Through the use of the statements contained in the advertisements referred to in paragraph fourteen, including but not necessarily limited to the advertisement attached as Exhibit H, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph fifteen, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 17: In truth and in fact, at the time they made the representations set forth in paragraph fifteen, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph sixteen was, and is, false and misleading.

Complaint

FAT BURNER PILLS

PAR. 18. Respondents have disseminated or have caused to be disseminated advertisements for Fat Burner pills, including, but not necessarily limited to, the attached Exhibit I. This advertisement contains the following statements:

A. "Fat Burner Pills Not only is Fat Burner the fastest selling product in its class, but it contains an incredible 500 mg of pure L-Carnitine (a special amino acid used in metabolism) per serving. . . . [Y]ou'll be on your way to a trimmer, firmer, leaner body. Try this supplement with any of the other weight control products in this catalog for a super combined effect that will enhance your weight control program. A special blend of Lipotropics plus 500 mg of L-Carnitine enhances the body's ability to burn fat." [Exhibit I: Zygon's SuperLife catalog]

PAR. 19. Through the use of the statements contained in the advertisements referred to in paragraph eighteen, including but not necessarily limited to the advertisement attached as Exhibit I, respondents have represented, directly or by implication, that Fat Burner pills:

A. Enhance the body's ability to burn fat. B. Enable users to have a trimmer, firmer, and leaner body. C. Enable users to lose weight.

PAR. 20. Through the use of the statements contained in the advertisements referred to in paragraph eighteen, including but not necessarily limited to the advertisement attached as Exhibit I, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph nineteen, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 21. In truth and in fact, at the time they made the representations set forth in paragraph nineteen, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph twenty was, and is, false and misleading.

DAY AND NIGHT EYES PILLS

PAR. 22. Respondents have disseminated or have caused to be disseminated advertisements for Day and Night Eyes pills, including,

ZYGON INTERNATIONAL, INC., ET AL. 203

195 Complaint

but not necessarily limited to, the attached Exhibit J. This advertisement contains the following statements:

A. "Focus on Healthy Eyes Eye Improvement Supplement If you suffer from night blindness (or want clearer vision during the day), Day and Night Eyes may be the remedy for you. This all-natural supplement gives your eyes the essential nutrients that must be present in your diet for proper eyesight function. Ingredients include Beta Carotene, Calcium, Vitamin D, Riboflavin (B-2), Zinc, Eyebright, and Anthocyanocide-rich Blueberry Leaf. Recommended dosage is one tablet every morning and evening." [Exhibit J: Zygon's SuperLife catalog]

PAR. 23. Through the use of the statements contained in the advertisements referred to in paragraph twenty-two, including but not necessarily limited to the advertisement attached as Exhibit J, respondents have represented, directly or by implication, that Day and Night Eyes pills:

A. Improve the night blindness of users. B. Give users clearer vision during the day.

PAR. 24. Through the use of the statements contained in the advertisements referred to in paragraph twenty-two, including but not necessarily limited to the advertisement attached as Exhibit J, respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraph twenty-three, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 25. In truth and in fact, at the time they made the representations set forth in paragraph twenty-three, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph twenty-four was, and is, false and misleading.

THIRTY-DAY MONEY-BACK GUARANTEE

PAR. 26. Respondents have disseminated or have caused to be disseminated advertisements for products, including, but not necessarily limited to, the attached Exhibits B, E, and K. These advertisements contains the following statements:

Complaint 122 F.T.C.

A. "Try the Learning Machine for 30 days risk free. Take your mind on an incredible journey. If for any reason you're not totally blown away by the experience, send your kit back to me for a full refund." [Exhibit B: USA Today, January 23, 1995]

B. "Try the Learning Machine for 30 days RISK FREE." [Exhibit E: The Learning Machine Home Page, World Wide Web, January 16, 1996]

C. "Our Return Policy We are committed to providing you with products that will improve your life. But if within 30 days you are not completely satisfied with your order, simply call a Customer Service Representative at 1-800-526-2177 to receive return instructions." [Exhibit K: Zygon's SuperLife catalog]

PAR. 27. Through the use of the statements contained in the advertisements referred to in paragraph twenty-six, including but not limited to the advertisements attached as Exhibit B, E, and K, respondents have represented, directly or by implication, that products ordered from respondents carry a thirty-day money-back guarantee, and that consumers who returned the product to respondents within thirty days after receipt would receive a full refund within a reasonable period of time.

PAR. 28. In truth and in fact, in numerous instances, consumers returned products to respondents within thirty days after receipt and did not receive a full refund within a reasonable period of time, or at all. Therefore, the representation set forth in paragraph twenty-seven was, and is, false and misleading.

PAR. 29. 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.

ZYGON INTERNATIONAL, INC., ET AL. | 205 195 | Complaint EXHIBIT A MIND DEVELOPMENT Learning Machine Breakthrough! Amazing Digital Headset Teaches You Foreign Languages Overnight, Reprograms Your Mind For Success & Launches You Into Virtual Dream-State Experiences NEW! [illegible] Knowledge really is power. But cramming using traditional study methods is slow and boring. Imagine putting on a headset that's hooked up to an ordinary CD player. When you push play, a programmed sequence of light and sound, opening a window into your mind. Then like magic it downloads new information directly onto your brain cells. No, it's not science fiction. High-tech learning is now a reality. It's called the Learning Machine™. A profound breakthrough that will revolutionize how you learn and acquire new skills. ing session. In a fun, almost effortless way, the Learning Disc lesson plan unfolds its program and transfers the knowledge into your mind. It's incredible. Amazing Light-Sound Matrix Stimulates Your Mind How does it work? A digital program embedded in the CD, called a Learning Matrix™, sends a combination of light and sound instructions through the Learning Machine digital headset to stimulate the optimum mind-state for learning. During your learning session you'll be asked to listen to an audio tape while you review written materials. Then while this information is still fresh in your mind, the narrator instructs you to lower your Eye Shield, and your Learning Disc fires an amazing light-sound matrix that instantly relaxes your mind. That highly relaxed mind-state helps lock the new information into your memory. [illegible] Plug Your Mind Into Super-Sonic Learning Power Let's say you want to learn a foreign language, quadruple your reading speed, or increase your math skills. Or give your children a powerful edge in school, earning 200%-300% faster than their peers. You select a specially programmed Learning Disc on the topic you want to study. Plug it into any ordinary CD player. Then attach your Learning Machine digital headset into the headphone jack. Push play and a few moments later your mind is launched into a pre-programmed learn- Learning Discs™ Teach Foreign Languages, Speed Reading, And More Learning foreign languages, or anything for that matter, at rocket speed can be yours. Because we're going to include a ton of valuable Learning Disc Software with your Learning Machine so you can get immediate results from this new technology. You'll receive 4 language courses - French, German, Spanish, and Italian. A Super Vocabulary course, a Super Memory course, and a Speed Reading course. And for your kids, a SuperPhonics™ reading program. Over $400 worth of Learning Discs make this the deal of the century. But I want to show off its other amazing powers. And give you 10 more reasons for ordering it now. 3-D Mind-Sync Library Launches Virtual Dream-States So I'll include an amazing 3-D Mind-Sync Library™, with 10 amazing whole-brain synchronization programs on 3 CDs, to turn your Learning Machine into a powerful meditation, self-hypnosis, and dream-induction computer. The 3-D Mind-Sync Library I'm bundling includes the following titles: Creativity Booster, Goal Energizer, Stress Zapper, Brain Tune-up, Alpha Visualization, Imagination Stimulator, Learning Accelerator, Super Intuition, Lucid Dreaming, and Ultra Zen States. A $150 value, this extensive collection of mind expansion experiences is a super bonus. But what's even more exciting is how this same machine can be used for habit control, success conditioning, and eliminating self-defeating attitudes. Reprogram Bad Habits & Zap Your Mind With Success Let's say you want to transform a loser mind-set into a winning one. Or you'd like to quit smoking or lose weight. Pop in an Inner Mind Programming Disc. The light-sound matrix opens a window into your unconscious mind - the source of your inner programming. Then by infusing your "inner mind" with new positive programs, you can rewrite negative self-defeating behavior. I'm including your Learning Machine kit 18 exquisitely produced Inner Mind programs. From success conditioning to weight control, this is another $150 value. And here's something else too. $200 Instant Rebate In addition to the Accelerated Language Learning Library, the SuperPhonics Program, Super Speed Reading, Super Memory, & Super Vocabulary, the Mind-Sync Library, and the Inner Mind Programming Library (a $750 combined value), I'm going to offer you a one-time $200 instant rebate off the list price of the Learning Machine. I figure you'll be so impressed with this incredible technology you'll use that extra $200 to buy additional Learning Discs. That's good for business. The list price for the Learning Machine is $499.95. But as I said I'm letting you have it (limited to the first 5,000 units) for $299.95 plus shipping. And remember, in addition to the $200 rebate, I'm including hundreds of dollars worth of free Learning Discs, making this an incredible opportunity. 30-Day Risk Free Trial Plus you can try the Learning Machine risk free for 30 days. During your risk free trial you'll be able to learn 4 languages, triple your reading speed, boost your vocabulary, improve your memory, and reprogram one or two bad habits. Now imagine what you can do during the second month. But please hurry. This is a limited introductory offer, so please reserve your unit today. Note: The Learning Machine will be available after January 1. Please reserve your order now. You will not be billed until your order is ready to ship. The unit you receive may vary slightly in appearance as pictured above. $750 Worth of Bonus Learning Discs! [illegible] Need a CD Player? [illegible] Learning Machine Special Offer Item # 4201 ................ $299.95 + $7.00 Portable CD Player Item # 32021 ............ $79.95 + $7.00 EXHIBIT A

Complaint 122 F.T.C.

EXHIBIT B

EXHIBIT B [illegible]

Mind Power Breakthrough!

Plug Your Mind into the Learning Machine- To Boost Mental Powers, Program Your Mind for Success & Launch Virtual Reality-Like Fantasies!

BY DANE SPOTTS

[illegible]

RELAX AND LEARN INCREDIBLY FAST [illegible]

Speak French, Spanish, German & Italian [illegible]

30-Day Risk Free Trial [illegible]

Over $600 Worth of Learning Discs Included? FREE!! [illegible]

10 Fantastic Mind Journeys [illegible]

Plus $1000 In Coupons for More Learning CDs [illegible]

Super Motivation Library [illegible]

Learning Machine Special Offer [illegible]

1-800-925-3263 ZYGON

ZYGON INTERNATIONAL, INC., ET AL.

Complaint EXHIBIT C BEYOND VIRTUAL REALITY Learning Machine Breakthrough! Amazing new technology teaches you foreign languages, reprograms your mind for success & launches you into virtual fantasy experiences BY DANE SPOTTS [illegible] Amazing Light-Sound Matrix Stimulates Your Mind [illegible] Plug Your Mind into Supersonic Learning Power [illegible] Learn Foreign Languages, Speed Reading, and More [illegible] 3-D Mind Sync Induces Virtual Fantasy Experiences [illegible] Zap Your Mind with Success [illegible] Over $600 Worth of Learning Discs Included...FREE! [illegible] $200 Instant Rebate [illegible] 30-Day Risk Free Trial [illegible] 1-800-925-3263 ZYGON [illegible] EXHIBIT C

Complaint 122 F.T.C.

EXHIBIT D

BEYOND VIRTUAL REALITY Advertisement Learning Machine Breakthrough! Amazing new technology teaches you foreign languages, reprograms your mind for success & launches you into virtual fantasy experiences BY DANE SPOTTS [illegible] Amazing Light-Sound Matrix Stimulates Your Mind [illegible] Plug Your Mind Into Supersonic Learning Power [illegible] Learn Foreign Languages, Speed Reading, and More [illegible] Induces Virtual Fantasy Experiences 3-D Mind Sync [illegible] Zap Your Mind with Success [illegible] Over $600 Worth of Learning Discs Included...FREE! [illegible] $200 Instant Rebate [illegible] 30-Day Risk Free Trial [illegible] 1-800-925-3263 ZYGON [illegible]

EXHIBIT D [illegible] magazine August 1994

ZYGON INTERNATIONAL, INC., ET AL. 209

195 Complaint

EXHIBIT E

Learning Machine Goes Beyond Virtual Reality...

It's the most advanced accelerated learning tool in the world!

Absolutely mind blowing!

What if you could flip a switch inside your mind to instantly activate your imagination? Speak foreign languages. Expand your mental skills. Program your subconscious to make you a sure-fire success. And pour into your mind the genius of an Einstein or a Socrates. Find out how the Learning Machine boosts mental powers, and launches virtual fantasy adventures... plus how to get $450 of Learning CDs FREE!

Try the Learning Machine for 30 days RISK FREE...Plus get $450 of FREE LEARNING CDs!

Get a Photographic Mind, Instant Motivation, Speak Foreign Languages, and More!

01/18/96 16:18:10

EXHIBIT E The Learning Machine Home Page, World Wide Web, January 18, 1996

Complaint 122 F.T.C.

EXHIBIT F

Advertisement Mind Power Breakthrough! Plug Your Brain Into This Powerful Mind Machine To Zap Stress, Improve Mental Powers, And Free Yourself Of Self-Sabotaging Behavior. Plus Get $500 Worth Of Bonus MindWare™!

[illegible]

EXHIBIT F [illegible]

ZYGON INTERNATIONAL, INC., ET AL.

Complaint EXHIBIT F

"Instant French" Free! Learn 4 foreign languages, rescript self-sabotaging behavior, and send your brain on incredible mind journeys! ALL FREE! Details below.

[illegible] comes with...

Super Motivation Library Turn stress into success, and a loser mind-set into a winning one at the touch of a button with the 22-title Behavioral Mindscapes Library™. By first synchronizing your brainwaves into the optimum mind-state for psychological programming, the SuperMind™ uses these manuscripting tapes to rewire deeply embedded self-sabotaging behavior patterns.

Reprogram self-sabotaging behavior and implant new success patterns automatically. Normally each title is $10, but for a limited time I'm bundling the entire $220 library with your SuperMind™ computer.

And there's more...

Speak French, Spanish, German, & Italian Overnight Using the amazing accelerated language learning system, these four Instant Language courses are also bundled with your SuperMind™ computer. Each course works with software built into your SuperMind™ to imprint a super-fast working knowledge of each language into your memory. Edited to accelerate learning time, words and phrases for speaking in each country are imprinted directly onto your brain for instant recall. A $200 value, all four language courses won't cost you a penny.

And here's something else...

3 Fantastic Mind Journeys Trigger vivid sensory responses in your brain and send your consciousness on a journey to other times and places with three mindblowing experiences. "Abysmal [illegible] takes you to a mystical time when the [illegible] magic ruled. "Cetacean Mind Link"

puts your consciousness inside a whale and dolphin to experience an incredible ocean world. And finally the ultimate mind-trip, "Near Death Experience" simulates the 5 astral stages of a journey out of your body, then back again, renewed and enlivened. Three superbly produced SuperMind™ experiences at $25 each, adding another $75 bonus value to your package.

$17,000 Machine For $299 I'm super pumped up by this powerful self-improvement tool. Of all the light/sound machines I've used, the only one that even comes close to the SuperMind™ is a $17,000 clinical model.

This powerful brain boosting computer with all its incredible bonuses -- Special Report ($25 value), the "Speed Learning" System ($25 value), Moodscapes™ Library ($100 value), and the incredible MindWare™ Bonus Bundle Package ($500 value), is all yours for only $299.95.

30-Day Free Trial And you can try it entirely at my risk over the next 30 days. Take your brain on a mind machine journey into incredible mind altering experiences, learn foreign languages at the push of a button, and reprogram a loser mind-set into a winning one. If for any reason you're not blown away by the technology, send your computer back to me for a full refund. But no matter what, keep the $100 worth of Moodscapes as my free gift just for giving it a shot.

To order, simply call my toll free number and ask for the SuperMind™ special offer (Item #403). Or send your check or money order for $299.95 plus $15 shipping & handling to the address below. Please allow 4-6 weeks for delivery.

For Fastest Service Order Toll Free 1-800-925-3263 ZYGON [illegible]

$500 MindWare Bonus Pak! SUPER MOTIVATION LIBRARY FREE! 3 FANTASTIC MIND JOURNEYS FREE! 4 INSTANT LANGUAGES FREE! [illegible]

EXHIBIT F

Complaint

EXHIBIT G

Mind Power Breakthrough! Plug Your Brain Into This Powerful Mind Machine To Zap Stress, Boost Mental Powers, And Launch Your Mind Into Virtual Reality-Like Fantasies. Plus Get $600 Worth Of Free MindWare™

By Dane Spotts [illegible]

A Vacation In 20 Minutes [illegible]

Boost Brainpower [illegible]

Super Motivation Library [illegible]

$500 MindWare Bonus Pak [illegible] Plus $100 Of Mind Lifting Moodscapes - FREE!

Speak French, Spanish, German, & Italian Overnight [illegible]

3 Fantastic Mind Journeys [illegible]

30-Day Free Trial [illegible]

For Fastest Service Order Toll Free 1-800-925-3263 ZYGON [illegible]

EXHIBIT G [illegible] January 1994

ZYGON INTERNATIONAL, INC., ET AL.

Complaint EXHIBIT H

“Smart Pill” Discovery! Can This Amazing New Brain Formula Actually Help Your Mind Work Better & Faster? Test It Yourself And Get This Powerful Vitamin Protection Formula Each And Every Month Free!

Recently I received a news clipping about a Florida medical doctor who takes a daily dose of “smart pills” to increase memory, improve intelligence, and energize his brain. The article went on to tell of his incredible claim that these super pills not only made him smarter, but his 4-year-old son was turned into a genius because his wife took the pills while she was pregnant.

Being a self-improvement warrior I was intrigued by the concept, and started taking them myself. Instantly I was zooming. I felt like Captain Kirk on the “Star Trek” episode where time becomes super accelerated. In other words, my brain was thinking at warp speed.

Smart Pill Breakthrough So how can a “pill” enhance cognition? Several ways: By increasing blood supply and oxygen to the brain. Enhancing brain cell metabolism. Inhibiting free radical damage to brain cells. And stimulating neuro-transmitter hormones.

My goal was to design a powerful brain formula, made entirely of natural substances.

Waking Up Your Brain We hired the hottest pharmaceutical research lab in the country. The result is the Brain Cognition Formula. Twenty-six ingredients each tested for maximum purity and potency are loaded into a gelatin capsule.

Look: Popping a few pills won’t make you an Einstein, but if your experiences are like mine, you’ll notice an improvement in attention, focus, concentration, and mental energy. Because subtle or even major improvements in cognitive functioning often go unnoticed, it’s important to have some way of measuring your progress.

So included in your package will be a special report called The Mental Boost that shows you how to measure your mental progress. You’ll be instructed how to look for changes in alertness, mental energy, concentration, memorization, productivity, organization and planning, verbal skills, problem solving ability, mood, sexual desire, and overall health.

Super Vitamin Bonus When you call and order your 3 mo Cognition Formula, you’ll automatically be sent a fresh month’s supply every four weeks. Plus as a special bonus you’ll also receive our Vitamin Protection Formula FREE. Yes you get two bottles for one low price! The Brain Cognition Formula and the Vitamin Protection Formula. This super bonus vitamin program is automatically sent to you each and every month along with your brain pills, for as long as you wish to continue the program.

30-Day Free Trial (Empty-The-Bottle Guarantee) And to be sure this stuff really works, you can try it out entirely at my risk for 30 days. Order your first month’s supply of both formulas. And if at any time during the 30-day trial you wish to discontinue the program, simply return the unused portion [even if it’s an empty bottle], and still receive a 100% refund. Then after the first 30 days, you may cancel any subsequent shipments with a simple telephone call.

Super Vitamin Bonus Decide For Yourself If The Brain Cognition Formula Really Works. And Get This Vitamin Protection Formula Every Month Free! [illegible] [illegible]

EXHIBIT H [illegible]

Complaint 122 F.T.C.

EXHIBIT I

Fat Burner Pills Not only is Fat Burner the fastest selling product in its class, but it contains an incredible 500 mg of pure L- Carnitine (a special amino acid used in metabolism) per serving. Combined with a special blend of Lipotropics and Chromium, you'll be on your way to a trimmer, firmer, leaner body.

Try this supplement with any of the other weight control products in this catalog for a super combined effect that will enhance your weight control program.

(60 Capsules)

A special blend of Lipotropics plus 500 mg of L- Carnitine enhances the body's ability to burn fat. Fat Burner Pills Item # 34011. ....................$14.95[3.00]

EXHIBIT I Zygon's SuperLife catalog

ZYGON INTERNATIONAL, INC., ET AL. 215

195 Complaint

EXHIBIT J

Focus On Healthy Eyes Eye Improvement Supplement If you suffer from night blindness (or want clearer vision during the day), Day and Night Eyes may be the remedy for you. This all-natural supplement gives your eyes the essential nutrients that must be present in your diet for proper eyesight function. Ingredients include Beta- Carotene, Calcium, Vitamin D, Riboflavin (B-2), Zinc, Eyebright, and Anthocyanocide-rich Blueberry Leaf. Recommended dosage is one tablet every morning and evening. (90 Capsules)

Day and Night Eyes Item # 34011......................$9.95[3.00]

EXHIBIT J Zygon's SuperLife catalog

Complaint 122 F.T.C.

EXHIBIT K

"My mission is to create and deliver tools that empower you to achieve your full potential in life. These are some of the best ideas in the world. Check them out!"

Dane Spotts, President Zygon International

Ordering Information

Fast and Easy Ordering For fastest delivery, call us toll free 1-800-865-7575, 24 hours a day, 7 days a week. Please have your credit card and ordering information ready when you call. If you prefer to pay by check or money order, please use this order form and pre-addressed envelope. Be sure to include shipping charges listed in the brackets [ ] directly after item price. Product prices are subject to change without notice. Your Sales Consultant will always inform you of any changes.

Fax Us Your Order Anytime Completely fill out this order form and fax it 24 hours a day, 7 days a week to 1-206-882-1454

International Orders Canadian customers call us toll free 1-800-865-7575, 24 hours a day, 7 days a week. If you order by mail, please add $9.00 to your delivery charge. NOTE: Canadian orders that include 79¢ GST will be delivered directly to shipping address with no additional duties. Your check or money order must be in U.S. funds. Other international customers call 1-206-885-9200 for specific delivery requirements.

All About Shipping Shipping charges for each item are listed in brackets [ ] directly after item price. Most orders are shipped within 72 hours via express delivery, at no extra charge. Some items due to weight must be shipped via UPS ground or common carrier. Orders paid by personal check require additional time. U.S. Post Box deliveries will be shipped Post. Canadian orders will be shipped Bulk Post unless otherwise specified. U.S. Post Box deliveries may require an additional shipping charge. Items ordered together are not necessarily shipped the same day. International customers call 1-206-885- 9200 for exact shipping and handling charge.

Customer Service Assistance If you need additional assistance after you have placed or received your order, our specially trained Customer Service Representatives are ready to answer your questions and will promptly handle any adjustments or corrections. Please call 1-800-526-2177, weekdays 7:30 a.m. to 4:00 p.m., Pacific Standard Time.

Our Return Policy We are committed to providing you with products that will improve your life. But if within 30 days you are not completely satisfied with your order, simply call a Customer Service Representative at 1-800-526-2177 to receive return instructions.

EXHIBIT K Zygon's SuperLife catalog

ZYGON INTERNATIONAL, INC., ET AL. 217

195 Decision and Order

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 Commission, would charge respondents with violation of the Federal Trade Commission Act; and

The respondents, their attorney, and counsel for Federal Trade 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, or that the facts as alleged in such complaint, other than jurisdictional facts, are true 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 having duly considered the comments received, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Zygon International, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Washington, with its office or principal place of business located at 18368 Redmond Way, Redmond, WA.

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

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

Decision and Order 122 F.T.C.

ORDER

I.

It is ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane Spotts, individually and as an officer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product or program 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 the use of such product or program can or will have any effect on the user's:

A. Health or bodily structure or function, including but not limited to sleep; weight, bodyfat content, or body shape or tone; immune system; eyesight or night vision; stress; or jet lag; or B. Smoking behavior,

unless at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates such 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.

II.

It is further ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane Spotts, individually and as an officer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product or program in or affecting commerce, as "commerce" is defined in the Federal Trade

ZYGON INTERNATIONAL, INC., ET AL. 219

195 Decision and Order

Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication, that the use of such product or program can or will have any effect on the user's cognitive or mental functions or skills, including but not limited to reading, vocabulary, learning, foreign language, verbal or math skills; intelligence or I.Q. or that of the user's children; attention or concentration levels; or memory, unless at the time of making such representation, respondents possess and rely upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates such representation.

III.

It is further ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane Spotts, individually and as an officer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product or program in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from making any representation, in any manner, directly or by implication:

A. Regarding the performance, benefits, efficacy, or safety of any food, drug, or device, as those terms are defined in Section 15 of the Federal Trade Commission Act, 15 U.S.C. 55, or dietary supplement, unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates such representation.

B. Regarding the performance, benefits, efficacy or safety of any product or service (other than a product or service covered under Part III.A herein), unless, at the time of making such representation, respondents possess and rely upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates such representation.

IV.

It is further ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane

Decision and Order 122 F.T.C.

Spotts, individually and as an officer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product or program in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, directly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test or study.

V.

It is further ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane Spotts, individually and as an officer of said corporation, and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any product or program in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, shall forthwith cease and desist from:

A. Representing, directly or by implication, that consumers can receive a refund, through such terms as "money-back guarantee" or similar terms, unless respondents refund the full purchase price at the consumer's request in accordance with the provisions of Part V.B herein;

B. Failing to refund the full purchase price in accordance with the terms of a guarantee, warranty or refund policy within a reasonable period of time after the consumer complies with the conditions for receiving a refund that are stated clearly and prominently in the advertisement or solicitation. For purposes of this Part, a "reasonable period of time" shall be:

1. That period of time specified in respondents' advertisement or solicitation if such period is clearly and prominently disclosed in the advertisement or solicitation; or

2. If no period of time is clearly and prominently disclosed in the advertisement or solicitation, a period of thirty (30) days following the date that the consumer complies with the conditions for receiving

ZYGON INTERNATIONAL, INC., ET AL. 221

195 Decision and Order

a refund that are stated clearly and prominently in the advertisement or solicitation.

VI.

It is further ordered, That respondents Zygon International, Inc., a corporation, its successors and assigns, and its officers, and Dane Spotts, individually and as an officer of said corporation, are jointly and severally liable for consumer redress as provided herein:

A. Not later that the date this order becomes final, respondents shall deposit into an escrow account to be established by the Commission for the purpose of receiving payments due under the provisions of this order ("first escrow account"), the sum of $150,000. These funds, together with accrued interest, less any amount necessary to pay the costs of administering the first escrow account and redress program herein, shall be used by the Commission or its representative to provide refunds to any consumers:

1. Who, between the dates of October 15, 1995, and the date this order becomes final, have returned or return any product(s) purchased from respondents to respondents for a refund within thirty days of their receipt of the product(s); and 2. Who have not previously received either a full refund or a full credit from a credit card issuer for the purchase of the product(s).

B. Any funds remaining in the first escrow account after refunds have been paid to consumers under Part VI.A herein, in the discretion of the Commission:

1. Shall be used to provide redress to purchasers of the Learning Machine who request a refund not later than sixty (60) days after the date this order becomes final and have not previously received either a refund pursuant to Part VI.A herein, a full refund from respondents, or a full credit from a credit card issuer for the purchase of the product(s);

2. Shall be used to provide redress to purchasers who, prior to October 15, 1995, returned, or contacted respondents for authorization to return, any product(s) purchased from respondents to respondents for a refund within thirty (30) days of their receipt of the product(s); have not previously received either a full refund or a full

Decision and Order 122 F.T.C.

credit from a credit card issuer for the purchase of the product(s); and whose identities become known to respondents or the Commission within sixty (60) days after the date this order becomes final; 3. Shall be used to pay any attendant costs of administration; and/or 4. Shall be paid to the United States Treasury.

C. At any time after this order becomes final, the Commission may direct the escrow agent to transfer funds from the first escrow account, including accrued interest, to the Commission to be distributed as herein provided. Respondents shall be notified as to how the funds are distributed, but shall have no right to contest the manner of distribution chosen by the Commission, provided that the manner of distribution chosen by the Commission comports with the terms of this Agreement. The Commission, or its representative, shall in its sole discretion select the escrow agent. Costs associated with the administration of the first escrow account and refund program provided herein, if any, shall be paid from funds in the first escrow account.

D. Respondents relinquish all dominion, control and title to the funds paid into the first escrow account, and all legal and equitable title to the funds shall vest in the Treasurer of the United States and in the designated purchasers. Respondents shall make no claim to or demand for the return of the funds, directly or indirectly, through counsel or otherwise; and in the event of bankruptcy of respondents, respondents acknowledge that the funds are not part of the debtor's estate, nor does the estate have any claim or interest therein.

E. Not later than the date this order becomes final, respondents shall deposit into a second escrow account to be established by the Commission for the purpose of receiving payments due under the provisions of this order ("second escrow account"), the sum of $45,000. These funds, together with accrued interest, less any amount necessary to pay the costs of administering the escrow account and redress program herein, shall be used by the Commission or its representative to provide refunds to consumers if refunds owed to consumers pursuant to Parts VI.A and VI.B herein exceed the amount of money in the first escrow account.

F. At any time after this order becomes final, the Commission may direct the escrow agent to transfer funds from the second escrow account, including accrued interest, to the Commission to be distributed as herein provided. Respondents shall be notified as to

ZYGON INTERNATIONAL, INC., ET AL. 223

195 Decision and Order

how the funds are distributed, but shall have no right to contest the manner of distribution chosen by the Commission, provided that the manner of distribution chosen by the Commission comports with the terms of this Agreement. The Commission, or its representative, shall in its sole discretion select the escrow agent. Costs associated with the administration of the second escrow account and refund program provided herein, if any, shall be paid from funds in the second escrow account. Any funds remaining in the second escrow account after all consumers have received refunds pursuant to Part VI.A, VI.B.1, VI.B.2, and VI.E herein shall be returned to respondents. If no funds from the second escrow account are needed to provide redress to consumers as provided herein, the funds in the second escrow account, together with accrued interest, shall be returned to respondents within seventy-five (75) days after the date this order becomes final. If funds from the second escrow account are needed to provide refunds to consumers as provided herein, the funds remaining in the second escrow account, together with accrued interest, less any amount necessary to pay the costs of administering the escrow account and redress program herein, shall be returned to respondents within one hundred twenty (120) days after the date this order becomes final.

VII.

It is further ordered, That within three (3) days after the date this order becomes final, respondents shall, to the extent available, provide to the Commission, in computer readable form (standard MS-DOS diskettes or IBM-mainframe compatible tape) and in computer print-out form, a list of:

A. The name and address of all consumers in the United States who purchased the Learning Machine;

B. The name, address, and date of refund of all consumers in the United States who purchased the Learning Machine and received a full refund from respondents;

C. The name, address, and date of credit of all consumers in the United States who purchased the Learning Machine and received a full credit from a credit card issuer for the purchase of the product(s); and

D. The name, address, and date of refund of all consumers in the United States who purchased any product(s) from respondents and

Decision and Order 122 F.T.C.

received a full refund between October 15, 1993 and October 15, 1995.

VIII.

It is further ordered, That for three (3) years after this order becomes final, respondents, and their successors and assigns, shall maintain and upon request make available to the Commission within three (3) business days:

A. Documents and records demonstrating the manner and form of respondents' compliance with Part VI of this order; and B. Copies of all correspondence and memorializations of other communications to or from any consumer regarding refunds or requests for refunds for any product(s) purchased from respondents.

IX.

It is further ordered, That for five (5) 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 or its staff 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 upon which respondents relied for such representation, including but not limited to, including complaints from consumers, and complaints or inquiries from governmental organizations.

X.

It is further ordered, That respondent Zygon International, Inc., its successors and assigns, shall:

A. Within thirty (30) days after service of this order, provide a copy of this order to each of its current principals, officers, directors, and managers, and to all personnel, agents, and representatives having

ZYGON INTERNATIONAL, INC., ET AL. 225

195 Decision and Order

sales, advertising, or policy responsibility with respect to the subject matter of this order; and

B. For a period of five (5) years from the date of entry of this order, provide a copy of this order to each of its future principals, officers, directors, and managers, and to all personnel, agents, and representatives having sales, advertising, or policy responsibility with respect to the subject matter of this order within three (3) days after the person commences his or her responsibilities.

XI.

It is further ordered, That respondent Zygon International, Inc., its successors and assigns, shall notify the Federal Trade Commission at least thirty (30) days prior to any proposed change in its corporate structure, including but not limited to dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or affiliates, the planned filing of a bankruptcy petition, or any other change in the corporation that may affect compliance obligations arising out of this order.

XII.

It is further ordered, That respondent Dane Spotts shall, for a period of seven (7) years from the date of entry of this order, notify the Commission within thirty (30) days of the discontinuance of his present business or employment and of his affiliation with any new business or employment involving the advertising, offering for sale, sale, or distribution of any consumer product or service. Each notice of affiliation with any new business or employment shall include the respondent's new business address and telephone number, current home address, and a statement describing the nature of the business or employment and his duties and responsibilities.

XIII.

This order will terminate on September 24, 2016, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

Decision and Order 122 F.T.C.

A. Any paragraph in this order that terminates in less than twenty years;

B. This order's application to any respondent that is not named as a defendant in such complaint; and

C. This order if such complaint is filed after the order has terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this paragraph as though the complaint was never filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

XIV.

It is further ordered, That respondents shall, within sixty (60) days after service of this order, and at such other times as the Federal Trade 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 this order.

HOME SHOPPING NETWORK, INC., ET AL. 227

227 Complaint

IN THE MATTER OF

HOME SHOPPING NETWORK, INC., ET AL.

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

Docket 9272. Complaint, March 2, 1995--Decision, Sept. 26, 1996

This consent order requires, among other things, the Florida-based corporation and two of its subsidiaries to possess scientific evidence to support any claims: that a food, food or dietary supplement, or drug cures, treats or prevents any disease or has any effect on the structure or function of the human body; and about the performance or benefits of efficacy of any smoking-cessation program, product or service.

Appearances

For the Commission: Lisa Kopchik.

For the respondents: Basil Mezines, Glenn A. Mitchell and David U. Fierst, Stein, Mitchell & Mezines, Washington D.C.

COMPLAINT

The Federal Trade Commission, having reason to believe that Home Shopping Network, Inc., Home Shopping Club, Inc., and HSN Lifeway Health Products, Inc., corporations, hereinafter sometimes referred to as 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 Home Shopping Network, Inc. ("HSN") is a Delaware corporation, with its offices and principal place of business at 11831 30th Court North, St. Petersburg, Florida. HSN is a holding company for numerous subsidiaries, including Home Shopping Club, Inc. and HSN Lifeway Health Products, Inc. HSN, through its subsidiaries, is principally engaged in the marketing of a variety of consumer products by means of live, customerinteractive, televised sales programs and through mail-order brochures and other literature.

Respondent Home Shopping Club, Inc. ("HSC") is a Delaware corporation, with its offices and principal place of business at 11831