Markets Wired

Following a public comment period, the Federal Trade Commission approved a final order settling charges that the $792 million proposed acquisition of Symbion Holdings Corporation by Surgery Center Holdings, Inc., would likely be anticompetitive.  

Under the order, Surgery Center Holdings, known as Surgery Partners, agrees to divest Symbion’s ownership in the Blue Springs Surgery Center in Orange City, Fla., within 60 days.

According to the complaint announced in October 2014, the merger would have combined the only two multi-specialty ambulatory surgical centers in the Orange City/Deltona area of Florida, and would have left commercial health plans and commercially insured patients there with only one meaningful alternative to Surgery Partners’ outpatient surgical services.

This action is part of the Commission’s ongoing effort to protect American consumers from higher healthcare costs.

The Commission vote approving the final order was 5-0.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

An auto dealer in suburban Dallas has agreed to settle Federal Trade Commission charges that it used deceptive ads to promote the sale and lease of its vehicles, including an ad that claimed consumers could get out of their current loan or lease for $1.

According to the complaint, false or deceptive ads from TXVT Limited Partnership, doing business as Trophy Nissan (Trophy), violated the FTC Act as well as the Consumer Leasing Act (CLA) and Regulation M, and the Truth in Lending Act (TILA) and Regulation Z.

The FTC charged that Trophy advertised enticing prices, lease or finance terms, and promotions and then attempted to disclaim its attractive offers using small text in print and video ads. In addition to print and TV advertisements, Trophy also ran ads on its website, Facebook and Twitter. The dealership also ran print ads in a local Spanish-language newspaper, Al Dia.

Among the deceptive ads run by Trophy was one that misled consumers into thinking they could get out of their current loan or lease for only $1. The Commission’s complaint alleges the advertisement was deceptive since consumers could not get out of their loan or lease for that amount. In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan.

In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed it limited match refunds to no more than $1,000. The FTC alleges that Trophy failed to disclose adequately the additional terms.

As part of the proposed consent order, Trophy is prohibited from:

• misrepresenting it will pay off a consumers’ trade-in;
• misrepresenting material terms of any promotion or other incentive;
• misrepresenting the cost of leasing or purchasing a vehicle; and
• failing to clearly and conspicuously disclose material terms of a promotion or other incentive. 

The proposed consent order also requires Trophy to comply with CLA and Regulation M and TILA and Regulation Z.

The case is part of the Commission’s continued efforts to protect consumers in the auto marketplace. The FTC provides a variety of resources for consumers buying or leasing a vehicle, including Are Car Ads Taking You For A Ride?

The Commission vote to issue the administrative complaint and accept the proposed consent order was 5-0. The agreement is subject to public comment for 30 days, beginning today and continuing through Jan. 22, 2015, after which the Commission will decide whether to make the proposed consent order final. Submit a comment online or through the mail.

NOTE: The Commission issues administrative complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues consent orders on a final basis, they carry the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into the Consumer Sentinel Network, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Two companies that market skin care and weight-loss products must stop making false or unsubstantiated deceptive claims about their products, under settlements resolving charges in two separate cases brought by the Federal Trade Commission.

In one case, the FTC challenged ads for DermaTend, a skin cream that was promoted for do-it-yourself removal of moles, skin tags, and warts, as well as Lipidryl, a supplement promoted for weight loss. In the second case, the agency challenged claims for Photodynamic Therapy anti-aging lotions, as well Shrinking Beauty, a supposed body-slimming lotion.

The FTC settlements in both cases prohibit the defendants from misleading consumers about the efficacy of their products and about whether their claims are backed by scientific evidence. In addition, the marketers of DermaTend and Lipidryl are required to disclose when people promoting the products are paid for their endorsement.

“These companies made outrageous claims that their products could provide a range of benefits – from removing warts to decreasing the appearance of cellulite to providing substantial weight loss,” said Jessica Rich, Director of the Bureau of Consumer Protection. “The common thread for all of these claims was the fundamental lack of scientific evidence. Consumers deserve better.”

DermaTend and Lipidryl

Aaron Lilly, a Nevada-based marketer, owns and operates both Solace International, Inc. and Bioscience Research Institute LLC, which sell DermaTend and Lipidryl, respectively. DermaTend was advertised in SkyMall (both the magazine and website), as well as on Amazon.com and eBay, and through Google AdWords. It was also sold on company-owned websites and marketed through affiliates.

According to the FTC’s complaint, DermaTend contains the botanical bloodroot and zinc chloride. A 1.7 ounce container of the “Original” formula sells for $39.95, while a 3.4 ounce container of “Ultra” sells for $69.95. Consumers who bought DermaTend also received an emery board and instructions directing consumers to file down their mole, skin tag, or wart with the emery board before applying the product.

The complaint alleges that DermaTend ads made false or unsubstantiated claims that the product worked in a very short amount of time, caused little or no scarring, and was safe (even for children). They also touted a “97 percent success rate.” The FTC also alleges that DermaTend ads touted “real user results” supposedly showing before and after photos of consumers who had success using the products, and written testimonials, without disclosing that reviewers were sometimes paid for their stories.

Bioscience, Lilly’s other company, charged $129.99 for a three-month supply of Lipidryl, which contains African mango seed extract. The FTC complaint charges that ads for Lipidryl falsely claimed that the supplement was clinically proven to cause substantial weight loss (such as 28 pounds in 10 weeks) and reduce users’ waistlines.

The FTC’s settlement order with Lilly and his companies requires that future claims for DermaTend and other products promoted for removing skin lesions be supported by high-quality human clinical testing. Future claims for Lipidryl or other weight-loss products must be supported by at least two well-done human clinical studies.

The order prohibits the defendants from making a number of specific unsubstantiated representations; requires disclosure if endorsers are provided with compensation; and requires monitoring of affiliate marketers. The order also requires the defendants to pay $402,338 and to provide the Commission with the proceeds from the sale of four homes in Texas.

DERMAdoctor, Inc.

According to the FTC’s complaint, DERMADoctor, Inc. and its majority owner, Audrey Kunin, M.D., violated the FTC Act by making deceptive claims about their anti-aging products and a body-slimming lotion. DERMAdoctor is based in Missouri and marketed Photodynamic Therapy Liquid Red Light Anti-Aging Lotion and Photodynamic Therapy Liquid Red Light Eye Lift Lotion, as well Shrinking Beauty, a “firming, sculpting & toning lotion with lobster weight loss inspired technology.”

The complaint states that since October 2010, the defendants have marketed and sold Photodynamic Therapy lotion with extract of the noni fruit, which was promoted as able to capture UV light and transform it into visible red light that has purported anti-aging effects on the skin. The defendants charged $85 for a one-ounce bottle of the face lotion. DERMAdoctor products are sold in retailers such as Nordstrom, Sephora, and Ulta, and according to the FTC, Photodynamic Therapy was advertised on QVC, the DERMAdoctor website, and in women’s magazines, including Cosmopolitan and Shape.

Since December 2012, the defendants also have marketed and sold Shrinking Beauty, with a retail price of $58 for a 5.5-ounce tube. Through ads in magazines such as Health and on the DERMAdoctor website, the defendants claimed the product would improve the appearance of cellulite, smooth and tighten skin, and that the results were “clinically proven to reduce measurements up to one inch in two weeks.”

The proposed settlement order with DERMAdoctor requires that the defendants have competent and reliable scientific evidence to support future anti-aging and cellulite-reduction claims, as well as at least two randomized, double-blind, placebo-controlled human clinical studies to support claims relating to weight loss or reduction of body size. It also prohibits them from misrepresenting the existence or results of any scientific test, study or research. The order requires payment of $12,675.

The Commission votes approving the complaints and proposed stipulated orders in both cases were 5-0. The complaint and proposed order in the Lilly case were filed in the U.S. District Court for the District of Nevada on December 10, 2014 and signed by the judge the next day The complaint and proposed order in the DERMAdoctor case were filed in the U.S. District Court for the Western District of Missouri, Western Division, on December 23, 2014.

In the course of its investigation into Solace International and Bioscience Research Institute, the FTC worked with the U.S. Food and Drug Administration (FDA), which issued a warning letter to Solace regarding its marketing of DermaTend, and law enforcers in 10 California counties. The National Advertising Division of the Better Business Bureaus referred this matter to the Commission.

Information for Consumers

When it comes to treatments for health and fitness, it can be tough to tell useful products and services from those that don’t work or aren’t safe. For more information, see the FTC’s guidance on Treatments & Cures and Weight Loss & Fitness.

The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.