FTC Victory Against “Ionized” Bracelet Marketers Upheld

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Marketers of the “Q-Ray Ionized Bracelet” violated the FTC Act by claiming that tests proved the therapeutic claims they made about the product, the U.S. Court of Appeals in Chicago has decided. An order barring the marketers from making most of their old claims for the bracelet's efficacy and requiring them to pay $16 million into a fund for consumer redress (2006-2 CCH Trade Cases ¶75,424) was affirmed.

The appellate court ruled that it was not clear error or an abuse of discretion to conclude that the defendants set out to bilk unsophisticated persons who found themselves in pain from arthritis and other chronic conditions. The marketers' claims that the bracelet enhanced the flow of bio-energy and other therapeutic claims were “blather,” according to the court.

The statement that the bracelet's efficacy had been test-proven was misleading because the tests the marketers relied on were “bunk.” The marketers did not have to conduct placebo-controlled, double-blind studies, the court explained. However, they offered no proof of the bracelet's efficacy.

Placebo Effect?

The marketers unsuccessfully argued that a placebo effect of the bracelet vindicated their claims. Even if the bracelet had caused a placebo effect among users, the claims would have violated the Federal Trade Commission Act, which condemns material falsehoods in promoting consumer products and lacks an exception for “beneficial deceit.”

The court noted that the possibility that a vague claim—along the lines of “this bracelet will reduce your pain without the side effects of drugs”—could be rendered true by the placebo effect. But the defendants advanced claims beyond those that could be supported by a placebo effect. They made statements that “they knew to be poppycock.”

Remedies

The defendants questioned the proof offered by the FTC with respect to the remedy. However, the FTC produced a reasonable estimate, and the defendants had the burden of showing that the estimate was inaccurate. The defendants also complained that the lower court failed to separate ill-gotten gains from legitimate profits; however, they offered no reason to believe that any of their profits were legitimate.

Money-Back Guarantee

The appellate court also rejected the marketers' objection to a requirement that they refund the purchase price to anyone who bought from their Web sites and returned the merchandise within 30 days. The defendants honored a 30-day money-back guarantee made in their infomercials for consumers who purchased by telephone but not for those who purchased bracelets from their Web sites.

Internet purchasers were allowed only 10 days to return their bracelets. The Web sites disclosed the 10-day refund period; however, the disclosure of this shorter period was buried several clicks away in the Web site and the infomercials suggested that customers purchase online.

Details of the January 3, 2008, decision in FTC v. QT, Inc, No. 07-1662, will appear in the CCH Trade Regulation Reporter.