In the Matter of the Complaint Against AMA-TOL INDUSTRIES AMA-TOL INDUSTRIES, INC. P. O. Box 35, Rugby Station at Brooklyn, New York 11203 P.O.D. Docket No. 2/266; APPEARANCES: For the Complainant: Abraham Levine, Esq. Office of the General Counsel Post Office Department Washington, D.C. 20260 For the Respondent: Solomon H. Friend, Esq. Sheldon S. Lustigman, Esq. Messrs. Bass & Friend 342 Madison Avenue New York, New York 10017
By complaint filed July 14, 1967 the General Counsel of the Post Office Department (the Complainant) charged that the Respondent, Ama-Tol Industries, Inc., is engaged in a fraudulent scheme in violation of 39 U.S.C. § 4005. The Respondent denied the essential elements of the complaint and the matter went to hearing before a Department Hearing Examiner in several sessions, beginning on October 17, 1967 and ending on January 18, 1968. The Hearing Examiner's Initial Decision, filed May 21, 1968, upheld the contentions of the complaint and recommended that a fraud order issue against the Respondent.
On June 17, 1968 the Respondent appealed the Initial Decision to the Judicial Officer, and the Complainant filed its answering brief on June 27, 1968.
The complaint charges the Respondent with obtaining remittances of money through the mails by means of false and fraudulent pretenses, representations and promises, in that the advertisements annexed to the compliant (hereinafter the "Advertisements") allegedly make the following false and fraudulent claims* for Respondent's product, "Ama-Tol" (hereinafter the ("Product"):
A. The Product constitutes an effective means for overcoming, treating and/or curing obesity.
B. By sole use of and reliance upon the Product "any MAN or WOMAN in normal health" will effectively overcome, treat and/or cure obesity.
C. By the sole use of and reliance upon the Product any man or woman in normal health will experience definite weight losses ranging from 10 to 50 and even 100 pounds in a very short space of item.
D. In claiming that "NOW] At last YOU can LOSE 5 - 10 - 20 or even 50 pounds of excess weight WITHOUT STARVATION DIETS, CALORIE COUNTING, EXERCISING, REDUCING FADS, AND THE LIKE" the Respondent represented that the Product is a recent discovery and that an
* These claims, designated "(3)a" through "(3)i" in the complaint, are set forth directly below and are hereinafter referred to as Claims "A" through "I".
obese person, relying solely upon the use of its ingredients, will effectively overcome, treat and/or cure obesity without need for caloric restriction, will-power, dietary regimens or reorientation of eating habits.
E. By use of the Product an obese person could lose ". . . 54 pounds of . . . fat] . . . IN ONLY 3 SHORT MONTHS]]"
F. The Product "has had favorable reviews and reports in LEADING PUBLICATIONS throughout the world . . ." as an effective means for overcoming, treating and/or curing obesity without the need for caloric restriction, dieting, exercise of will-power or reorientation of eating habits.
G. Any obese person in normal health may freely indulge in such foods as "SPAGHETTI", FRENCH TOAST", "PIZZA", "mALTED MILKS", "CREAM OF MUSHROOM SOUP", and other high caloric foods commonly consumed by overweight persons, and manage to lose substantial amounts of weight in very short periods of time, by the use of the Product.
H. All the obese person needs to do is "to take 3 capsules a day . . . one in the morning before breakfast . . . one before lunch . . . and a capsule before dinner following the enclosed directions. AND THAT'S ALL. 'AMA-TOL' DID THE REST." . . . "AMA-TOL" formula "seemed to soak up the fat as 10 - 25 - 50 pounds melted away".
I. The obese person who tries "this sensational 'AMA-TOL' formula":
(i) ". . . MUST see definite results by the loss of pounds and inches";
(ii) ". . . MUST achieve a slimmer, more attractive appearance";
(iii) ". . . MUST feel and look better";
(iv) Will achieve unbelievable results in 30 days.
The Complainant's case was presented through five witnesses and numerous exhibits. It was established that the Product consists of various types of vitamins, 5.8 mg. of the anesthetic benzocaine, and 750.8 mg. of sodium carboxymethylcellulose (SCM) which absorbs fluid to form a bulk in the intestines. The most significant testimony was given by Dr. Sam W. Kalb, who qualified as an expert on the nature and treatment of obesity. Dr. Kalb testified, essentially, that the Product's ingredients, neither separately nor acting together, would of themselves justify the Advertisements' claims or cause the user to experience significant weight loss. The testimony of the Complainant's other experts all supported this view and established jurisdiction.
The Respondent's only witness was a medical doctor named Frederick B. Bohensky, whose testimony generally supported the limited proposition that the Product alone, taken 3 times daily before meals as directed, would cause the user to eat less at mealtimes than he would otherwise, and that he would therefore presumably lose weight. Dr. Bohensky declined to affirm that specific results could be anticipated and stated that the user could eat the normally fattening foods listed in the
advertising and still lose weight only if those foods were prepared in accordance with special dietetic recipes.
The gist of the Hearing Examiner's Initial Decision appears in his statement on page 8 that: ". . . the contradiction between what is said by the Respondent in the advertisement and what is received by the remitter is so sharp and so clear as to make patent the Respondent's intent to deceive without the necessity for further proof."
The Initial Decision eschews detailed analysis of the 918 transcript pages of testimony, much of which bears little on the single issue raised by the complaint--whether the materials which the Respondent sends to its remitters fulfill the expectations legitimately aroused by the Advertisements and, if not, whether the Respondent intended its advertising claims to deceive. The Initial Decision, referring to only so much of the record as sufficed to support its conclusion, found that the Respondent made the claims charged in the compliant and that they are both false and fraudulent.
The Respondent's appeal assigned the following six errors to the Initial Decision:
1. The Initial Decision is defective and violative of the Administrative Procedure Act and the Rules of Practice of the Post Office Department in that the purported "findings of fact" set forth on page 9 thereof are not supported by any reasons or bases whatever.
2. The Respondent was deprived of a fair hearing by lack of adequate notice of certain issues raised, sua sponte, by the Initial Decision after the close of all proceedings and without reference to the complaint.
3. (a) The Initial Decision is unsupported by substantial evidence, in that it fails to determine whether the Product is effective in producing weight loss.
(b) The Initial Decision establishes the existence of a difference of medical opinion concerning the efficacy of the Product and is therefore insufficient, as a matter of law, to support a fraud order.
4. The failure of the Advertisements to clearly disclose the existence of an accompanying diet plan is immaterial and insufficient to support the issuance of a fraud order.
5. Sale of the Product with a money-back guarantee precludes the issuance of a fraud order.
6. The cases cited by the Hearing Examiner are inapposite.
The Respondent's presentation at the hearing and on appeal evades the main point of the complaint--namely, that there is a wide gap between the Respondent's exuberant advertising claims on the one hand, and the Product's maximum provable efficacy on the other. The hearing was dominated by an exploration of the more fundamental i8issue of whether the Product is totally ineffective, which goes far beyond the requirements of this proceeding. I am satisfied that the Complainant has amply proven the more limited case made out by the complaint.
I find, firstly, that the Advertisements make the several claims (A through I) attributed to them by the complaint.
I am further satisfied by the exhibits, by the strong evidence presented by the Complainant's experts, and by the limited and qualified testimony of the Respondent's own witness that those claims are false.
One need not challenge the scientific validity of the Respondent's expert evidence to find that Claims A and B are false. Thus, for example, the directions require that one unit of the Product be consumed three times daily before each meal. The Respondent's own witness claimed no more than that one or the other of the two active ingredients would be effective for a relatively brief period during and possibly after the ensuing meals. At best this would do no more than begin to meet the obese person's eating problem (even if both ingredients are effective) which persists throughout his waking hours and is not confined to the normal three daily mealtimes (Transcript, pp. 550-6, 674-7).
It is likewise uncontested that the Product's effectiveness, such as it may be, is limited, in the words of the label on the Ama-Tol bottle, to "an aid to decreasing the desire for food" (emphasis supplied). It is not, as the Advertisements clearly suggest, a formulation which causes the user to lose weight by direct action of its own chemical properties. It merely supplements the will-power normally required to reduce. Even the Respondent's expert witness proved evasive when asked whether he would endorse the bombastic promises of specific weight losses advanced in Claims C, D, E, H and I. His highly qualified
responses were quite insufficient to support these representations (Transcript, pp. 508-10, 655-7, 660-5).
Claims B, C, D, F. and H represent that the promised results will be achieved by reliance solely on the use of the Product. The Complainant therefore contends that the accuracy of the Advertisements should be assessed against the efficacy of the Product alone, without reference to the results obtainable by the remitters' adherence to certain instructions which the Respondent sends out with the Product. These instructions, captioned "'Ama-Tol' Plan," are to be "used in combination with 'Ama-Tol' capsules herewith enclosed" and require the remitter to "Eat only foods that are listed on these pages and give careful consideration to the amounts consumed over extended periods." They mandate a restrictive diet and set forth low-calorie recipes for certain foods, of which I shall have more to say later. I agree with the Complainant's view and find that the average reader is entitled to conclude that the Advertisements' promises are attainable through use of the advertised Product alone, rather than through Product in association with the diet instructions.
In light of this practice, I find Claim D, that specific weight losses are attainable "WITHOUT STARVATION DIETS, CALORIE COUNTING, EXERCISING, REDUCING FADS, AND THE LIKE," a particularly flagrant deception. While its diet plan does not technically involve any of these (calories are not mentioned in the instructions), the wording of the Advertisements is calculated to reinforce the false impression that use of the Product alone will cause the promised loss of weight.
The Advertisements contain a few oblique references which one might be able to link with the diet plan set forth in the instructions if one were forearmed with a knowledge of the Respondent's system. Thus the references to "My amazing method" and "THE FORMULATED PLAN OF 'AMA-TOL'" are presumably intended to cover the combined use of the Product and diet plan. However the Advertisements' studied confusion of the words "method" and "formulated plan," with "formula" and "formulation" which are used to refer to the Product alone, is ample proof that the references to the diet plan were carefully designed to conceal its existence without, technically, misstating.
Claim F proclaims that there have been favorable reviews and reports of the Product's efficacy in "leading publications throughout the world." In fact there have been no reviews, not even unfavorable ones. The Respondent was able to produce no more than few reports commenting favorably upon one or the other of the Product's two principal ingredients--benzocaine and SCM.
Claim G represents that the remitter may freely indulge in such normally high-calorie foods as spaghetti and malted milks and still lose much weight quickly by using the Product. The Respondent contends that its low-calorie recipes for the indicated foods, set forth in the instructions which accompany the Product, support the claim. I find that since the crucial low-calorie recipe qualification does not appear anywhere in the Advertisements, the claim is false. The average reader is entitled to assume that the Advertisements refer to the named foods, prepared in the usual and customary manner.
The proven falsity of any one of the Respondent's claims A through I, would be a sufficiently significant fact to contaminate the Advertisements entirely. However I find that each and every one of the claims cited by the complaint is false.
They are also fraudulent. Each is supported by a partial truth which is nullified by a vital, withheld qualification--a certain indicator of the Respondent's intent to deceive. The Advertisements constitute a tissue of thinly veiled misrepresentation, obfuscation and duplicity. "The artful wording ot the advertisements" is such as to give rise to an inference of intent to deceive, even though it avoids express misrepresentations Borg Johnson Electronics, Inc. v. Christenberry (S.D.N.Y. 1959) 169 F.Supp. 746, 751 .
A number of other points raised by the Respondent require comment.
In the first of the errors assigned to the Initial Decision the Respondent charges that the findings of fact are not supported by any reasons or bases (supra, p. 6). The Hearing Examiner found, firstly, that the Respondent made the representations charged in the complaint, and that they would be understood by the average reader as claims that the Product is "an effective preparation by means of which users could achieve significant loss of weight without dieting" (Initial Decision, pp. 3-4). Secondly, the Examiner found that the gist of the Advertisements--that the Product is effective without a diet--is refuted by facts upon which the expert witnesses for both parties agreed and by the unheralded
enclosure of a diet plan along with the Product (Initial Decision, pp. 4-6). Finally, the Examiner found that the "contradiction" between promise and delivery is so "sharp and so clear" as to expose the Respondent's fraudulency (Initial Decision, p. 8).
In other words, the Initial Decision held that undisputed evidence abundantly proved the falsity of the Advertisements' claims, and the incontestable contrast between what was promised and that which was delivered amply proved deceit. The Examiner was therefore not required to explore the disputed evidence in order to find both falsity and fraudulency. This opinion attests to my agreement with the Hearing Examiner's reasoning and my consequent rejection of the Respondent's first assigned error.
The Respondent next contends (supra, p. 6) that it was deprived of a fair hearing by lack of adequate notice that the Hearing Examiner would, sua sponte, raise a new issue--namely, "that it is false and fraudulent to sell any weight reducing preparation without the purchaser first consulting a physician and without prescribing an individualized weight reducing regimen" (Brief, pp. 9-10). The Initial Decision records no such finding. The Hearing Examiner did observe that the expert witnesses for both parties were able to agree on certain important points such as that 1) obese patients should consult with a physician before embarking on a weight-reducing program, 2) weight reducing regiments should be individualized, and 3) a weight-reducing preparation's degree of success is unpredictable in advance because of varied individual reactions (Initial Decision, p. 5). This agreement of the experts, he said, indicated "the fallacy of offering, as the Respondent does, a product to be taken uniformly by everyone who is obese upon
the assurance that a loss of weight will surely result" (p. 5). The Hearing Examiner's point was that the Advertisements' essentially unqualified promises were given the lie by facts upon which the experts agreed and that there was consequently no need to explore the areas of disagreement among them. I fully agree.
Finally, the Respondent argues that the sale of the Product with a money-back guarantee precludes the issuance of a fraud order (supra, p. 7). The presence of a guarantee is merely one item of evidence which may or may not negative fraudulent intent (see The Arzana Co., Inc., P.O.D. Docket No. 2/277, September 20, 1968, and decisions cited therein). In this case the guarantee is so unconditional and presents such an aspect of screaming hard-sell as to constitute one more element in the misrepresentation itself. The guarantee's claims were even cited as a specific charge in the complaint (Claim I).
In short, I find that the Respondent's activities complained of constitute a fraudulent scheme violating 39 U.S.C. § 4005. A fraud order will, accordingly, issue against the Respondent forthwith.
11/01/68
Rosenblatt, Peter R.