Meanwhile, I've become a spokesperson for the Ab-roller

If you get the reference in the post title, you are a geek after my own heart.

Telebrands Corp. v. Federal Trade Commission, --- F.3d ----, 2006 WL 2243584 (4th Cir.)

Telebrands uses direct-response ads to promote its “compare and save” strategy – it finds popular items it can copy and sell cost-effectively. Some of Telebrands's more successful products include Ambervision Sunglasses, the Magic Hanger, the Safety Can Opener, the Audubon Singing Bird Clock, the Better Pasta Pot and the Roll-a-Hose Flat Hose.

Using this strategy, Telebrands introduced the Ab Force, an electronic muscle stimulation ("EMS") abdominal belt, in December 2001. EMS belts use electrical signals to cause the abdominal muscles to contract and release involuntarily. You can see the Ab Force in use in the first two pictures at this fairly creepy site.

Telebrands was copying other EMS belts, which were sold through infomercials as easy ways to lose weight, fat, and inches, and to gain abdominal muscle, without the need to exercise. Telebrands didn’t make any such express claims, but implicitly did so by encouraging comparison to those competing products. For example, Ab Force advertisements referenced "those fantastic electronic ab belt infomercials on TV." Other ads described abdominal belts as "the latest fitness craze to sweep the country," and a radio ad pointed out that the other belts "promis[e] to get our abs into great shape fast--without exercise." Naturally, the ads showed fit, well-muscled models using the Ab Force.

The FTC issued an administrative complaint alleging that Telebrands had made false and misleading claims in violation of the FTCA, specifically, unsubstantiated claims that the Ab Force caused loss of weight, inches or fat, caused well-defined abdominal muscles, and was an effective alternative to regular exercise.

An administrative law judge found that Telebrands had made the claims alleged and that the claims were material to consumers. Furthermore, the parties stipulated that Telebrands neither possessed nor relied on substantiation of the alleged claims, and that, in fact, the use of the Ab Force did not result in the claimed benefits.

The FTC imposed a “fencing-in” remedy barring Telebrands from making any representation, express or implied, about weight, muscle, health, safety, performance, or efficacy in relation to “Ab Force, any other EMS device, or any food, drug, dietary supplement, device, or any other product, service or program,” without substantiation. Telebrands sought to have the order narrowed on the ground that there was no reasonable relation between the fencing-in provision and Telebrand’s violation of the law. The seriousness and deliberateness of the violation, the ease with which a violative claim may be transferred to other products, and a respondent’s history of prior violations are the three factors the FTC considers for whether an order’s scope bears a reasonable relationship to the violation it’s supposed to remedy. Telebrands challenged the FTC’s findings that Telebrands intended to make false claims, that its implied advertising claims were transferable to other product advertising, and that its entry into three prior consent orders for unrelated alleged violations on other products constitutes a history of prior violations.

The court found the violation serious. This wasn’t just overselling a product that was essentially fit for the advertised purpose. Rather, without substantiation, Telebrands mounted an expensive, nationwide ad campaign claiming that the Ab Force could deliver results that it just couldn’t. And it was successful: Telebrands sold 747,000 units with gross sales over $19 million.

The court also found substantial evidence of deliberateness. Telebrands’s use of “compare and save,” given its extensive experience with direct-response ads in general and with the “compare and save” strategy in particular, prevents any suggestion that it acted unintentionally. It wanted to capitalize on the popularity of existing EMS belts, which its ads called “fantastic.” It knew the ads for those products, to which its own ads referred, made claims that the devices would cause people to lose weight and fat and develop muscle without exercise. The idea that Telebrands didn’t intend for consumers to believe that the Ab Force did the same things “strains credulity,” and its choice of visual images “calculatedly fostered” such beliefs. Its ads also called the Ab Force “just as powerful and effective” as the EMS belts sold in infomercials. Given that the ads lacked any explicitly identified purpose for using the Ab Force, consumers had to infer the benefit associated with that power and effectiveness.

The second factor is the transferability of the offending conduct to other products. As with the first factor, substantial evidence supported the FTC’s finding of transferability. The marketing strategy for the Ab Force can be applied to almost any kind of product or service. Telebrands seeks out heavily advertised products to imitate. “Compare and save” is one of Telebrands’s standard marketing tools, and unsubstantiated benefit claims can easily be evoked by reference to other products combined visual images.

The FTC concluded that the first two factors were enough to justify a broad fencing-in order, but still considered Telebrands’s entry into three prior consent orders, even though it had never admitted liability, as support under the third factor. Because the court agreed that the strength of the first two factors was enough, it didn’t reach the issue of whether this was legal error.