WASHINGTON, Feb. 19, 2002 --
The Federal Trade Commission has settled charges against a Virginia company for numerous allegations of false and unsubstantiated claims concerning weight-loss products, pain-relief magnets, air cleaners, and hair-growth stimulants, and for deceptively "upselling" a buyer's club service.
TechnoBrands, Inc., (TBI) formerly known as Comtrad Industries, and its president, Charles J. Anton, have agreed to settle FTC charges that they engaged in deceptive advertising claims for six products they sold. Under the terms of the proposed consent agreement, the respondents are required to pay $200,000 in consumer redress, and would be required to have competent and reliable scientific evidence to support claims made for the specific products challenged, as well as for other products sold by TBI.
In a separate action, filed in federal district court, TBI has agreed to pay more than $200,000 in consumer redress for its role in the deceptive telemarketing of a buyer's club service after completing the sale of its own products. The Commission charged that the company did not clearly alert consumers that their credit cards would automatically be charged if they did not cancel the membership before the end of a "free" 30-day trial or that their credit card numbers were being turned over to a different company.
TBI, located in Colonial Heights, Virginia, is a mail-order retail seller of various gadgets, electronic items, and diet, health, and beauty products manufactured by third parties. It markets these products through direct mail catalogs, on the Internet, and in magazine and newspaper ads. TBI creates the advertising claims, develops marketing strategy, prints promotional materials, takes orders from consumers, ships the products, and handles returns and consumer complaints.TBI does business as The Lifestyle Resource, TechnoScout, Ennovations, Tech Update, and International Collectors' Society.
The claims challenged in the FTC's complaint against TBI relate to six of its products: the Hollywood 48-Hour Miracle Diet; the Enforma System, a dietary supplement for weight loss; the BMI Magnetic Kit, an analgesic device; Nisim New Hair Biofactors System, a preparation to stimulate hair growth; the Clarion Ionic Filter Ceiling Fan, an air cleaning device; and the Sila Ionic Air Purifier, another air cleaning device.
The FTC alleged that TBI made numerous false and unsubstantiated claims concerning the weight loss that consumers can achieve with the Hollywood Diet and Enforma; the pain relief that can be achieved with the BMI Magnetic Kit; the effectiveness of Nisim in stopping hair loss and stimulating hair growth; the ability of the air cleaners to eliminate various pollutants from indoor space; and the health benefits of using the Clarion Fan.
In a separate action, the FTC has filed a complaint and stipulated order in federal district court alleging that TBI engaged in the deceptive telemarketing of a buyer's club service to consumers who ordered TBI products. The stipulated order includes a permanent injunction and requires TBI to pay more than $200,000 in consumer redress.
According to the FTC, TBI (then Comtrad) sold memberships in Triad Discount Buying Service, later, Best Price USA. TBI's telemarketers promoted a so-called "no obligation free trial" in Triad's buying club at the end of the call after a consumer had completed an order to buy TBI's product and provided credit card information.
The telemarketer allegedly failed adequately to disclose, however, the following material facts: the consumer had to cancel the service before 30 days elapsed in order to avoid being charged for a year's membership; renewals each year were billed automatically to a credit card; and the credit card number provided by the consumer for the TBI product order would be turned over to Triad for the purpose of charging the membership.