Announced Actions for April 22, 2005

Commission authorization of the staff to file amended complaint: The Commission has authorized the staff to file an amended complaint in the case currently pending against CHK Trading Corp., et al. (CHK). Announced as part of the FTC’s “Operation Big Fat Lie” law enforcement sweep targeting deceptive weight-loss ads, the original complaint was filed against several corporate defendants and their principal, Chong Kim, who market and sell “Hanmeilin Cellulite Cream,” a topical cream that contains Chinese herbs and other all-natural ingredients. According to the FTC, the defendants make false and unsubstantiated claims that rubbing the cream into the body: causes permanent weight loss; causes substantial weight loss; and eliminates fat and cellulite.

In filing the amended compliant, the Commission’s staff is seeking to add a new count alleging that the defendants made unsubstantiated breast cancer prevention claims in marketing their breast cream, “Hanmeilin Breast Cream,” in advertisements for the product. The Commission vote authorizing the staff to file the amended complaint was 5-0. (FTC File No. X050004; the staff contact is Michele Stolls, FTC Northeast Region, 212-607-2834; see press release dated November 9, 2004.)

Staff advisory opinion concerning the Non-Profit Institutions Act: The staff of the Bureau of Competition has advised Stevens Hospital, in Edmonds, Washington, that its purchase of pharmaceuticals to be dispensed to patients treated by its clinic physicians is covered by the Non-Profit Institutions Act (NPIA). That statute exempts from the Robinson-Patman Act “purchases of their supplies for their own use by schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for profit.”

Stevens is a non-profit hospital that owns a number of clinics. The physicians who work at the clinic are all Stevens employees, and all medical services provided at the hospital and at the clinic are billed under Stevens’ tax identification number. Stevens also maintains liability insurance for the clinics and staff. Stevens currently purchases pharmaceuticals at reduced pricing from a drug wholesaler and uses these pharmaceuticals for its hospitalized patients for inpatient needs, for periodic discharge prescriptions, and to supply its emergency department. Stevens asked for an opinion on whether it also can use these pharmaceuticals purchased pursuant to the NPIA for patients receiving treatment from its clinic physicians. The staff opinion letter, signed by David Pender, Acting Assistant Director of the Health Care Services and Products Division of the FTC’s Bureau of Competition, concluded that pharmaceuticals used in the ways described in the request letter would be purchased for Stevens’ “own use” within the meaning of the statute.

NOTE: This letter sets out the views of the staff of the FTC’s Bureau of Competition, as authorized by the Commission’s Rules of Practice. It has not been reviewed or approved by the Commission. As the Commission’s rules explain, the staff’s advice is rendered “without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.” (The staff contact is Ellen Connelly, Bureau of Competition, 202-326-2532.)

Publication of Federal Register notice: The Commission has approved the publication of a Federal Register notice concerning a new FTC publication incorporating model forms and procedures for identity theft victims, as required by the Fair and Accurate Credit Transactions Act (FACTA). FACTA, which was enacted in December 2003 and amends the Fair Credit Reporting Act, requires the FTC, in consultation with the federal banking agencies and the National Credit Union Administration, to develop a model form and model procedures for consumers to use when informing creditors and consumer reporting agencies that they are identity theft victims.

The Federal Register notice announces the publication of a recently revised FTC consumer education booklet, Take Charge: Fighting Back Against Identity Theft (previously titled ID Theft: When Bad Things Happen to Your Good Name), which offers guidance and tools for resolving the issues facing identity theft victims, including consumers’ new rights under FACTA. The Commission believes that publishing the revised booklet is the best method of complying with this FACTA requirement.

The Commission vote approving the publication of the Federal Register notice was 5-0. (FTC File No. P044804; the staff contact is Andrew Smith, 202-326-3224).

Copies of the documents mentioned in this release 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, DC 20580. Call toll-free: 1-877-FTC-HELP.