Commission Upholds ALJ Ruling Against Telebrands Corp.

The Federal Trade Commission today announced a unanimous opinion and order holding respondents Telebrands Corporation (Telebrands), TV Savings, L.L.C. (TV Savings), and their principal Ajit Khubani liable for disseminating unsubstantiated and false advertising for the Ab Force, a belt-like device that uses electronic stimulation (EMS) to cause involuntary contraction of the muscles of the abdominal wall. The respondents reaped over $19 million from sales of the Ab Force, despite their admission that the product did not produce results. According to the FTC’s opinion, “This is a case about firm abs and phony ads. It illustrates how false and unsubstantiated claims can be communicated indirectly but with utter clarity – to the detriment of consumers and in violation of the laws this Commission enforces.”

Based on its own analysis of the respondents’ Ab Force ads, the Commission – in an opinion authored by Commissioner Jon Leibowitz – concluded that the ads “clearly convey” the claims alleged in the administrative complaint. The Commission also determined that other evidence – including a copy test and expert testimony – confirmed the Commission’s analysis.

Before and during the Ab Force ad campaign, the respondents’ competitors advertised ab belts that were supposed to improve the physical condition of the user’s abdominal muscles and help the user lose inches and weight – without exercise. The respondents’ ads invited consumers to recall infomercials for competitors’ ab belts and to compare the Ab Force to them. But, “[a]s the respondents were well aware,” the Ab Force was “useless for the health, weight loss, and fitness purposes for which it was advertised,” the opinion states.

Case History

The administrative complaint, filed on September 30, 2003, alleged that from December 2001 through at least April 2002, the respondents marketed the Ab Force belt on television, radio, the Internet, and in print, making unsubstantiated claims that the product: 1) causes loss of weight, inches, or fat; 2) creates well-defined abdominal muscles; and 3) is an effective alternative to conventional exercise. The complaint charged that the respondents’ claims were unsubstantiated and constituted an unfair or deceptive act or practice and false advertising, in violation of Sections 5 and 12 of the FTC Act.

On September 24, 2004, Administrative Law Judge (ALJ) Stephen L. McGuire issued an initial decision. Based on his analysis of the ads themselves and other evidence, ALJ McGuire held that the respondents’ ads communicated the challenged claims. He ordered the respondents to stop making those claims for the Ab Force belt or any substantially similar device, and from making any representations that any of the claims made in the ads were true or that using any EMS device will lead to the results claimed by the Ab Force belt. The order also prohibited the respondents – in connection with the production, promotion, sale, or distribution of Ab Force or any other EMS device, or any device, product, or service, or program pertaining to health, weight-loss, fitness, or exercise – from making certain similar representations unless they could be supported by competent and reliable scientific evidence.

ALJ McGuire did not grant complaint counsel’s request for a performance bond – a monetary surety to protect future consumers of products sold – with respect to respondent Khubani. The respondents subsequently appealed the ALJ’s ruling to the Commission; complaint counsel cross-appealed on the basis that the ALJ should have granted their request for a performance bond and that the product coverage in the order was too limited.

The Commission Opinion and Order

Although the respondents stipulated that the claims challenged by complaint counsel were unsubstantiated and false, they denied that their ads communicated the challenged claims. The Commission disagreed. The Commission’s opinion described the elements of the ads – the ad copy and, for some media, the visual images – that communicated the challenged claims. For example, the respondents’ television ads – the most widely disseminated advertising for the Ab Force – showed well-muscled, bare-chested men and trim women in tight-fitting exercise apparel wearing Ab Force belts and experiencing abdominal contractions.

The ads highlighted the models’ trim waists and well-defined abs; other images included men without ab belts performing abdominal crunches and bikini-clad women showing off their well-toned bodies and trim waistlines, suggesting that use of the Ab Force would achieve similar results. On television and in other media, the respondents touted the Ab Force as “powerful and effective,” with “sophisticated computer components” and the “same powerful technology” as other ab belts. Because of these elements, the Commission’s order states that “it is not necessary to look beyond the four corners of the respondents’ ads” to conclude that the ads communicated the challenged claims.

The Commission determined that a copy test used by complaint counsel to establish how consumers likely would perceive the challenged claims provided further support for its analysis. The respondents objected to the methodology of the copy test – principally that it did not eliminate completely the influence on consumer perception of any preexisting beliefs that ab belts could be effective in achieving the advertised results. The Commission disagreed and concluded that this “flaw,” if anything, worked in respondents’ favor by effectively understating the extent to which the challenged claims were communicated. The Commission explained, “[w]here, as here, an advertiser exploits preexisting beliefs by inviting consumers to recall the claims in other ads to help convey a message, it makes little sense to remove the influence of those other ads.”

The Commission also rejected the respondents’ contention that, should the Commission hold respondents liable for false advertising, the Order would violate the First Amendment. In rejecting the respondents’ contention, the Commission stressed that the First Amendment provides no protection for deceptive commercial speech. According to the Commission, the challenged claims were “communicated indirectly but with utter clarity,” a conclusion that “was buttressed by extrinsic evidence, including a copy test and expert testimony.” Given these circumstances, the Commission ruled that there was no basis for the respondents’ concern about an “inherent risk of restricting protected speech.”

The Commission’s order requires the respondents to cease and desist from making any of the false and unsubstantiated statements made in the Ab Force advertisements, bars them from making similar claims in promoting or marketing the Ab Force or any similar EMS device in the future, and requires that any claims they do make for the Ab Force, any other EMS device or any other food, drug, dietary supplement, device, or other product, service or program be substantiated by competent and reliable evidence. The scope of this fencing-in provision is broader than that ordered by the ALJ. Unlike the ALJ, in determining the appropriate scope of relief, the Commission considered the respondents’ history of alleged law violations that resulted in a series of consent orders between the Commission and the respondents as further support for broad injunctive relief.

The Commission order does not require respondent Khubani to obtain a $1 million performance bond, as requested by complaint counsel, because complaint counsel did not provide the Commission with evidence to support whether that amount was appropriate. The Commission, however, rejected the respondents’ contention that the Commission did not have authority to order a bond. The Commission explained that it is authorized to “impose fencing-in provisions to prevent a recurrence of the same or similar violations” so that FTC respondents “cannot simply circumvent the order.”

The Commission vote to issue the opinion and order was 4-0.

Copies of the Commission’s opinion and 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 Docket No. 9313)