Texas Attorney General Greg has halted the unlawful marketing and sales of thermal massage beds sold in Texas that a company and its franchises deceptively claimed would treat or cure cancer and a range of other serious ailments and diseases.
The settlement ends an investigation against Ceragem International Inc. of California, which operates franchises and company-owned stores in several Texas cities, including Houston, the Dallas/Fort Worth area, El Paso, San Antonio, Corpus Christi and McAllen.
Most of the distributors sold the beds to Spanish-speaking consumers. Texas is the first state to take legal action against the company for its deceptive marketing practices.
"This company made inflated and unsubstantiated claims about the benefits of its products, which were intended to exploit consumers who may have actually needed professional medical services," said Abbott. "This really amounted to orchestrated consumer health fraud, all without physician involvement, and I am pleased the company will cease these deceptive practices."
The investigation alleged consumers were falsely led to believe the U.S. Food and Drug Administration approved the devices for a range of ailments such as cancer, epilepsy, heart disease, ovarian cysts and other maladies.
The company's Web site also featured the deceptive use of an FDA seal and, when viewed as a whole, suggested the devices utilized methods of acupressure and acupuncture to accomplish the therapy.
Dr. Eduardo J. Sanchez, commissioner of the Texas Department of State Health Services, which referred this case to the Attorney General, concurred with Abbott: "Our investigators documented an alarming incidence of false health claims associated with Ceragem's beds. Consumers should not rely on these claims. These beds are not substitutes for prescribed medicines and treatments."
The equipment is manufactured by Ceragem Co. Ltd., of South Korea, which provides machines to Ceragem International and independent franchises. According to the investigation, distributors host up to 14 live presentations per day for up to 50 consumers each.
The Attorney General's undercover investigation and video revealed speakers repeatedly claiming the $2,400 "Ceragem-C Thermal Massager" was instrumental in the treatment of a range of medical conditions, including diabetes and obesity. "Testimonials" about cures by previous customers were encouraged.
Although the FDA has approved the device for the temporary relief of minor muscle and joint pain, and pain associated with arthritis, the agency has not approved the device for most of the uses described by the distributors during presentations in Spanish about the product. Representations regarding the treatment and cure of diseases was evidence the company misled consumers and marketed what amounted to an illegal device.
According to the investigation, the defendants transformed retail locations into the equivalent of large therapy clinics without physicians involved at any point.
The practice increased the risk to consumers who may have had serious ailments because they were led to believe the devices could take care of health problems, and as a result, they might not have sought the medical attention they actually needed.
The settlement also provides for restitution to compensate consumers for losses based on false claims about the health benefits of Ceragem's beds.
Ceragem Co. of South Korea sells the thermal massage beds in 22 countries and supports more than 500 independent retail distributors worldwide.
California-based Ceragem International, which authorizes distributorships for North America, reported sales of $18 million a year, according to a 2004 Dunn & Bradstreet report.
November 14, 2006
We received the following response to the attorney general's action from Paul Choi of Ceragem International, Inc.
The contents of your posting have a lot of false information that will mislead the consumers. Our website does not not have any FDA logos that misrepresent or mislead any of our customers. The only reference/link that we have referring to the FDA on our website is the 510(k) clearance notice that we received from the FDA.
Your posting also states that the investigation was against company-owned stores which is a wrong statement. The investigation was against independently owned stores. In addition, the recording with the person making statements regarding the mitigation or treatment of diseases was never established to be a store employee.
We can not control or dictate the testimony of a customer. We monitor the marketing and advertising contents regarding our product and our corporate office sends out quarterly memorandums reminding our distributors to stay within the product claim guidelines as described by the FDA regarding our product, as it is a Class II 510(k), medical device.
We also request all of our distributors to submit any and all advertising material and documents to our corporate office for approval prior to distribution of the documents. Our centers never at any point claimed to be a clinic or treatment center and we are avid about our customers obtaining consultation from their doctor or physician regarding their conditions.
We remind all of our customers that we are not doctors and our centers are neither treatment centers nor clinics. Therefore, if they have any medical conditions, they need to consult their doctor. In conclusion, we want you to state that both parties acknowledged (according to AVC) that we did nothing wrong and NONE of our Ceragem stores, whether Corporate or independently owned, had to close or cease the operation of the business or its sales.
In fact, we had customers by the hundreds protesting the Attorney General, Greg Abbott's comments and protested his actions. Please! update or revise your posting according to the facts.
Editor's Note: Our story is based on an official press release from the Attorney General's office.
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