UNITED STATES OF AMERICA In the Matter of FILE NO. 972 3071 AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission has conducted an investigation of certain acts and practices of Nutrivida, Inc., a corporation, and Frank Huerta, individually and as an officer and director of the corporation ("proposed respondents"). Proposed respondents, having been represented by counsel, are 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 Nutrivida, Inc., by its duly authorized officer, and Frank Huerta, individually and as an officer and director of the corporation, and counsel for the Federal Trade Commission that: 1.a. Proposed respondent Nutrivida, Inc. ("Nutrivida") is a New York corporation with its principal office or place of business at 25 Chapel Street, Brooklyn, New York 11201. 1.b. Proposed respondent Frank Huerta is an officer and director of the corporate respondent. Individually or in concert with others, he formulates, directs or controls the policies, acts, or practices of the corporation. His business address is 25 Chapel Street, Brooklyn, New York 11201. 2. Proposed respondents admit all the jurisdictional facts set forth in the draft complaint. 3. Proposed respondents waive:
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 respondents, 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 respondents 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 This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to proposed respondents, (1)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 respondents by any means specified in Section 4.4 of the Commission's Rules shall constitute service. Proposed respondents waive any right they 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 respondents have read the draft complaint and consent order. They understand that they 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. ORDER DEFINITIONS For purposes of this order, the following definitions shall apply: 1. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results. 2. Unless otherwise specified, "respondents" shall mean Nutrivida, Inc., a corporation, its successors and assigns and its officers; and Frank Huerta, individually and as an officer and director of the corporation; and each of the above's agents, representatives, and employees. 3. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44. 4. "Video advertisement" shall mean any advertisement intended for dissemination through television broadcast, cablecast, home video, or theatrical release. IT IS ORDERED that respondents, 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 Nutrivida's Cartilet shark cartilage capsules or any other product in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, that such product:
IT IS FURTHER ORDERED that respondents, 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 Nutrivida's Cartilet shark cartilage capsules, or any food, dietary supplement, or drug as "food" and "drug" are defined in Section 15 of the Federal Trade Commission Act, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the health benefits, performance, or efficacy of such product, unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. IT IS FURTHER ORDERED that respondents, 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 Nutrivida's Cartilet shark cartilage capsules or any food, dietary supplement, or drug, as "food" and "drug" are defined in Section 15 of the Federal Trade Commission Act, in or affecting commerce, shall not misrepresent, in any manner, expressly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research. IT IS FURTHER ORDERED that respondents, 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 any food, dietary supplement, or drug as "food" and "drug" are defined in Section 15 of the Federal Trade Commission Act, in or affecting commerce, shall not represent, in any manner, expressly or by implication, that the experience represented by any user testimonial or endorsement (as endorsement is defined in 16 C.F.R. § 255.0(b)) of the food, dietary supplement, or drug represents the typical or ordinary experience of members of the public who use the product, unless:
Nothing in this order shall prohibit respondents from making any representation for any product that is specifically permitted in the labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990. Nothing in this order shall prohibit respondents from making any representation for any drug that is permitted in the labeling for such drug under any tentative final or final standard promulgated by the Food and Drug Administration or under any new drug application approved by the Food and Drug Administration. IT IS FURTHER ORDERED that respondents, 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 any product or service, in or affecting commerce, do forthwith cease and desist from creating, producing, selling, or disseminating:
"THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE PRODUCT OR SERVICE]." Provided that, for the purposes of this provision, the oral or visual presentation of a telephone number or address for viewers to contact to place an order for the product or service shall be deemed a presentation of ordering instructions so as to require the display of the disclosure provided herein; and C. Any radio advertisement fifteen (15) minutes in length or longer or intended to fill a time slot of fifteen (15) minutes in length or longer that does not state in the same language as the predominant language that is used in the advertisement, in a clear and prominent manner, and in a volume and cadence sufficient for an ordinary consumer to hear, within the first thirty (30) seconds of the commercial and immediately before each presentation of ordering instructions for the product or service, the following disclosure: "THE PROGRAM YOU ARE LISTENING TO IS A PAID ADVERTISEMENT FOR [THE PRODUCT OR SERVICE]." Provided that, for the purposes of this provision, the presentation of a telephone number or address for viewers to contact to place an order for the product or service shall be deemed a presentation of ordering instructions so as to require the stating of the disclosure provided herein. IT IS FURTHER ORDERED that respondent Nutrivida, Inc., and its successors and assigns, and respondent Frank Huerta 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:
IT IS FURTHER ORDERED that respondent Nutrivida, Inc., and its successors and assigns, and respondent Frank Huerta, for a period of five (5) years after the date of issuance of this order, shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities. IT IS FURTHER ORDERED that respondent Nutrivida, Inc., and its successors and assigns shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondents shall notify the Commission as soon as is practicable after obtaining such knowledge. 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. IT IS FURTHER ORDERED that respondent Frank Huerta, for a period of three (3) 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 employ-ment that involves the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any food, dietary supplement, or drug as "food" and "drug" are defined in Section 15 of the Federal Trade Commission Act . 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. IT IS FURTHER ORDERED that respondent Nutrivida, Inc., and its successors and assigns, and respondent Frank Huerta 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 they have complied with this order. 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:
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 NUTRIVIDA, INC. By: Frank Huerta, Officer and Director GARY D. HAILEY Venable, Baetjer, Howard & Civiletti, LLP Attorney For Corporate Respondent FRANK HUERTA, individually and as an officer and director of Nutrivida, Inc. JEFFREY RUBIN Rubin & Shang Attorney For Individual Respondent DONALD G. D'AMATO Counsel for the Federal Trade Commission CAROLE A. PAYNTER Counsel for the Federal Trade Commission DENISE V. TIGHE Counsel for the Federal Trade Commission APPROVED: MICHAEL JOEL BLOOM Director New York Regional Office UNITED STATES OF AMERICA In the Matter of COMPLAINT The Federal Trade Commission, having reason to believe that Nutrivida, Inc., a corporation, and Frank Huerta, individually and as an officer and director of the corporation ("respondents"), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:
Respondent Frank Huerta is an officer and director of the corporate respondent. Individually or in concert with others, he formulates, directs, participates in, or controls the policies, acts, or practices of the corporation, including the acts or practices alleged in this complaint. His business address is 25 Chapel Street, Brooklyn, New York 11201.
This product is a "food" and/or "drug" within the meaning of Sections 12 and 15 of the Federal Trade Commission Act, 15 U.S.C. §§ 52 and 55.
Narrator (male): "[F]rom the complexities of the ocean to the wonders of the natural. Shark cartilage. The shark does not sleep. We bring our cartilage from clean waters, without contamination. Its [shark cartilage's] marvelous properties are already known. It [shark cartilage] has been used in studies against cancer, arthritis, diabetes, and other illnesses." Copy on Screen: "It has been used in studies against: Cancer Arthritis Diabetes" Dr. J. Casas: "My friends, as you all know, for there to be a tumorous process, for a fibroid, for a tumor in the body to grow, survive, it definitely needs nourishment. How do you nourish a tumor? How do you nourish a fibroid? Well, you only and exclusively nourish it through the blood vessels. It must have blood irrigation -- the main -- the best that shark cartilage has is that it inhibits the formation of blood vessels that irrigate and cause the tumor to grow. [T]his is a basic principle which has been documented various times, it is written in many books how shark cartilage has a predilection and goes directly to inhibit the growth of the blood vessels that nourish the tumor. Because there are no nutrients, because there is no nourishment, because there is no blood to nourish that tumor, it has no alternative but to disappear and to give in to the shark cartilage. In few words, my friends, shark cartilage is the medium by which to inhibit any nutrients so that that tumor can not prosper. . . . Shark cartilage has many indications of being a potent anti-inflammatory. For that reason, it is indicated in the processes of rheumatism, in the processes of arthritis, in bursitis, in the circulatory process, in all that has to do with pain and inflammation. Remember, it is important to always visit your doctor. . . . It definitely works, because in it we find elements that help . . . those cells and arteries that nourish that cyst, that fibroid, that tumor, to simply stop providing nourishment . . . malnourishment to the blood and that fibroid, that cyst, can no longer grow. The results at this moment are extraordinary. Thank God. Shark cartilage, like they have properly stated, sharks do not get cancer . . . ." Consumer (female): "Dr. Pestano, I believe because the experience has been marvelous. I personally did not believe much in natural medicine, truly. But really, my son, who had visited Miami, came to my house and brought me . . . Cartilet. He said, 'Mom, try this.' I had suffered for a very long time from a pain in my left arm; my arm was paralyzed, I was tormented, I was desperate. I had taken other medicines, and nothing had been effective. I listened to my son and started to take the capsules of this wonderful product. I later learned it was shark cartilage, and it worked a miracle because my arm was cured." Dr. R. Martinez: "What I want to emphasize is that to separate and place shark cartilage like a great medicine, as an independent weapon in the fight against these illnesses, is a mistake. Shark cartilage must be treated like a powerful weapon, but, within the combination of medicines and therapeutic possibilities we have; all natural, all complementary, but, directed towards the same end . . . ." Dr. R. Martinez: "When we speak about inflammation, we also speak about cancer, about arthritis, about rheumatism . . . . [T]he results in patients with different types of arthritis are parallel to the results obtained with different types of cancer - regarding effectiveness. This all depends on the dosage -- in accordance with the individual's weight in accordance with the patient's immune system. But I repeat, the results with different types of arthritis were highly effective, without toxicity, and with little side effects. In comparison with the other weapons we have in the modern pharmacopoeia against these illnesses or to alleviate these illnesses, it has come to represent a step in advancement -- in my opinion -- extraordinary."
THEREFORE, the Federal Trade Commission this day of , 1998, has issued this complaint against respondents. By the Commission. Donald S. Clark Secretary SEAL: ANALYSIS OF PROPOSED CONSENT The Federal Trade Commission has accepted, subject to final approval, an agreement to a proposed consent order from Nutrivida Inc. ("Nutrivida") and Frank Huerta, an officer and director of the company. The proposed consent order has been placed on the public record for sixty (60) days for the receipt 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 comments received and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order. This matter concerns Spanish language television advertisements, including program length "infomercials," for the proposed respondents' Cartilet shark cartilage capsules. The Commission's complaint alleges that the proposed respondents made unsubstantiated representations that: (1) Cartilet shark cartilage capsules are effective in the symptomatic relief, treatment, or cure of cancer; (2) Cartilet shark cartilage capsules are effective in the symptomatic relief or treatment of rheumatism, arthritis, diabetes, fibroids, bursitis, circulatory problems, and cysts; and (3) a testimonial from a consumer who appears in the advertisements for Cartilet shark cartilage capsules reflects the typical or ordinary experience of members of the public who use the product. The Commission's complaint also alleges that the proposed respondents falsely represented that studies prove that Cartilet shark cartilage capsules are effective in the symptomatic relief or treatment of cancer, arthritis, and diabetes and that the proposed respondents misrepresented that their infomercial for the Cartilet shark cartilage capsules was an independent television program and not paid advertising. Paragraph I of the proposed order prohibits proposed respondents from representing that Nutrivida's Cartilet shark cartilage capsules or any other product are effective in the symptomatic relief, treatment, or cure of cancer or that Nutrivida's Cartilet shark cartilage capsules are effective in the symptomatic relief or treatment of rheumatism, arthritis, diabetes, fibroids, bursitis, circulatory problems, and cysts; unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. Paragraph II of the proposed order would prohibit for Cartilet shark cartilage capsules or any food, dietary supplement, or drug, representations about the health benefits, performance, or efficacy of such product unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. Paragraph III of the proposed order would prohibit for Cartilet shark cartilage capsules or any food, dietary supplement or drug, misrepresentations about the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research. Paragraph IV of the proposed order would prohibit for any food, dietary supplement or drug the representation that the experience represented by any user testimonial or endorsement of the product represents the typical or ordinary experience of members of the public who use the food, dietary supplement or drug, unless: at the time it is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation; or respondents disclose in the same language as the predominant language that is used in the advertisement, clearly and prominently, and in close proximity to the endorsement or testimonial, either (1) what the generally expected results would be for users of the food, dietary supplement or drug, or (2) the limited applicability of the endorser's experience to what consumers may generally expect to achieve, that is, that consumers should not expect to experience similar results. Part V and VI of the proposed order contain provisions permitting certain claims that are approved for labeling by the FDA, either under the Nutrition Labeling and Education Act, a tentative or final standard or under any new drug application approved by the FDA. Part VII of the proposed order would require proposed respondents to disclose "THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE PRODUCT OR SERVICE]" in television advertisements fifteen (15) minutes in length or longer, and to disclose a similar audio message in radio advertisements of fifteen (15) minutes in length or longer. Part VIII of the proposed order contains record keeping requirements for materials that substantiate, qualify, or contradict claims covered by the proposed order. Parts IX of the proposed order requires distribution of a copy of the order to current and future officers and agents. Part X provides for Commission notification upon a change in the corporate respondent and Part XI requires Commission notification when the individual respondent changes his business or employment. Part XII requires the proposed respondents to keep and maintain all records demonstrating compliance with the terms and provisions of the order. Part XIII provides for the termination of the order after twenty years under certain circumstances. The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms. |