FTC, Texas Charge "Infomercials" For
Health-Care Products Were Deceptive
Charges Settled under Consent Agreement
Requiring $1.5 Million in Consumer Redress
FTC News Release
April 17, 1990
The Federal Trade Commission has charged Twin Star Productions, Inc., and six Twin Star officers with making false and unsubstantiated claims in connection with program-length commercials for a weight-loss product, a baldness product, and an impotence product, and with falsely representing that their program-length commercials are something other than paid commercial advertising. Texas Attorney General Jim Mattox also announced an agreed order against Twin Star and one officer settling similar charges.
Under the FTC consent agreement announced today for public comment, the company and officers are prohibited from making unsubstantiated efficacy claims for any product or service and have agreed not to misrepresent that a paid advertisement is an independent program. The agreement also requires Twin Star and five of the six individuals to pay a total of $1.5 million in consumer redress.
"Today's settlement, the first in which the Commission has obtained consumer redress from an infomercial marketer, sends a signal to the booming infomercial industry that deceptively formatted programming will not be tolerated," said Barry J. Cutler, Director of the Bureau of Consumer Protection.
"Program-length commercials, known as 'infomercials,' are a new and rapidly growing type of television advertising, which often mimic the format of genuine TV talk show or investigative news programs," Cutler said. "They share many of the features of a regular TV show: they are typically the same length, 30 minutes; some claim to be part of a series; some have a host, often a celebrity; and others present reports by 'investigative reporters.' And just like genuine TV shows, they 'break away' to realistic looking commercials for the product being featured."
"There's nothing illegal about advertisers paying for commercials to sell products," Cutler continued. "The problem is when it is designed so the consumer can't tell whether it is a genuine TV show or a paid commercial."
The FTC and Texas both cited infomercials advertising the EuroTrym Diet Patch, a weight-loss product; Foliplexx, a baldness product; and Y-Bron, an impotence product. The FTC's complaint charges that claims for these products are false, misleading and deceptive.
"This consent agreement also demonstrates the Commission's continuing concern about false claims for diet and other health-related products. The three products here are often sold through fraudulent misrepresentations. This settlement demonstrates the Commission's continuing determination to stop deception in two important areas — deceptive claims for health products and deceptive program-length commercials," said Cutler.
Under the FTC consent agreement, Twin Star and the six individuals agreed not to disseminate the three infomercials or another 30-minute advertisement for the book, How to Make Money By Doing Business With the Government. They are also prohibited from misrepresenting that their commercials are independent programs and not paid advertising. In any commercials 15 minutes long or longer, respondents must include one or more disclaimers noting that the program is a paid advertisement for the particular product or service being advertised.
Under the terms of the FTC agreement, Twin Star will pay one million dollars and Jerald H. Steer, Allen R. Singer, Douglas E. Gravink, Peter Claypatch, and Steven L. Singer will pay a total of $500,000 in consumer redress over an 18-month period. Judith P. Singer, who is also named in the complaint and is subject to the injunctive provisions of the agreement, is not required to pay redress. They are all based in Scottsdale, Ariz.
The investigation was handled by the FTC's Seattle Regional Office. Charles A. Harwood, Director of the Office, also expressed appreciation for the substantial and valuable assistance provided by the Office of the Attorney General of Arizona, and the Office of the Attorney General of Texas.
The Texas settlement with Twin Star was filed in the District Court of Dallas County, Texas.
- FTC Docket No. C-3307.
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This page was posted on August 27, 2006.