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SYNCHRONAL WILL PAY $ 3.5 MIL. INTO CONSUMER FUND UNDER FTC SETTLEMENT

This article was originally published in The Tan Sheet

Executive Summary

SYNCHRONAL WILL PAY $ 3.5 MIL. INTO CONSUMER FUND UNDER FTC SETTLEMENT of charges that the infomercial producer and two expert endorsers made "false and unsubstantiated claims" in ads for the "Omexin System" baldness treatment and the "Anushka Bio-Response Body Contouring Program" for cellulite. Under the proposed consent agreement with the Federal Trade Commission, published in the June 14 Federal Register, New York City-based Synchronal will be required to pay $ 3.5 mil. in installments into a fund that will be used to provide refunds to consumers who purchased the Omexin or Anushka products. The FTC filed charges against Synchronal, several affiliates, the company's officers and two "expert endorsers" -- New York dermatologist Steven Victor, MD, and Ana Blau, owner of New York's Anushka Institute -- in October 1991. The FTC complaint alleged that two infomercials, "Can You Beat Baldness" and "Cellulite Free: Straight Talk with Erin Gray," made false and unsubstantiated claims about the products' effectiveness and that they were represented as independent television programming rather than paid ads. FTC's commissioners voted 5-0 to accept the proposed consent agreement. FTC will decide after a 60-day comment period whether to make the agreement final. The proposed consent agreement would prohibit Synchronal or its former officers from disseminating the two infomercials and from misrepresenting study results in the marketing of any product or service. In addition, the settlement would require Synchronal, its former officers and the two expert endorsers to have reliable scientific evidence to support any representations they make regarding the performance or safety of any product they market. Victor and Blau would be required to "actually exercise their represented expertise by examining or testing the product," FTC noted. Furthermore, Synchronal and its former officers would be prohibited from disseminating any ad that represents itself as other than a paid ad and from selling products through "continuity" programs without the express consent of consumers and without disclosing all the terms of the program. Any commercial 15 minutes or longer would require a visual disclosure that the program is a paid ad within the first 30 seconds and before the display of ordering information. According to the FTC charges, "once customers order the products, many were enrolled without their permission in an automatic shipping program to receive additional supplies . . . for which Synchronal billed their credit cards without authorization," FTC said in a June 3 press release. FTC also alleged that Synchronal "promised to send consumers free samples . . . but then billed their credit cards without authorization." Regarding the Omexin infomercial, Synchronal, its former officers and Victor are prohibited from making further false claims about the baldness treatment and from marketing any baldness product not approved by FDA. The Synchronal group and Blau are prohibited from making claims that the Anushka program "contains any ingredient that substantially reduces or eliminates cellulite" and the group would be required to substantiate "certain cellulite, hip- or thigh-reduction, or weight loss claims for any product they market in the future," FTC said. The settlement also would require that former Synchronal officer Ira Smolev maintain a $ 500,000 escrow account before advertising or marketing health-related or cosmetic products to consumers in the future. One of Synchronal's management team, Thomas Fenton, has not agreed to the proposed settlement and his case remains in litigation, FTC said.

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