FTC Garners $2.75 Million Civil Penalty in Settlement of
Charges against Maker of "Miracle-Ear" Hearing Aids
FTC News Release
November 21, 1995
Dahlberg, Inc. has agreed to pay a $2.75 million civil penalty to settle Federal Trade Commission charges that the company made numerous false and unsubstantiated claims for its Miracle-Ear "Clarifier," a "noise-suppression" hearing aid, in violation of a 1976 FTC order. The settlement also would prohibit future violations of the 1976 order, which bars Dahlberg from making false or unsubstantiated claims about the features, performance, uniqueness, superiority or efficacy of its hearing aids.
The national advertising campaign challenged by the FTC ran from 1988 until mid-1993. Dahlberg was acquired by Bausch & Lomb in the summer of 1993.
The settlement announced today resolves FTC charges filed in federal district court in January 1994 by the Department of Justice at the Commission's request. In the complaint detailing those charges, the FTC alleged that Dahlberg falsely claimed that the Clarifier focuses its amplification on sounds the user wants to hear, such as speech, or otherwise distinguishes speech from noise, and that it reduces all unwanted background noise. The FTC also alleged that the company falsely claimed that the Clarifier does not amplify background noise, and that it is superior to other hearing aids. Dahlberg's claims violated the 1976 order the company had entered into with the FTC, the government charged. That order also had resolved allegations of false advertising claims for its Miracle Ear hearing aids.
According to the FTC staff, hearing aids increase sound pressure and consist of a microphone, amplification circuits that make weaker sounds louder, and a speaker. Hearing loss affects 24 million Americans, most of whom are elderly. The most common type of hearing loss — sensorineural loss (nerve damage) — cannot be treated medically but often can be helped through the use of a hearing aid. However, persons with sensorineural hearing loss have problems both with hearing sounds and with understanding sounds. For the most part, hearing aids address the former problem, but not the latter, the staff said. Even with a properly-fit hearing aid, a hearing-impaired person will not understand speech as well as a non-hearing-impaired person. Thus, unlike eye glasses that restore normal vision, hearing aids will not restore normal hearing or otherwise provide "20/20" hearing or complete understanding of everything the user hears.
After the 1994 complaint was filed in federal district court, Dahlberg argued that the Commission did not have jurisdiction over the hearing aid advertising at issue here because hearing aids were medical devices under the jurisdiction of the Food and Drug Administration (FDA). In March 1995, the court denied Dahlberg's motion to dismiss the case and held that the Commission has jurisdiction over hearing aid advertising. Ultimately, Dahlberg entered into the settlement announced today, which, if approved by the federal district court, will end that litigation.
Under the proposed settlement, called a consent decree, Dahlberg would pay the $2.75 million civil penalty within 10 days of the court's approval. In addition, Dahlberg would be prohibited from violating the 1976 Commission order. The consent decree contains a "safe harbor" that would permit Dahlberg to make any claim about hearing aids that is approved by the FDA without violating the settlement, except that it excludes claims that the FDA has permitted through clearing a "premarket notification report" unless the clearance was based on a review and evaluation of the substantiation submitted with the report.
The Commission vote to accept the proposed consent decree was 5-0. Commissioner Mary L. Azcuenaga concurred, although said in a statement that she believes the safe harbor for FDA-approved claims is too narrow. She said she would have included all claims that the FDA has permitted through clearing a premarket notification report because "Congress has assigned FDA the task of determining the amount of review and evaluation that is necessary before such claims are permitted," and there is "no need for the Commission to second guess FDA's determination" given "FDA's expertise and experience in evaluating and approving claims for medical devices, including hearing aids."
The settlement was filed in US District Court for the District of Minnesota, Fourth Division, in Minneapolis, on Nov. 21, by the Department of Justice at the request of the FTC.
- United States District Court, District of Minnesota, Fourth Division. Civil Action No. 4-94-CV-165. FTC Matter No. X940021.
This page was posted on December 23, 2005.