FTC Settlement in Baldness Remedy Case
Nets $1.875 Million Payment
Agreement Also Would Require Advertising Disclosures
FTC News Release
June 23, 1992
The Reno, Nevada-based marketer of the “New Generation” line of hair products has agreed to pay $1.875 million to settle Federal Trade Commission allegations that it falsely claimed its products would prevent hair loss and stimulate hair regrowth in persons with male pattern baldness. The proposed settlement agreement also would prohibit California Pacific Research, Inc., from making such claims in the future and require the company to disclose in all ads and sales pitches that New Generation and similar products in fact will not prevent hair loss or promote hair growth.
Male pattern baldness is an inherited predisposition affecting up to 80 percent of the male population in the United States. The FTC first filed suit against California Pacific and its owner, Robert E. Murphy, Jr., in November 1988. The New Generation package consists of a shampoo, a cleanser/conditioner, and the Ilona Schreck-Purola MD Exclusive Overnight Formula. The products contain polysorbate-60, the purported active ingredient, which is a commonly used cleansing ingredient in detergents and also is used as a preservative in foods. At the time the FTC filed suit, the package sold for $49.95 and had been advertised on local and cable television stations in a 30-minute talk-show called “The Fred Lewis Show.” Consumers ordered the products by calling an 800 number shown during the commercial.
Last August, the late Judge Bruce R. Thompson of the US District Court in Nevada issued a final judgment finding in favor of the FTC. He noted that the claims made by the defendants were not cosmetic claims, such as claims that the products may make your hair look fuller. Rather, he said they were medical or drug claims and, thus, required scientific validation. The Food and Drug Administration, he wrote, has determined that baldness remedy claims for non-prescription products like New Generation are either false, misleading or unsupported by scientific data. Judge Thompson ordered the defendants to pay $2 million to the FTC and permanently banned them from selling any New Generation products. California Pacific appealed. The proposed settlement being announced today, if approved by the court, would end the litigation.
The proposed settlement would not continue the ban on the sale of New Generation products, but it would ban the challenged claims and require California Pacific and Murphy to disclose in every advertisement, telephone sales pitch, and all promotional materials that New Generation — or similar products that are not approved by the FDA for these purposes — will not prevent hair loss or grow new hair. The settlement would require disclosures in television commercials to appear both orally and visually and, for commercials longer than 15 minutes, both in the first 30 seconds and immediately before any ordering instructions are given.
The $1.875 million already has been deposited with the Commission. If the court approves the settlement, the Commission will determine whether issuing consumer refunds is practical. If not, the funds will be paid to the US Treasury.
The proposed final judgment was filed in US District Court for the District of Nevada, in Reno, on June 22.
- Civil Action No. CV-N-88-602 (District of Nevada). FTC Matter No. X89-0013. FTC File No. 882-3167.
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This page was posted on August 27, 2006.