Care Technologies, Inc

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

IN THE MA TTER OF CARE TECHNOLOGIES, INC.

CONSENT ORDER, ETe. , IN REGARD TO ALLEGED VIOLA non OF SECS. SAND 12 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3840. Complaint, Dec. 1998--Decision, Dec. , 1998 This consent order prohibits, among other things, a Connecticut.based corporation that manufactures and distributes phannaceuticals, from making unsubstantiated claims concerning the efficacy of its over-the-counter head lice treatments. The consent order requires the respondent to make certain disclosures in advertisements concerning the use and effectiveness of its head lice treatment products. In addition the consent order prohibits the respondent from misrepresenting the existence contents, or interpretations of any test, study, or research. Participants For the Commission: Linda Badger, Kerry 'Brien, Jeffrey Klurfeld, and Carolyn Cox.

For the respondent: Daniel Manell, Farkas Manell Washington, D.

COMPLAINT The Federal Trade Commission, having reason to believe that Care Technologies, Inc. , a corporation ("respondent"), has 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 Care Technologies, Inc. is a Connecticut corporation with its principal offce or place of business at 10 Corbin Drive, Darien, Connecticut.

2. Respondent has manufactured, advertised, labeled, offered for sale, sold, and distributed over-the-counter pharmaceuticals to the public, including "Clear Lice Killing Shampoo" and "Clear Lice Egg Remover. " Clear Lice Killing Shampoo and Clear Lice Egg Remover are "drugs " within the meaning of Sections 12 and 15 of the Federal Trade Commission Act.

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

CARE TECHNOLOGIES, INC. 831 830 Complaint 4. Respondent has disseminated or has caused to be disseminated advertisements for the Clear Lice Killing Shampoo and the Clear Lice Egg Remover, including but not necessarily limited to the attached Exhibits A through E. These advertisements contain the following statements:

A. "LICE KILLING SHAMPOO PEDICULICIDE Kills BOTH lice and their eggs. " (Exhibit A). B. "CleariI Lice Egg Remover is a vegetable derived enzyme system that makes units easier to remove after treatment by loosening the glue that bonds units to hair.

CleariI Killing Shampoo - a pyrethrum extract from chrysanthemum flowers - effectively kills lice and their units. " (Exhibit B). C. "Clear Lice Egg Remover; to save you hours of combing and tears.... Special enzymes only in Clear actually loosen lice eggs that can hide in your child' s hair. Trust Clear to get lice out of your life. Fast!" (Exhibit C).

D. "CleariI Lice Egg Removcr is the fastest way to finish the hard work of removing lice eggs. Only Clear Lice Egg Remover has natural enzymes to un-glue lice eggs for easier comb-out. The Clearly System with Lice Egg Remover does the complete job. Kills lice and removes eggs. It' s all you need. Trust CleariI to get lice out of your life...fast." (Exhibit D).

E. " Clear Rinse is quick. It loosens lice eggs in less than 3 minutes. Units easily slide off hair when combed.... Clear Rinse has been thoroughly laboratory and field tested and meets all standards for safety and effectiveness. Clear Rinse is easy. A targeted enzyme solution, it rapidly attacks and loosens lice egg ecment. " (Exhibit E). 5. Through the means described in paragraph four, respondent has represented, expressly or by implication, that: A. Clear Lice Egg Remover loosens or unglues lice eggs from the hair.

B. Clear Lice Killing Shampoo kills one hundred percent oflice eggs.

6. In truth and in fact:

A. Clear Lice Egg Remover does not loosen or unglue lice eggs from the hair.

Complaint 126FTC B. Clear Lice Killing Shampoo does not kil one hundred percent of lice eggs. Clear Lice Killing Shampoo is based on a pesticide which is not one hundred percent effective against lice eggs. As a result, purchasers are instructed to use an eggremoving comb, and to apply a second treatment in seven to ten days to kill any newly hatched lice.

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

7. Through the means described in paragraph four, respondent has represented, expressly or by implication, that it possessed and relied upon a reasonable basis that substantiated the representations set forth in paragraph five, at the time the representations were made. 8. In truth and in fact, respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in paragraph five, at the time the representations were made. Therefore the representation set forth in paragraph seven was, and is, false or misleading.

9. Through the means described in paragraph four, respondent has represented, expressly or by implication, that laboratory and field testing proves that Clear Lice Egg Remover loosens or unglues lice eggs from the hair.

10. In truth and in fact, laboratory and field testing does not prove that Clear Lice Egg Remover loosens or unglues lice eggs from the hair. Therefore, the representation set forth in paragraph nine was and is, false or misleading.

11. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices, and the making offalse advertisements, in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act. .. ...... CARE TECHNOLOGIES , INC. 833 830 Complaint EXHIBIT A --",-_l1 oc:T_- OIo.__c.r_- EXHIBIT 1\ 000020 CARE : : ... .. Complaint 126 FTC. EXHIBIT B eare Products aie ear to tbt II . acre Ure Ea Rlmc1U .. a veb1 dem. 88.,1l reon .fur trtm"t by Jo.1q di &I" tbt bo8i to Uf. Aa uee. aI comb is ladadtd Li Ee R-..r eobt .. kana ud e.. b8 U8 .. eh "olly ..d ..rel u -p.'" w.te. . eJelr"" Total Lk- Ellhudo. Synl!lI (avilbl 18 2 oz rer ud Lr.IIDyri) ooata: a CI,l Kiu.. S"IIPO.. pyrr. eit fr. d...dt... noWI!". dTecrinly ki Ik ..41 tk Ut o C1,l Lic Ea Rll8r (Ut co.. .. Iail .bo). Clear4 does the complete job so kids cad get back tD school..Fast! jl22'10J7AM EXHIBIT B CARE TECHNOLOGIES, INC. 835 830 Complaint EXHIBIT C Clien!; Care Technologie Product: Clear SyslemsIER Tille: "Confusion length: 30 Date: 112317 Agency: Petr3V Consultng Commerdal No. CTCl-0013 OM no! Head lice on your child? Now what? Clear ends the confusion I Beuse only Clear has the system - Clear shampo, to kid lice fast. And Clear lice egg remo\/er 10 save you hours of cobing and tears. Here s how! Special enzymes only in Ctear actually loosen lic eggs that can hide in your child's hair. It's safe. it's effe, its Clear! Trust Clear to get lice out of your lif! Fastl EXHIBIT C ...._ ;:. ..... .

Complaint 126 r. EXHIBIT D KIDS, LICE and PARNTS.

If your child is sent home from school with head J;ce, don t panic. It's not your fault but you have to solve the problem. That means killing lice and removing their eggs. Jn fact. many parents don know lice egg removal is the hardest and longest part of the job. Clear' lice Egg Remover The Clear'" System is the fastest way to finish with Lice Egg Remover the hard work of removing does the complete Job. lice eggs. Only Clear lice Kill lice and eggs. Egg Remover has natural re It's aU you need. enzymes to un-clue lice eggs for easier ( Jmb-out Trust Clear to get lice out of yo Ii..Wt. For information call 80783- 1919 or cola htJt\.de, 'fi_"" ._.. .. r E:HIBIT 0 ....

CARE TECHNOLOGIES , INC. 837 830 Complaint EXHIBIT E At lat, the first real solution for lice egg removal is quick, safe and easy. tht T1 Introducing Clear ing rinse For new saes and happy cutomers you can feel goo about recommendig Qea.

AU.. Rim", i.;opo-pculi ide draming rime ae Ri iJ "* A naru. v ct;blc drrivcd for lhcquidUlde'remov;ofliccr-lti$a enze. it It chcmicaH and non-toxic. Dc.. narun. non..w,uc Liuid enze 'Ilution. Asd it Ri:shalbcnthoroughlytabor.ilo'1andfield \Oorn On iJ the fim fM !I!uuon to nit pid..nl! !c.U' and me'ual uand:dl for s:ety aJd ,inccthecornb. dfcc!inML C,. Rinse i. II loo'Cn.licr in ! ae Ritr i. ": A etf e'nzyc JOlution. lhan3minute-. NitsnsiI)IJidcoffhaiwhcn ilrapidata.IuUldJ n.licc cement combtd. ""dClarRin""leave.lichait.ilky. De Riru ;W ts on IOxin. Idl tr d;m!;. dean ,mdJing, and man"'c;Jblc. c!dn. l1rlpLng thc rrcmov. Can Technologt'!I. Inc. 55 Holly Hill Lue Greenwich, cr 0630 _...-....c- EXHIBIT E Decision and Order 126 F.T. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the San Francisco Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order an admission by the respondent 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 respondent 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 waivcrs 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 respondent has 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 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:

I. Respondent Care Technologies, Inc., is a corporation organized, existing, and doing business under and by virtue of the laws of the State ofConnectieut, with its office and principal place of business located at 10 Corbin Drive, Darien, Connecticut. 2. The Federal Trade Commission has jurisdiction ofthe subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

CARE TECHNOLOGIES , INC. 839 830 Decision and Order ORDER DEFINITONS 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. "Clear Lice Killng Shampoo shall mean the pediculicide marketed by respondent which contains the active ingredients of 0. percent pyrethrum extract and 4 percent piperonyl butoxide. 3. "Lice egg removal product shall mean any product that is sold to loosen, unglue, biodegrade, or otherwise aid in the detachment of lice eggs from hair shafts.

4. " Substantially similar product" shall mean any pediculicide marketed by respondent which contains the active ingredients of pyrethrum extract and piperonyl butoxide, and is covered by the Food and Drug Administration s Final Monograph on OTC Pediculicide Drug Products.

5. Unless otherwise specified respondent shall mean Care Technologies, Inc. , a corporation, its successors and assigns, and its offcers, agents, representatives, and employees. 6. " Commerce shall mean as defined in Section 4 ofthe Federal Trade Commission Act, 15 U. C. 44.

7. "Drug and device shall mean as defined in Section 15 of the Federal Trade Commission Act, 15 U. c. 55, including, but not limited to, any lice egg removal product.

8. "Pesticide shall mean as defined in Section 2 of the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U. c. 136(u). 9. " Clearly and prominently shall mean as follows: A. In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), any audio disclosure shall be delivered in a volume and cadence suffcient for an ordinary consumer to hear and comprehend it. Any video disclosure shall be of a size and shade, and shall appear on the screen for a duration suffcient for an ordinary consumer to read and comprehend it. In Decision and Order 126 F. addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation.

B. In a print advertisement or promotional material, the disclosure shall be in a type size and location suffciently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. In multipage documents, the disclosure shall appear on the cover or first page. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label. It is ordered That respondent, 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 Clear Lice Egg Remover or any lice egg removal product in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, that such product loosens, unglues, or otherwise detaches lice eggs from the hair, unless the representation is true and, at the time it is made respondent possesses and relies upon competent and reliable scientific evidence that substantiates the representation. II.

It is further ordered That respondent, 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 the Clear Lice Killing Shampoo or any substantially similar product in or affecting commerce, shall not represent, in any manner, expressly or by implication, that such product kills one hundred percent oflice eggs, unless the representation is true and, at the time it is made, respondent possesses and relies upon competent and reliable scientific evidence that substantiates the representation.

It is further ordered That, for a period of two (2) years from the date of service of this order, respondent, directly or through any corporation, subsidiary, division, or other device, in connection with CARE TECHNOLOGIES, INC. 84l 830 Decision and Order the manufacturing, labeling, advertising, promotion, offering for sale sale, or distribution of Clear Lice Killing Shampoo or any other substantially similar product, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication in print advertisements or promotional materials about the effcacy such product in the removal or elimination of lice or the treatment of lice infestations ("triggering representation ), unless it makes the following disclosure, clearly and prominently, in such advertisements or promotional materials containing the triggering representation: Reapplication and egg removal are required to ensure complete effectiveness.

See label for important information.

Provided, however, that the above disclosure shall not be required if respondent possesses and relies upon competent and reliable scientific evidence demonstrating that the product is effective for the complete elimination of all lice and lice eggs in a single application. Provided, further, that the above disclosure shall not be required in a particular piece of promotional material if such promotional material constitutes "labeling of a pediculicide drug product" subject to the labeling requirements of the Food and Drug Administration s Final Monograph on OTC Pediculicide Drug Products, 21 CFR 358.650. IV.

It is further ordered That, for a period of two (2) years from the date of service of this order, respondent, 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 Clear Lice Killing Shampoo or any other substantially similar product, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication in advertisements communicated through an electronic medium about the efficacy of such product in the removal or elimination of lice or the treatment of lice infestations ("triggering representation unless it makes the following disclosure, clearly and prominently, in the video portion of such advertisements (or in the audio portion if the advertisement is audio only) containing the triggering representation: Two Treatments Required.

Decision and Order 126 F. Provided, however, that if the respondent makes any representation, in any manner, expressly or by implication, about directions for use of such product in advertisements communicated through an electronic medium utilizing both video and audio, the disclosure shall be presented in both the video and the audio portions of such advertisements.

Provided, further, that the above disclosure shall not be required if respondent possesses and relies upon competent and reliable scientific evidence demonstrating that the product is effective for the complete elimination of all lice and lice eggs in a single application. It is further ordered That respondent, 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 drug or device for the treatment of lice in humans, or any pesticide for treatment of lice in or affecting commerce, shall not make any representation, in any manner expressly or by implication, regarding the effcacy of such product unless, at the time the representation is made, respondent possesses , thatand relies upon competent and reliable scientific evidence substantiates the representation.

VI.

It is further ordered That respondent, 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 drug or device for the treatment of lice in humans, or any pesticide for treatment of lice in or affecting commerce, shall not misrepresent, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research. VII.

Nothing in this order shall prohibit respondent from making any representation for any drug that is permitted in 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. CARE TECHNOLOGIES, INC. 843 830 Decision and Order VII It isfurtherordered That respondent Care Technologies, Inc. and its successors and assigns 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 its possession or control that contradict, quality, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations. IX.

It is further ordered That respondent Care Technologies, Inc. and its successors and assigns 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 ofthis order. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and, for a period of five (5) years from the date of issuance of this order, to future personnel within thirty (30) days after the person assumes such position or responsibilities.

It is further ordered That respondent Care Technologies, Inc. and its successors and assigns shall notify the Commission at least thirty (30) days prior to any change in the corporation(s) that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affliate that engages in any acts or practices subject to this order; the proposed filing of a bankrptcy petition; or a change in the corporate name or address. Decision and Order 126 FTC. 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. A1l 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. XI.

It is further ordered That respondent Care Technologies, Inc. and its successors and assigns shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade , inCommission may require, file with the Commission a report writing, setting forth in detail the manner and form in which it has complied with this order.

XII.

This order will terminate on December 14, 2018, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission fies 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: 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.

CARE TECHNOLOGIES , INC. 845 830 Statement STATEMENT OF CHAIRMAN PITOFSKY AND COMMISSIONERS ANTHONY AND THOMPSON We write to express our views about the concerns Commissioner Swindle raises regarding the disclosure remedy in these cases. The orders require that, for two years, whenever a claim is made regarding the efficacy of the lice removal products, the respondents include a disclosure about the necessity for a second application of their product. The disclosure remedy in these cases is fencing-in relief designed to prevent purchasers of respondents' products from being deceived by future advertising. 1 The triggered disclosure about the need for two treatments provides additional assurance that consumers will not be misled by future ads. We are satisfied that the triggered disclosures in these orders are appropriate and reasonable. STATEMENT OF COMMISSIONER ORSON SWINDLE I have voted in favor of issuance ofthe final orders in these cases because there is reason to believe that the respondents have violated the law and most of the relief contained in the orders is necessary and appropriate. However, I continue to have concerns with regard to the need for and scope of one of the disclosure requirements contained in the orders. The complaints include the allegation that the respondents claimed that their respective lice products eradicate a lice infestation after a single treatment. In truth, reapplication and careful combing are required to complete the treatments. To address this allegedly false claim, the orders prohibit the respondents from making, expressly or by implication, any claim that their lice treatment products work in only one treatment, unless that claim is true and substantiated. I agree that this prohibition is necessary and appropriate. The orders, however, go further. For a period of two years whenever the respondents make any effcacy claim for one of their lice treatment products, they must disclose "Two Treatments Required." The majority of the Commission has cast this provision as a "triggered disclosure requirement" and concluded that it is appropriate and reasonably related to the alleged violations of 1 It is also worth noting that the Commission has distinguished triggered disclosures such as those in these cases from corrective advertising, which is required regardless of the contents of the ad. Removatron inl 'j Corp" III FTC 206, 311- 12 n. 28 (1988), aiid 884 F.2d 1489 (1 sl Cir. 1989). See a/so American Home Prods. Corp. v, FTC 695 F. 2d 681 , 700 (3rd Cire. 1982). Statement 126 F. Section 5. " Even if this is a triggered disclosure requirement ' I do not believe that it is either necessary or appropriate. The majority apparently believes that consumers will be misled if the respondents do not disclose that two treatments are required whenever they make an efficacy claim for their products. However, if a respondent makes a one-treatment claim that is false or unsubstantiated, the Commission can bring an action for violating the injunctive provisions of the order, and thus the two-treatment disclosure requirement would be unnecessary. On the other hand, if a respondent makes a one-treatment claim that is true and substantiated, the disclosure itself -- "Two Treatments Required" -- would be false, because the product would require only one treatment to be effective. Consequently, the disclosure requirement is not needed to prevent the respondents from making the misleading claim that their lice products work in one treatment.

Even if some sort of disclosure requirement were needed to prevent deception, the disclosure requirement imposed here is not appropriate. It appears both overbroad and inadequate in duration. The triggered disclosure must be made whenever an effcacy claim is made, but not every efficacy claim (c.g., the product "works ) creates the impression that the product will work in only one treatment. Without such an impression, there may well be no need to disclose that two treatments are required. Moreover, the triggered disclosure requirement is inadequate because it terminates after two years. If the disclosure in fact is necessary to prevent deception, then why does it end after two years? If the Commission decides to impose a triggered disclosure requirement to prevent future ads from being deceptive, it should be triggered by a claim that would be deceptive in the absence of the information to be disclosed and should continue as long as necessary to prevent deception. I support the Commission s move toward stronger remedies. The injunctive provisions of these orders, together with the FDA-mandated labeling,' should ensure that consumers have truthful and accurate information before and after purchase. The disclosure requirement here however, is unnecessary and inappropriate.

1 The majority is correct that the requirement has the form of a triggered disclosure, but the substance of the requirement is indistinguishable from corrective advertising. The disclosure wil! be required whenever the respondents make any express or implied claim that their products are effcacious, which likely would include all or virtually all of the ads they run for their lice treatment products. The disclosure also is required for only a limited period of time which is also consistent with being a corrective advertising measure.

2 The FDA requires the following statement on the label of any shampoo formulated to treat head lice: "Apply to affected area until all the hair is thoroughly wet with product. Allow product to remain on area for 10 minutes but no longer. Add suffcient warm water to form a lather and shampoo as usual. Rinse thoroughly. A fine-toothed comb or special lice/nit removing comb may be used to help remove dead lice or their eggs (units) from hair. A second treatment must be done in 7 to 10 days to kill any newly hatched lice.

PFIZER lne. 847 847 Complaint