Body Systems Technology, Inc.

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

BODY SYSTEMS TECHNOLOGY, INC. a corporation, WILLIAM E. CHACE, individually and as an officer of the corporation, and JAMES D. DAVIS individually and as an officer of the corporation.

FILE NO. 982 3177

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission has conducted an investigation of certain acts and practices of Body Systems Technology, Inc., a corporation, and William E. Chace and James D. Davis, individually and as officers 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 Body Systems Technology, Inc., by its duly authorized officer, and William E. Chace and James D. Davis, individually and as officers of the corporation, and counsel for the Federal Trade Commission ("Commission") that:

1. Proposed respondent Body Systems Technology, Inc. ("Body Systems") is a Florida corporation with its principal office or place of business at 408 Live Oaks Blvd., Casselberry, Florida 32707.

Proposed respondent William E. Chace is an officer 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 408 Live Oaks Blvd., Casselberry, Florida 32707.

Proposed respondent James D. Davis is an officer 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 408 Live Oaks Blvd., Casselberry, Florida 32707.

2. Proposed respondents admit all the jurisdictional facts set forth in the draft complaint.

3. Proposed respondents waive:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a statement of findings of fact and conclusions of law; and

c. All rights to seek judicial review or otherwise to challenge or contest the validity of the order entered pursuant to this agreement.

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 Body Systems Technology, Inc., a corporation, its successors and assigns and its officers; William E. Chace and James D. Davis, individually and as officers of the corporation; and each of the above's agents, representatives, and employees.

3. "Distributor" shall mean any purchaser or other transferee of any product or program covered by this order who acquires such product or program from respondents.

4. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44.

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 Body System Technology, Inc.'s shark cartilage capsules or any other product or program in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, that such product or program:

A. Is effective in the treatment of cancer; or

B. Is effective in preventing cancer,

unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation.

II.

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 Body System Technology, Inc.'s uña de gato capsules, uña de gato liquid, or any other product or program in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, that such product or program:

A. Is or is likely to be an effective treatment of cancer;

B. Is or is likely to be an effective treatment of HIV and AIDS; or

C. Is or is likely to be an effective treatment of arthritis,

unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation.

III.

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, or any program, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the health benefits, performance, efficacy, or safety of such product or program, unless, at the time the representation is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation.

IV.

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 program, 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.

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.

VI.

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.

VII.

IT IS FURTHER ORDERED that:

A. Respondents shall not disseminate to any distributor any material containing any representations prohibited by this order.

B. Respondents shall not, directly or indirectly, authorize any distributor to make any representations prohibited by this order.

C. Within thirty (30) days after service of this order, respondents shall send by first class mail an exact copy of the notice attached hereto as Attachment A to each distributor with whom respondents have done business between February 1, 1997 and the date respondents executed this order, to the extent that such distributor is known to respondents through a diligent search of their records, including but not limited to computer files, sales records, and inventory lists. The mailing shall not include any other documents. Respondents shall require each distributor to execute and return the original of the letter as a condition of remaining or once again becoming a distributor of Body Systems Technology, Inc.

D. For a period of three (3) years following service of this order, respondents shall provide an exact copy of the notice attached hereto as Attachment C to each new distributor with whom respondents do business after the date respondents executed this order. Such notice shall be sent with the first shipment of respondents' products or programs to said distributor. Respondents shall require each new distributor to execute and return the original of the letter as a condition of being a distributor of Body Systems Technology, Inc.

E. Respondents shall use reasonable efforts to monitor distributors' advertising and promotional activities. In the event that respondents receive any information that subsequent to receipt of Attachment A pursuant to Subpart C of this Part or subsequent to receipt of Attachment C pursuant to Subpart D of this Part, any distributor is using or disseminating any advertisement or promotional material or making any oral statement that contains any representation prohibited by this order, respondents shall immediately terminate said distributor's right to market respondents' products or programs and immediately provide, by certified mail, all relevant information, including name, address, and telephone number of the company at issue, the nature of the violation, and any relevant materials used or disseminated, to the Associate Director, Division of Enforcement, Federal Trade Commission, Washington, D.C. 20580.

F. Respondents shall require distributors to submit to respondents all advertising and promotional materials and claims for any products or programs covered by this order for review prior to their dissemination and publication. Respondents shall not authorize distributors to disseminate these materials and claims unless they are in compliance with this order.

Respondents may also comply with the obligations set forth above in this Subpart by:

1. disseminating to distributors marketing materials that comply with this order; and

2. requiring these distributors to submit for review all advertising and promotional materials for a particular product or program covered by this order that contain representations that are not substantially similar to the representations for the same product or program contained in the advertising and promotional materials most recently forwarded to the distributors by respondents.

VIII.

IT IS FURTHER ORDERED that respondents Body Systems Technology, Inc. and its successors and assigns, and respondents William E. Chace and James D. Davis shall, for a period of five (5) years after the last notice is sent pursuant to Part VII of this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying: all notification letters sent to distributors, communications between respondents and distributors, and any other materials that refer or relate to the requirements of Part VII.

IX.

IT IS FURTHER ORDERED that respondents shall refund the full purchase price of its shark cartilage capsules, uña de gato capsules, and uña de gato liquid, including shipping and handling and applicable taxes, to each purchaser whose initial request for a refund is received by respondents within one hundred and twenty (120) days after the date of service of this order under the following terms and conditions:

A. If respondents' diligent inquiry and examination of the corporate respondent's books and records reasonably substantiates the purchaser's claim of purchase or the purchaser provides proof of purchase, including but not limited to any of the following: return of goods or packaging, canceled check[s], credit card invoice[s], or receipt[s], the refund shall be paid within fifteen (15) business days of respondents' receipt of the refund request.

B. If the purchaser makes a timely request for a refund but neither of the conditions of Subpart A is satisfied, the respondents shall advise the purchaser, within fifteen (15) business days of receipt of the request for refund, that respondents will provide a prompt refund if the purchaser completes and returns to any respondent, within fifteen (15) days of receipt of the notice, a declaration of purchase, which the respondents shall provide together with a stamped and addressed return envelope. The declaration shall be substantially in the form of the declaration attached hereto as Attachment B. The refund shall be paid within fifteen (15) business days of respondents' receipt of the purchaser's completed declaration.

Provided, however, that if any request[s] for a refund from a single purchaser is for greater than three bottles of a product covered by this Part, respondents may, within fifteen (15) business days of receipt of the request[s] for refund, notify the purchaser that it will provide a prompt refund for all unopened packages of Body Systems Technology, Inc. shark cartilage capsules, uña de gato capsules, and uña de gato liquid returned within fifteen (15) business days of receipt of the notice, and shall advise the purchaser that such returns may be made at the respondents' expense. The respondents shall provide each such purchaser with a prepaid means of return. The refund shall be paid within fifteen (15) business days of the return of unopened merchandise.

Refund requests shall be sent to Body Systems Technology, Inc., 408 Live Oaks Blvd., Casselberry, FL 32707.

IT IS FURTHER ORDERED that respondent Body Systems Technology, Inc. and its successors and assigns, and respondents William E. Chace and James D. Davis shall, no later than one hundred and eighty (180) days after the date of service of this order, send by certified mail a monitoring report, in the form of a sworn affidavit executed on behalf of respondents to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580. This report shall specify the steps respondents have taken to comply with the terms of Part IX of this order and shall state, without limitation:

A. The name and address of each purchaser from whom respondents received a refund request;

B. The date on which each request was received and the amount of the refund provided by respondents to each such purchaser;

C. That each refund was for the full amount of payment from each purchaser to whom any refund was paid;

D. The status of any disputed refund request and the identification of each purchaser whose refund request is disputed, by name, address, and amount of the claim; and

E. The total amount of refunds paid by respondents.

XI.

IT IS FURTHER ORDERED that respondent Body Systems Technology, Inc., and its successors and assigns, respondents William E. Chace and James D. Davis 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 their 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.

XII.

IT IS FURTHER ORDERED that respondent Body Systems Technology, Inc., and its successors and assigns, and respondents William E. Chace and James D. Davis, 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.

XIII.

IT IS FURTHER ORDERED that respondent Body Systems Technology, 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.

XIV.

IT IS FURTHER ORDERED that respondents William E. Chace and James D. Davis, for a period of five (5) 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 her/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.

XV.

IT IS FURTHER ORDERED that respondent Body Systems Technology, Inc., and its successors and assigns, and respondents William E. Chace and James D. Davis 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.

XVI.

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

BODY SYSTEMS TECHNOLOGY, INC.

By:

William E. Chace, President

WILLIAM E. CHACE, individually
and as an officer of Body Systems Technology, Inc.

JAMES D. DAVIS, individually
and as an officer of Body Systems Technology, Inc.

ROBERT GATTON
Broad & Cassel
Attorney For Respondents

DONALD G. D'AMATO
Counsel for the Federal Trade Commission

ALICE AU
Counsel for the Federal Trade Commission

APPROVED:

MICHAEL JOEL BLOOM
Director
New York Regional Office

Attachment A

LETTER SENT TO DISTRIBUTORS WITH WHOM RESPONDENTS HAVE DONE BUSINESS BETWEEN FEBRUARY 1, 1997 AND THE DATE RESPONDENTS EXECUTED THIS ORDER

[To Be Printed on Body Systems Technology, Inc. letterhead]

[NAME AND ADDRESS OF RECIPIENT]

[DATE]

Dear [DISTRIBUTOR'S NAME]:

It is against the law to make false claims about any product or program or to make any health-related claims about any product or program of Body Systems Technology, Inc., which are not substantiated by competent and reliable scientific evidence. Competent and reliable scientific evidence is defined as 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. Anecdotal evidence and consumer testimonials are not considered competent and reliable scientific evidence.

Body Systems Technology, Inc. intends to abide by the law and demands that its distributors do the same. Therefore, as a condition of your remaining and or becoming once again a distributor of Body Systems Technology, Inc.'s products and programs, you must agree not to use, rely on, or distribute any advertising or promotional materials containing false or unsubstantiated claims. You must further agree not to make false or unsubstantiated oral representations with regard to any product or program of Body Systems Technology, Inc. You must also agree to notify your retail or wholesale customers to do the same. If you or your retail or wholesale customers use such materials or make such representations, we will stop doing business with you.

In order that Body Systems Technology, Inc. may assure itself that you are in compliance with the aforesaid requirements, you must, as a condition of remaining or becoming a distributor of Body Systems Technology, Inc. agree to submit to Body Systems Technology, Inc. in advance and prior to use, dissemination, or publication, all advertisements or promotional materials that you intend to use, publish, or disseminate with regard to any Body Systems Technology, Inc. product or program. You must further agree not to use, disseminate or publish any such advertisement or promotional materials without obtaining our prior approval.

If you should fail or refuse to comply with the terms of this letter, your distributorship with Body Systems Technology, Inc. will be terminated immediately. Furthermore, if Body Systems Technology, Inc. believes that you have misrepresented or have made claims with respect to any product or program of Body Systems Technology, Inc. which are unsubstantiated by reliable scientific evidence, Body Systems Technology, Inc. will report your violation to the Federal Trade Commission.

Please sign, date, and return this letter to Body Systems Technology, Inc. at the above address acknowledging your agreement to the terms set forth herein. A copy of this letter has been provided for your files.

Thank you very much for your cooperation.

William E. Chace
President
Body Systems Technology, Inc.

ACKNOWLEDGMENT AND AGREEMENT

The undersigned acknowledges receipt of this letter and hereby agrees to its terms and conditions.

Date Signature

REFUND CONDITIONS AND PROCEDURES

Body Systems Technology, Inc. will refund the full purchase price of its shark cartilage capsules, uña de gato capsules, and uña de gato liquid including shipping and handling and applicable taxes, to each purchaser whose initial request for a refund is received by Body Systems Technology, Inc. within ninety (90) days after the date of this letter under the following terms and conditions:

A. Our books and records reasonably substantiate your claim of purchase or you provide Body Systems Technology, Inc. with proof of purchase, including but not limited to any of the following: return of goods or packaging, canceled check[s], credit card invoice[s], or receipt[s].

B. If you make a timely request for a refund but neither of the conditions of Subpart A is satisfied, Body Systems Technology, Inc. will provide you with a Declaration of Purchase. Upon completion and return of this Declaration of Purchase to Body Systems Technology, Inc., we will then provide you with a refund.

Please Note: If any request[s] for a refund from a single purchaser is for more than three bottles of Body Systems Technology, Inc. shark cartilage capsules, uña de gato capsules, or uña de gato liquid, we reserve the right to only provide a refund upon receipt of all unopened packages of the Body Systems Technology, Inc. shark cartilage capsules, uña de gato capsules, and uña de gato liquid. Such returns, however, will be made at Body Systems Technology, Inc.'s expense as we will provide you with a prepaid means of return.

Refund requests may be sent to Body Systems Technology, Inc., 408 Live Oaks Blvd., Casselberry, FL 32707.

Attachment B

[ADDRESS AND TELEPHONE NUMBER OF THE DECLARANT]

[DATE]

William E. Chace, President
Body Systems Technology, Inc.
408 Live Oaks Boulevard
Casselberry, Florida 32707

Dear Mr. Chace:

I make the following Declaration of Purchase.

On or about [DATE], I purchased [NUMBER OF BOTTLES] of [PRODUCT] at [PRICE PER UNIT]. Moreover, I incurred [DOLLAR AMOUNT] in shipping and handling charges and taxes as a result of this purchase(s). I request a refund for [TOTAL DOLLAR AMOUNT FOR PRODUCT(S), SHIPPING AND HANDLING, AND TAXES].

I declare under penalty of perjury that the foregoing is true and correct.

[DECLARANT'S SIGNATURE]

Attachment C

LETTER SENT TO DISTRIBUTORS WITH WHOM RESPONDENTS
HAVE DONE BUSINESS SINCE RESPONDENTS EXECUTED THIS ORDER

[To Be Printed on Body Systems Technology, Inc. letterhead]

[NAME AND ADDRESS OF RECIPIENT]

[DATE]

Dear [DISTRIBUTOR'S NAME]:

The Federal Trade Commission has determined that it has reason to believe that claims that Body Systems Technology, Inc.'s shark cartilage capsules are effective in the treatment or prevention of cancer are not substantiated by competent and reliable scientific evidence. Moreover, the Federal Trade Commission has determined that it has reason to believe that claims that Body Systems Technology, Inc.'s uña de gato capsules and uña de gato liquid are or are likely to be effective treatments for cancer, HIV, AIDS, and arthritis also are not substantiated by competent and reliable scientific evidence. Body Systems Technology, Inc. intends to abide by the law and demands that its distributors do the same. Therefore, as a condition of your becoming and remaining a distributor of Body Systems Techonology, Inc.'s products and programs, you must agree not to use, rely on, or distribute any advertising or promotional materials containing false or unsubstantiated claims. You must further agree not to make false or unsubstantiated oral representations with regard to any product or program of Body Systems Technology, Inc. You must also agree to notify your retail or wholesale customers to do the same. If you or your retail or wholesale customers use such materials or make such representations, we will stop doing business with you.

In order that Body Systems Techonology, Inc. may assure itself that you are in compliance with the aforesaid requirements, you must, as a condition of your becoming and remaining a distributor of Body Systems Technology, Inc. agree to submit to Body Systems Technology, Inc. in advance and prior to use, dissemination, or publication, all advertisements or promotional materials that you intend to use, publish, or disseminate with regard to any Body Systems Technology, Inc. product or program. You must further agree not to use, disseminate or publish any such advertisement or promotional materials without obtaining our prior approval.

If you should fail or refuse to comply with the terms of this letter, your distributorship with Body Systems Technology, Inc. will be terminated immediately. Furthermore, if Body Systems Technology, Inc. believes that you have misrepresented or made claims with respect to any product or program of Body Systems Techonolgy, Inc. which are false or not substantitated by competent and reliable scientific evidence, Body Systems Technology, Inc. will report your violation to the Federal Trade Commission.

Thank you very much for your cooperation.

William E. Chace
President
Body Systems Technology, Inc.

ACKNOWLEDGEMENT AND AGREEMENT

The undersigned acknowledges receipt of this letter and hereby agrees to its terms and conditions.

Date

Signature