FTC Announces First Two Enforcement Actions Against Purveyors of Bioterrorism Defense Products

The marketers of a home test kit for anthrax, and an on-line seller of a colloidal silver product purported to treat anthrax, have both settled Federal Trade Commission charges of false and unsubstantiated product advertising. The FTC's complaints name Vital Living Products, Inc. and its president, Donald R. Podrebarac, and the operator of "rawhealth.net," Kris Pletschke.

These cases are the latest in a series of FTC efforts to combat bogus bioterrorism-related products. Since mid-November 2001, the FTC had sent 121 warning letters to marketers of these products discovered during a coordinated Internet "surf" by the Commission with the help of the Food and Drug Administration (FDA), more than 30 state attorneys general, and the California Department of Health Services. To date, 62 percent of the 121 warned sites have eliminated suspect claims to satisfy the FTC's concerns.

"These companies used inaccurate and unfounded claims to sell peace of mind," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "They tried to cash in on consumer anxiety about bioterrorism, but as we all know, deception doesn't pay."

Vital Living Products

Vital Living Products, Inc. and its president have entered into an agreement with the FTC to settle charges that they deceptively advertised their "PurTest Anthrax Test" (PTAT) - a purported do-it-yourself test kit - as an effective and accurate means for detecting the presence of anthrax bacteria and spores. In a complaint filed in federal court along with the agreement, the FTC states that the defendants claimed that the PTAT was an accurate and effective test for detecting anthrax in air, water and on surfaces, and that an independent FDA-registered laboratory conducted tests, using anthrax, showing that PTAT was effective. The complaint alleges that these advertising claims were false and unsubstantiated. Among other things, the proposed settlement would prohibit sales and shipment of PTAT, unless evidence showed that the product worked, and would prohibit false and unsubstantiated claims for other biohazard tests or devices.

Specifically, the FTC alleges that Vital Living Products, Inc., a North Carolina-based company sometimes doing business as American Water Service, and Donald R. Podrebarac, its president, marketed test kits that purportedly allowed consumers to home-test for anthrax in the air, in water, or on surfaces, at home or in the workplace. After the September 11, 2001 tragedy, the defendants began marketing PTAT to hardware stores and on the Internet, claiming, among other things, that their tests were 95 percent accurate in detecting anthrax. As a result of a Commission staff request, however, no kits were actually sold to consumers.

According to the FTC, the defendants' claims about PTAT are false. The proposed stipulated final order for permanent injunction would prohibit the defendants from selling or shipping PTAT, or any substantially similar test or device, without evidence showing that the product in fact accurately and reliably detects the presence and absence of anthrax. The proposed settlement also would prohibit the defendants from (a) making any false or unsubstantiated efficacy or accuracy claims for any biohazard test or device, and (b) from misrepresenting the existence, contents, validity, results or conclusions of any test, study or research.

The Commission vote to authorize staff to file the complaint and stipulated final order for permanent injunction was 5-0. The complaint and stipulated final order were filed in the U.S. District Court for the Western District of North Carolina, in Charlotte, on February 25, 2002, and the stipulated final order requires the court's approval.

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated judgments have the force of law when signed by the judge.

Raw Health

The operator of the Web site "rawhealth.net," Kris Pletschke, signed a final consent agreement with the FTC concerning the Web site's unsubstantiated claims that its colloidal silver product could treat or cure 650 different diseases; eliminate all pathogens in the human body in six minutes or less; and is medically proven to kill every destructive bacterial, viral, and fungal organism in the body, including anthrax, Ebola, Hanta, and flesh-eating bacteria. According to the terms of the FTC settlement, Pletschke is prohibited from making deceptive and misleading therapeutic claims for colloidal silver or any other health-related product, and is required to make refunds to consumers who purchased colloidal silver products from the Raw Health Web site.

Under the terms of the consent agreement, Pletschke is prohibited from making false or misleading representations, including anthrax treatment claims, for colloidal silver and other health-related products. The order requires him to have competent and reliable scientific evidence to substantiate any future claim that any dietary supplement, food, drug, or any other covered product or service is effective in mitigating, treating, preventing, or curing any disease, illness, or health condition. In addition, Pletschke must have scientific evidence to substantiate any health benefits, performance, safety, or efficacy claims for any such product or service.

Pletschke is further prohibited from misrepresenting in any manner the nature of any test, study, or research. The order requires Pletschke to notify all consumers who purchased colloidal silver from him of the FTC's action, offer them full refunds, and make such refunds within 90 days of the request. Finally, he must provide the FTC with a list of all distributors who purchased colloidal silver from him, and notify his distributors of the FTC's action.

This case was developed as part of a joint effort with the Oregon Attorney General's Office. Working in close coordination with FTC staff, the Oregon Attorney General brought its own action against rawhealth.net and Pletschke, who is located in Beaverton, Oregon.

Effective Date of the Raw Health Order

FTC administrative consent orders ordinarily become final only after a 30-day public comment period. In August 1999, the FTC adopted procedures that allow for an order to become effective immediately, prior to a public comment period, stating that it would take such action "only in exceptional cases where, for example, it believes that the allegedly unlawful conduct to be prohibited threatens substantial and imminent public harm." The Commission determined that this is such a matter and issued the complaint and a final decision and order, and served them upon the respondent. At the same time, it has placed the consent agreement on the record for a period of thirty (30) days for public comment. As a result, the order is now effective and the respondent is subject to civil penalties if he fails to comply.

The Commission vote to accept and make final a Part II consent agreement was 5-0.

Note: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaints and the proposed settlements 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, 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.

(Vital Living: FTC Matter No. 022 3060) (Civil Action No. 3:02CV74-MU)
(Raw Health: FTC Matter No. 022 3070)