Efficient Labs, Inc

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101 THE MA TIER EFFICIENT LABS, INC. , ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLA non OF SECS. 5 AND 12 OF THE FEDERAL TRADE COMMISSION ACT Docket 3768. Complaint, Sept. 1997--Decision, Sept. , 1997 This consent order requires, among other things, the Puerto Rico-based Spanishlanguage advertiser of dietary supplements and its officer to have scientific evidence to substantiate any claim they make concerning the health benefits perfonnance, safety or efficacy of any food, drug, cosmetic or dietary supplement promoted or used to treat conditions or ilnesses related to the circulatory system.

Appearances For the Commission: Michael Bloom, Donald D'Amato and Denise Tighe.

For the respondents: Jose Acosta-Grubb, Fiddler, Gonzalez & Rodriquez San Juan, Puerto Rico.

COMPLAINT The Federal Trade Commission, having reason to believe that Effcient Labs, Inc. , a corporation, and BIas Reyes-Reyes individually and as an offcer ofthe corporation ("respondents ), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent Effcient Labs, Inc. is a corporation organized under the laws of the Commonwealth of Puerto Rico, with its principal office or place of business at 413 San Jorge Street, San Juan, Puerto Rico.

2. Respondent BIas Reyes-Reyes is an offcer of the corporate respondent. Individually or in concert with others, he formulates directs, participates in, or controls the policies, acts, or practices of the corporation, including the acts or practices alleged in this complaint. His principal office or place of business is thc same as that of Effcient Labs, Inc.

3. Respondents have advertised, offered for sale, sold, and distributed products to the public, including "Venoflash " a nutritional supplement with ingredients that include J'iacin U. ; Vitamins Complaint 124 FTC. , B- , B- , C, and E; and various plant derivatives. Venoflash purportedly, among other things, treats the symptoms of varicose veins and hemorrhoids. "Venoflash" is a "food" and/or "drug" within the meaning of Sections 12 and 15 of the Federal Trade Commission Act, IS U.S.C. 52 55.

4. 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. 5. Respondents have disseminated or have caused to be disseminated print and television advertisements for Venoflash that have appeared in Miami' EI Nuevo Herald, and have been broadcast and cablecast on Telemundo de Puerto Rico, Univision 41(WXTV-New York), Telemundo (T47/WNJU New York), Univision 23 (WLTV-Miami), and Telemundo de Florida. These print and television advertisements, including but not necessarily limited to the attached Exhibit A (transcript of a television advertisement), contain the following statements: Clogged, Clogged, Clogged! When your blood circulation feels like Its clogging, look for the Venoflash aid. If you suffer from varicose veins, Venoflash can help you! If you suffer from hemorrhoids, Venoflash can help you! To order, 1-800-272-8964.

Venoflash can help if your extremities become numb as a result of problems in your veins and capillaries.

Defend yourself from those dangerous clogs in your circulatory system and recover your lost agility taking Venoflash.

Venoflash can help you!"

(Exhibit A) 6. Through the means described in paragraph five, respondents have represented, expressly or by implication, that: A. Venoflash removes dangerous clogs in the circulatory system; B. Venoflash treats the symptoms of varicose veins; and C. Venoflash treats the symptoms of hemorrhoids. 7. Through the means described in paragraph five, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in paragraph six at the time the representations were made. 8. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in paragraph six at the time the representations were made. Therefore EFFICIENT LABS, INC., ET AL. 293 291 Complaint the representation set forth in paragraph seven was, and is, false or misleading.

9. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices, and the making of false advertisements, in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act. Complaint 124 FTC EXHIBIT A VE0!OFLASH TV COM:\ERCIAL SCRIPT TAPON, TAPON, TAPON! Clogged, Clogged, Clogged! CUANDO SE PRODUCEN TAPONES EN LA CIRCULACION DE LA SA GRE BUSQUE LA A YUDA DE VENOFLASH.

When your blood circulation feels like it s clogging, look for the Vena flash aid. SI SUFRE DE VARICES, VENOFLASH PUEDE A YUDARLE' If you suffer from varicose veins. Venoflash can help you! SI PADECE DE HEMORROIDES, VENOFLASH PUEDE A YUDARLE! If you suffer from hemorrhoids. Venoflash can help you! PARA ORDENAR, 1-800-272-8964.

To Order, 1- 800-272-8964.

VENOFLASH PUEDE A YUDARLE 51 SE LE ADOR.\1ECEN LAS EXTRE:vIDADES POR PROBLEMAS EN 5US VE AS Y CAPILARES.

Venoflash can help if your extremities become numb as a result of problems in your veins and capillaries.

DEFIENDASE DE ESaS PELiGROSOS TAPONES E1\ SCS SISTEMA CIRCGLA TORJO Y RECL'PERE SU AGILIDAD PERDlDA TOMANDO YENOFLASH. Defend yourself from those dangerous clogs in your circulatory system and recover your lost agility taking Venoflash. VENOFLASII PUEDE A YUDARLE! Venoflash can help you EFFICIENT LABS, INe. , ET AL. 295 291 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 hcrcof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the New York Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the Jaw has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, arc true and waivers and other provisions as required by the Commission Rules; and The Commission having thereafter considcrcd the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executcd consent agrcement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and cnters the following order:

1. Respondent Efficient Labs, Inc. is a corporation organized existing and doing business under and by virtue of the laws of the Commonwealth of Puerto Rico, with its offce and principal place of business located at 413 San Jorge Street, San Juan, Puerto Rico. Respondent BIas Reyes-Reyes is an offcer and director of the corporate respondent. Mr. Reyes-Reyes, individually or in concert with others, formulates, directs, and controls the policies, acts, and practices of said corporation, and his business address is the same as that of the said corporate respondent.

2. 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.

296 FEDERAL TRADE CO:vMISSION DECISIONS Decision and Order 124 F.T.C. ORDER DEFINITIO'IS For purposes of this order, the following definitions shall apply: 1. "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.

2. Unless otherwise specified respondents shall mean Effcient Labs, Inc. , a corporation, its successors and assigns and its officer; BIas Reyes-Reyes, individually and as an offcer of the corporation; and each of the above s agents, representatives and employees. 3. "Commerce shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U. c. 44.

It is ordered That respondents, directly or through any corporation, partnership, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion offering for sale, sale, or distribution of "Venoflash" or any other product in or affecting commerce, shall not make any representation in any manner, expressly or by implication, that such product: A. Removes dangerous clogs in the circulatory system; B. Trcats the symptoms of varicose veins; or C. Treats the symptoms of hemorrhoids.

unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiatcs the representation.

II.

It is That respondents, directly or through any further ordered corporation, partnership, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion offering for sale, sale, or distribution of V cnoflash or any food arc defined in dietary supplement, or drug, as " food" and "drug" Section 15 of the Federal Trade Commission Act, promoted or used EFFICIENT LABS, INe. , ET AL. 297 291 Dccision and Order to treat conditions or illnesses related to the circulatory system, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the health benefits performance, safety, or efficacy of such product, unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation.

Nothing in this order shall prohibit respondents ITom making any representation for any product that is specifically permitted in the labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990.

IV, Nothing in this order shall prohibit respondents ITom making any representation for any drug that is permitted in the labeling for 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. It is further ordered That respondent Effcient Labs, Inc., and its successors and assigns, and respondent BIas Reyes-Reyes shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying: A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with govemmental or consumer protection organizations.

298 FEDERAL TRADE CO.\MISSION DECISIONS Decision and Order 124 FTC VI.

It is further ordered That respondent Effcient Labs, Inc. and its successors and assigns, and respondent BIas Reyes-Reyes, shall deliver a copy of this order to all current and future principals offcers, directors, and managers, and to all current and future employees agents, and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and datcd statement acknowledging receipt of the order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

VII.

It is further ordered That respondent Effcient Labs, Inc. , and its successors and assigns shall notify the Commission at least thirt (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assigrent, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affliatc that engages in any acts or practices subject to this order; thc proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D. VII It is further ordered That respondent BIas Reyes-Reyes, for a period of seven (7) years after the date of issuance ofthis order, shall notify the Commission of the discontinuance of his current business or employment, or of his affliation with any new business or employment. The notice shall include respondent' s new business address and telephone number and a description of the nature of the business or employment and his duties and responsibilities. All EFFICIE0!T LABS, INC., ET AL. 299 291 Decision and Order notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D. IX.

It is further ordered That respondent Effcient Labs, Inc., and its successors and assigns, and respondent BIas Reyes-Reyes shall within sixty (60) days after the date of 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. This order will terminate on September 12, 2017, or twenty (20) years ftom 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 ofthe order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of: A Any Part in this order that terminates in less than twenty (20) 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 Part.

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 Part as though the complaint had never been filed, except that the order wil 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.

Complaint 124 FTC.