UNITED STATES OF AMERICA In the Matter of ROGER J. CALLAHAN individually. FILE NO. AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission has conducted an investigation of certain acts and practices of Roger J. Callahan, individually ("proposed respondent"). Proposed respondent, having been represented by counsel, is willing to enter into an agreement containing a consent order resolving the allegations contained in the attached draft complaint. Therefore, IT IS HEREBY AGREED by and between Roger J. Callahan, individually, and counsel for the Federal Trade Commission that: 1. Proposed respondent Roger J. Callahan, individually or in concert with others, actively participated in the creation and dissemination of program length television commercials which promoted Dr. Callahan’s Addiction Breaking System. His principal office or place of business is 45350 Vista Santa Rosa, Indian Wells, California 92210. 2. Proposed respondent admits all the jurisdictional facts set forth in the draft complaint. 3. Proposed respondent waives:
4. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission, it, together with the draft complaint, will be placed on the public record for a period of sixty (60) days and information about it publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify proposed respondent, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision in disposition of the proceeding. 5. This agreement is for settlement purposes only and does not constitute an admission by proposed respondent that the law has been violated as alleged in the draft complaint, or that the facts as alleged in the draft complaint, other than the jurisdictional facts, are true. 6. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to proposed respondent, (1) issue its complaint corresponding in form and substance with the attached draft complaint and its decision containing the following order in disposition of the proceeding, and (2) make information about it public. When so entered, the order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The order shall become final upon service. Delivery of the complaint and the decision and order to proposed respondent by any means specified in Section 4.4 of the Commission's Rules shall constitute service. Proposed respondent waives any right he may have to any other manner of service. The complaint may be used in construing the terms of the order. No agreement, understanding, representation, or interpretation not contained in the order or in the agreement may be used to vary or contradict the terms of the order. 7. Proposed respondent has read the draft complaint and consent order. He understands that he may be liable for civil penalties in the amount provided by law and other appropriate relief for each violation of the order after it becomes final. Definitions For purposes of this order, the following definitions shall apply:
ORDER I. IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of Dr. Callahan’s Addiction Breaking System or any substantially similar product in or affecting commerce, shall not represent, in any manner, expressly or by implication, that:
For purposes of this Part, “substantially similar product” shall mean any product or program purported to treat addictions or compulsions that is substantially similar in components, techniques, composition and properties. II. IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any weight loss product or program or any product or program purported to treat addictions or compulsions in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the benefits, performance, or efficacy of such product, unless, at the time the representation is made, respondent possesses and relies upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates the representation. III. IT IS FURTHER ORDERED that: A. Respondent Roger J. Callahan shall pay to the Federal Trade Commission by electronic funds transfer the sum of fifty thousand dollars ($50,000) no later than fifteen (15) days after the date of service of this order. In the event of any default on any obligation to make payment under this Part, interest, computed pursuant to 28 U.S.C. §1961(a) shall accrue from the date of default to the date of payment. B. The funds paid by respondent Roger J. Callahan, pursuant to subpart A above, shall be paid into a redress fund administered by the FTC and shall be used to provide direct redress to purchasers of Dr. Callahan’s Addiction Breaking System. Payment to such persons represents redress and is intended to be compensatory in nature, and no portion of such payment shall be deemed a payment of any fine, penalty, or punitive assessment. If the FTC determines, in its sole discretion, that redress to purchasers is wholly or partially impracticable, any funds not so used shall be paid to the United States Treasury. Respondent shall be notified as to how the funds are disbursed, but shall have no right to contest the manner of distribution chosen by the Commission. IV. IT IS FURTHER ORDERED that respondent Roger J. Callahan shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying: A. All advertisements and promotional materials containing the representation; B. All materials that were relied upon in disseminating the representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in his possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations. V. IT IS FURTHER ORDERED that respondent Roger J. Callahan, for a period of ten (10) years after the date of issuance of this order, shall notify the Commission of the discontinuance of his current business or employment, or of his affiliation with any new business or employment. The notice shall include respondent's new business address and telephone number and a description of the nature of the business or employment and his duties and responsibilities. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580. VI. IT IS FURTHER ORDERED that respondent Roger J. Callahan shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which he has complied with this order. VII. This order will terminate twenty (20) years from the date of its issuance, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of: A. Any Part in this order that terminates in less than twenty (20) years; B. This order's application to any respondent that is not named as a defendant in such complaint; and C. This order if such complaint is filed after the order has terminated pursuant to this Part. Provided, further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal. Signed this day of ______, 1998 ROGER J. CALLAHAN MARY ELIZABETH TORTORICE CHARULATA B. PAGAR APPROVED: C. STEVEN BAKER UNITED STATES OF AMERICA In the Matter of ROGER J. CALLAHAN, individually. DOCKET NO. COMPLAINT The Federal Trade Commission, having reason to believe that Roger J. Callahan, individually ("respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges: 1. Respondent Roger J. Callahan has manufactured, advertised, offered for sale, sold, and distributed products to the public, including Dr. Callahan’s Addiction Breaking System. Individually or in concert with others, he participated in the acts or practices alleged in this complaint. His principal office or place of business is 45350 Vista Santa Rosa, Indian Wells, California 92210. 2. Respondent entered into an agreement with Mega Systems, Inc., a corporation which creates and distributes program-length radio and television commercials which run for 30 minutes or less and fit within normal radio and television broadcasting time slots. The television commercials were and are broadcast on network, independent and cable television stations throughout the United States. The radio commercials were and are broadcast on network and independent radio stations throughout the United States. In at least one of Mega Systems, Inc.’s program-length television commercials, respondent acted as the guest and promoted Dr. Callahan’s Addiction Breaking System. 3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act. 4. Respondent has created and disseminated advertisements for Dr. Callahan’s Addiction Breaking System, including but not necessarily limited to the attached Exhibit A. This advertisement contains the following statements:
5. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that for all or virtually all users:
6. In truth and in fact:
Therefore, the representations set forth in Paragraph 5 were, and are, false or misleading. 7. Through the means described in Paragraph 4, respondent has represented, expressly or by implication, that he possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 5, at the time the representations were made. 8. In truth and in fact, respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 5, at the time the representations were made. Therefore, the representation set forth in Paragraph 7 was, and is, false or misleading. 9. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices, and the making of false advertisements, in or affecting commerce in violation of Sections 5(a) and 12 of the Federal Trade Commission Act. THEREFORE, the Federal Trade Commission this day of , 199 , has issued this complaint against respondent. By the Commission. Donald S. Clark SEAL Analysis of Proposed Consent Order to Aid Public Comment The Federal Trade Commission has accepted an agreement, subject to final approval, to a proposed consent order from respondent Roger J. Callahan. The proposed consent order has been placed on the public record for sixty (60) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order. This matter concerns efficacy claims made regarding Dr. Callahan’s Addiction Breaking System promoted by respondent. The Commission's complaint charges that respondent, in concert with Mega Systems, Inc., made false and unsubstantiated claims that Dr. Callahan’s Addiction Breaking System (1) reduces an individual’s compulsive desire to eat, leading to significant weight loss, (2) reduces an individual’s compulsive desire to eat, leading to significant weight loss without the need to diet or exercise, and (3) cures addictions and compulsions, including but not limited to, smoking, eating, and using alcohol or heroin. The proposed consent order contains provisions designed to remedy the violations charged and to prevent the respondent from engaging in similar acts and practices in the future. The proposed order extends to any weight loss product or program or any product or program purported to treat addictions or compulsions. Part I of the proposed consent order prohibits the respondent from representing that Dr. Callahan’s Addiction Breaking System, or any substantially similar product or program purported to treat addictions or compulsions, (1) reduces an individual’s compulsive desire to eat, leading to significant weight loss, (2) reduces an individual’s compulsive desire to eat, leading to significant weight loss without the need to diet or exercise, or (3) cures addictions and compulsions, including but not limited to, smoking, eating, and using alcohol or heroin. Part II of the proposed order prohibits the respondent from representing the performance, benefits, or efficacy of any weight loss product or program or any product or program purported to treat addictions or compulsions, unless the representation is substantiated. Part III of the proposed order requires the respondent to pay fifty thousand dollars into a redress fund. The remaining parts of the proposed consent order require the respondent to maintain promotional and substantiation materials related to the claims covered by the order, to notify the Commission of any changes in his employment, and to file one or more compliance reports. The purpose of this analysis is to facilitate public comment on the proposed consent order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms. |