A Federal Trade Commission settlement with Kevin Trudeau – a prolific marketer who has either appeared in or produced hundreds of infomercials – broadly bans him from appearing in, producing, or disseminating future infomercials that advertise any type of product, service, or program to the public, except for truthful infomercials for informational publications. In addition, Trudeau cannot make disease or health benefits claims for any type of product, service, or program in any advertising, including print, radio, Internet, television, and direct mail solicitations, regardless of the format and duration. Trudeau agreed to these prohibitions and to pay the FTC $2 million to settle charges that he falsely claimed that a coral calcium product can cure cancer and other serious diseases and that a purported analgesic called Biotape can permanently cure or relieve severe pain.
Trudeau is paying $500,000 in cash and transferring residential property located in Ojai, California, and a luxury vehicle to the Commission to satisfy the $2 million monetary judgment against him. In the event that the court finds that Trudeau or his companies misrepresented their financial condition, the order would require Trudeau to pay $20 million pursuant to an avalanche clause.
“This ban is meant to shut down an infomercial empire that has misled American consumers for years,” said Lydia Parnes, Acting Director of the FTC’s Bureau of Consumer Protection. “Other habitual false advertisers should take a lesson; mend your ways or face serious consequences.”
In nationally-televised infomercials, Trudeau advertised that Coral Calcium Supreme, a dietary supplement purportedly made from Japanese marine coral, provided the same amount of bioavailable calcium as two gallons of milk, could be absorbed into the body faster than ordinary calcium, and could cure cancer, heart disease, high blood pressure, lupus, and other illnesses. In a separate infomercial, Trudeau claimed that Biotape, an adhesive strip, provided permanent relief from severe pain, including debilitating back pain, and pain from arthritis, sciatica, and migraines. In June 2003, the FTC filed a complaint in the Northern District of Illinois against Trudeau and some of his companies, alleging that these disease claims for Coral Calcium Supreme were false and unsubstantiated. The Commission also alleged in a separate action that Trudeau violated a 1998 FTC order by making the Coral Calcium Supreme claims and the pain-relief claims for Biotape.
In July 2003, Trudeau entered into a stipulated preliminary injunction that prohibited him from continuing to make the challenged claims for Coral Calcium Supreme and Biotape. This summer the court found Trudeau in contempt of court for violating this preliminary injunction when he disseminated a direct mail piece and an infomercial making the prohibited coral calcium claims. The court ordered Trudeau to cease all marketing for coral calcium products.
The settlement announced today permanently bans Trudeau and the other defendants, Shop America (USA), LLC, Shop America Marketing Group, LLC, and Trustar Global Media, Limited (“defendants”), from appearing in, producing, or disseminating infomercials that advertise any product, service, or program and, regardless of the advertising medium used to make the claim, from making representations that any product, program, or service can cure, treat, or prevent any disease or provide health benefits. The order’s ban on future infomercials exempts infomercials for books, newsletters, and other informational publications.
In addition, the order prohibits the defendants from transferring, selling, or renting personal information collected from customers who purchased Coral Calcium Supreme and requires the defendants to destroy this information for certain customers. Finally, the order contains standard recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance with its prohibitions and requirements.
The Commission vote to authorize staff to file the stipulated final order was 5-0. The stipulated final order for permanent injunction was entered in the U.S. District Court for the Northern District of Illinois, Eastern Division on September 3, 2004.
Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order has the force of law when signed by the judge.
Copies of the stipulated final order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. X980014/X030066)
(Civil Action No. 03-C-3904)