ANALYSIS OF PROPOSED CONSENT
ORDER TO AID PUBLIC COMMENT

The Federal Trade Commission has accepted, subject to final approval, an agreement to a proposed Consent Order ("proposed order") from Melinda Sneed and John Sneed, doing business as Arthritis Pain Care Center.

The proposed consent order has been placed on the public record for sixty (60) days for the 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 will decide whether it should withdraw from the agreement or make final the agreement's proposed order.

This matter concerns advertisements on the Internet, audio cassettes, and print advertisements provided to consumers and prospective distributors, for a product called "CMO," described as a form of cetylmyristoleate, purportedly useful in the treatment or cure of arthritis and other diseases. CMO is said to be a fatty acid ester, extracted from beef tallow, which regulates the immune system. Purportedly, the substance, in one or two courses of treatment, each lasting less than three weeks, permanently relieves the symptoms of osteoarthritis and rheumatoid arthritis and reverses the effects of the disease. CMO is also claimed to be useful for the treatment, mitigation, prevention, and cure of most forms of arthritis and a number of other diseases.

The Commission's complaint charges that the proposed respondents engaged in deceptive advertising in violation of Sections 5 and 12 of the FTC Act by making unsubstantiated claims that their CMO products: (1) are effective in the mitigation, treatment, prevention, and cure of most forms of arthritis, including rheumatoid arthritis and osteoarthritis; (2) provide permanent relief from symptoms of arthritis, including pain, impaired mobility, swelling, and joint deformities; (3) are as effective as or superior to prescription medications in the treatment of arthritis and the relief of arthritis symptoms; (4) are completely safe and without adverse side effects; and (5) are effective in the treatment of multiple sclerosis, lupus, emphysema, chronic bronchitis, silicone breast disease, cancer, benign prostate hyperplasia, hypertension, hypotension, and cardiac arrhythmia.

The complaint further alleges that the proposed respondents made false claims that (1) clinical studies prove that their CMO products are a safe and effective treatment for arthritis; and that (2) studies were conducted at the National Institutes of Health that prove that CMO reverses the effects of arthritis.

The complaint further alleges that proposed respondents engaged in a deceptive practice by representing that John Sneed is an endorser of their CMO products, without adequately disclosing that Mr. Sneed, at the time of his endorsement, had a material connection with respondents' CMO products in that he had a financial interest in Arthritis Pain Care Center and received a financial benefit from respondents' sales of the product.

The proposed order contains provisions designed to remedy the violations charged and to prevent proposed respondents from engaging in similar acts in the future.

Paragraph I of the proposed order prohibits proposed respondents from making any representation that CMO or any similar product: (1) is effective in the mitigation, treatment, prevention, or cure of arthritis, including rheumatoid arthritis and osteoarthritis; (2) provides permanent relief from symptoms of arthritis, including pain, impaired mobility, swelling, or joint deformities; (3) is as effective as or superior to prescription medications in the treatment of arthritis or the relief of arthritis symptoms; (4) is completely safe or has no adverse side effects; or (5) is effective in the treatment of multiple sclerosis, lupus, emphysema, chronic bronchitis, silicone breast disease, cancer, benign prostate hyperplasia, hypertension, hypotension, or cardiac arrhythmia, 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 prohibits proposed respondents from making any representations about the performance, safety, efficacy, or health benefits of CMO or any other food, drug, dietary supplement, or program, unless the claims are substantiated by competent and reliable scientific evidence.

Paragraph III of the proposed order provides that proposed respondents are not prohibited from making representations which are specifically permitted by regulations of the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990. Paragraph IV of the proposed order provides that proposed respondents are not prohibited from making representations for a drug that are permitted under tentative final or final standards issued by the Food and Drug Administration or under any new drug application approved by that agency.

Paragraph V of the proposed order prohibits proposed respondents from misrepresenting the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.

Paragraph VI of the proposed order prohibits proposed respondents from representing that the experience represented by any user testimonial or endorsement of any product or program represents the typical or ordinary experience of members of the public who use the product or program, unless the representation is true, and competent and reliable scientific evidence substantiates that claim, or respondents clearly and prominently disclose either: (1) what the generally expected results would be for users or the product or program; 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.

Paragraph VII of the proposed order requires proposed respondents to disclose clearly and prominently, and in close proximity to the endorsement, any material connection between a person providing an endorsement of any product or program and any respondent or other individual or entity manufacturing, labeling, advertising, promoting, offering for sale, selling, or distributing such product or program. A "material connection" is a relationship that might materially affect the weight or credibility of the endorsement and would not reasonably be expected by consumers.

Paragraph VIII of the proposed order requires that proposed respondents: (1) not disseminate to any distributor any material containing any representations prohibited by the order; (2) not authorize any distributor to make any representations prohibited by the order; (3) send a required notice to each distributor with whom proposed respondents have done business since January 1, 1996, requesting that the distributor cease using any advertising or promotional materials containing unsubstantiated claims for CMO, requesting distributors not to make unsubstantiated oral representations, informing the distributor of this settlement, attaching a copy of this proposed complaint and order, and not including any other documents in the mailing; (4) for a period of three (3) years following service of the order, send the required notice to each distributor who has not previously received the notice; the notices shall be sent within one week of the first shipment of respondents' products to the distributor; (5) require distributors to submit to proposed respondents all advertising and promotional materials and claims for any products or programs covered by the order for review prior to their dissemination and publication, and not authorize distributors to disseminate materials and claims unless they comply with the order, or furnishing to distributors marketing materials that do not contain representations prohibited by the order and requiring the distributors to submit for review all advertising and promotional materials for a particular product covered by the order that contain representations that are not substantially similar to the materials most recently provided by proposed respondents; and (6) monitor distributors' advertising and promotional activities, immediately terminate the right of any distributor who disseminates advertisements or marketing material or makes oral representations prohibited by the order, and immediately provide information to the Federal Trade Commission about any such distributor and the materials used. "Distributor" is defined in the proposed order to mean any purchaser or transferee of a product covered by the order who acquires product from proposed respondents, with or without consideration, and who sells, or who has sold, such product to other sellers or to consumers, including individuals, retail stores, or catalogs. Paragraph IX of the proposed order requires proposed respondents to retain for five (5) years after the last correspondence to which they pertain and to make available to the Federal Trade Commission on request, copies of all notification letters and other communications with distributors relating to the requirements of Paragraph VIII.

Paragraph X of the proposed order contains record keeping requirements for materials that substantiate, qualify, or contradict covered claims and requires proposed respondents to keep and maintain all advertisements and promotional materials containing any representation covered by the proposed order. In addition, Paragraph XI requires distribution of a copy of the consent decree to current and future officers and agents. Further, Paragraph XII requires the filing of a compliance report.

Finally, Paragraph XIII of the proposed order 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.