UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

MAGNETIC THERAPEUTIC TECHNOLOGIES, INC., a corporation, and JIM B. RICHARDSON, individually and as an officer of the corporation.

FILE NO. 982 3150

AGREEMENT CONTAINING CONSENT ORDER

The Federal Trade Commission has conducted an investigation of certain acts and practices of proposed respondents, Magnetic Therapeutic Technologies, Inc. and Jim B. Richardson, individually and as an officer of the corporation. Proposed respondents 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 Magnetic Therapeutic Technologies, Inc. by its duly authorized officer, and Jim B. Richardson, individually and as an officer of the corporation, and counsel for the Federal Trade Commission that:

1.a. Proposed respondent Magnetic Therapeutic Technologies, Inc. ("MTT") is a Texas corporation with its principal office or place of business at 1915 Peters Road, Suite 106, Irving, Texas 75061.

1.b. Proposed respondent Jim B. Richardson is the majority shareholder, President, Treasurer, and Secretary of the corporate respondent. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the corporation. His principal office or place of business is the same as that of MTT.

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' address as stated in this agreement by any means specified in Section 4.4(a) 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. Proposed respondents 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. "Clearly and prominently" shall mean as follows:

A. In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. Provided, however, that in any advertisement presented solely through video or audio means, the disclosure may be made through the same means in which the ad is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation.

B. In a print advertisement, promotional material, or instructional manual, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. In multipage documents, the disclosure shall appear on the cover or first page.

C. On a product label, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears.

The disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label.

3. "Magnetic therapy products" shall mean any product that contains a magnet of any kind purporting to relieve the symptoms of, treat, mitigate, cure, relieve, heal or alleviate any disease or health condition, including but not limited to Magnetic Sleep Pads, M+ Flexible Magnetic Pads, Magnetic Insoles, Magnetic Knee Support, Magnetic Knee Brace, Magnetic Lumbar Support, Magnetic Wrist Support, Magnetic Sports Band, Magnetic Ankle Support, Magnetic Elbow Sleeve, and Magnetic Tennis Elbow Support.

4. Unless otherwise specified, "respondents" shall mean MTT, its successors and assigns; Jim B. Richardson, individually and as an officer of the corporation; and each of the above's agents, representatives and employees.

5. "Distributor" shall mean any purchaser or other transferee of any product or program covered by this order who acquires product or program from respondents, with or without valuable consideration, and who sells, or who has sold, such product or program to other sellers or to consumers, including but not limited to individuals, retail stores, or catalogs.

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

I.

IT IS ORDERED that respondents, directly or through any partnership, corporation, subsidiary, division, or other device, including franchisees, licensees or distributors, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of magnetic therapy products in or affecting commerce, shall not represent, in any manner, expressly or by implication, that such products:

A. Are effective in treating cancer, including lung and breast cancers, diabetic ulcers, arthritis, or degenerative joint conditions;

B. Lower high blood pressure;

C. Stabilize or increase the T-cell count of HIV patients;

D. Reduce muscle spasms in persons with Multiple Sclerosis;

E. Reduce nerve spasms associated with diabetic neuropathy;

F. Increase bone density, immunity, or circulation; or

G. Are comparable or superior to prescription pain medicine,

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 partnership, corporation, subsidiary, division, or other device, including franchisees, licensees or distributors, 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 represent, in any manner, expressly or by implication, that the experience represented by any user testimonial or endorsement of the product or program represents the typical or ordinary experience of members of the public who use the product or program, unless:

A. At the time it is made, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation; or

B. Respondents disclose, 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 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.

For purposes of this Part, "endorsement" shall mean as defined in 16 C.F.R. § 255.0(b).

III.

IT IS FURTHER ORDERED that respondents, directly or through any partnership, corporation, subsidiary, division, or other device, including franchisees, licensees or distributors, 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 make any representation, in any manner, expressly or by implication, about the health benefits, performance, or efficacy of any 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:

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 certified mail, return receipt requested, an exact copy of the notice attached hereto as Attachment A to each distributor with whom respondents have done business since January 1, 1994, 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.

D. For a period of three (3) years following service of this order, respondents shall send by certified mail, return receipt requested, an exact copy of the notice attached hereto as Attachment A to each distributor with whom respondents do business after the date of service of this order who has not previously received the notice. Such notice shall be sent within one (1) week from the first shipment of respondents' products or programs to said distributor. The mailing shall not include any other documents.

E. Respondents shall monitor distributors' advertising and promotional activities. In the event that respondents receive any information that subsequent to receipt of Attachment A pursuant to subparts C and 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 approval 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.

V.

IT IS FURTHER ORDERED that respondent Magnetic Therapeutic Technologies, Inc. and its successors and assigns, and respondent Jim B. Richardson shall, for five (5) years after the last correspondence to which they pertain, maintain and upon request make available to the Federal Trade Commission for inspection and copying: Copies of all notification letters sent to distributors, communications between respondents and distributors referring or relating to the requirements of Part IV, and any other materials created pursuant to Part IV of this order.

VI.

IT IS FURTHER ORDERED that respondent Magnetic Therapeutic Technologies, Inc. and its successors and assigns, and respondent Jim B. Richardson 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.

VII.

IT IS FURTHER ORDERED that respondent Magnetic Therapeutic Technologies, Inc. and its successors and assigns, and respondent Jim B. Richardson 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.

VIII.

IT IS FURTHER ORDERED that respondent Magnetic Therapeutic Technologies, Inc. and its successors and assigns, and respondent Jim B. Richardson shall notify the Commission at least thirty (30) days prior to any change in the corporation(s) 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 respondents learn 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.

IX.

IT IS FURTHER ORDERED that respondent Jim B. Richardson, 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.

X.

IT IS FURTHER ORDERED that respondent Magnetic Therapeutic Technologies, Inc. and its successors and assigns, and respondent Jim B. Richardson, 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 it has complied with this order.

XI.

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 , 19

MAGNETIC THERAPEUTIC TECHNOLOGIES, INC.

By:

JIM B. RICHARDSON, President

JIM B. RICHARDSON, individually
and as an officer of the corporation

CHRISTA V. A. VECCHI
Counsel for the Federal Trade Commission

APPROVED:

Attachment A

BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED

[To Be Printed on Magnetic Therapeutic Technologies, Inc. letterhead]

[date]

Dear [distributor's name]:⁽¹⁾

Magnetic Therapeutic Technologies, Inc. recently settled a civil dispute with the Federal Trade Commission (FTC) and the State of Texas involving advertising claims for the magnetic therapy products that we sell. As a part of the settlement, we must make sure that you comply with the FTC order.

Our settlements with the FTC and the State of Texas prohibit us from making unsubstantiated written and oral claims in promoting health-related products or programs. In addition, the FTC requires us to review and approve all advertising and promotional materials and claims used by our distributors prior to their dissemination to ensure compliance with the FTC settlement. We are also required to monitor our distributors' marketing and promotional activities, terminate those distributors who refuse to comply with the FTC settlement, and inform the FTC of their activities. Therefore, please send us all promotional and marketing materials and oral representations you intend to disseminate for approval before disseminating them in promoting our products.

We request your assistance by asking you NOT to use, rely on or distribute any advertising or promotional materials containing unsubstantiated claims and NOT to make unsubstantiated oral representations. Please also notify any of your retail or wholesale customers to do the same.

Although we do not admit that the FTC's allegations are true, we have agreed to send this letter as a part of our settlement with the FTC.

Thank you very much for your assistance,

________________________________
Jim B. Richardson President
Magnetic Therapeutic Technologies, Inc.

1. "Distributor" shall mean any purchaser or other transferee of any product or program covered by this order who acquires product or program from respondents, with or without valuable consideration, and who sells, or who has sold, such product or program to other sellers or to consumers, including but not limited to individuals, retail stores, or catalogs.