In the Matter of the Complaint Against

 NATURE'S HARVEST, INC.,
 95M South Hoffman Lane at
 Central Islip, NY 11722

 P.S. Docket No. 10/120
 
 May 11, 1981
 
 Edwin S. Bernstein Administrative Law Judge

 APPEARANCES FOR COMPLAINANT:
 Hilda Rosenberg, Esq.
 Sandra C. McFeeley, Esq.
 Law Department
 Consumer Protection Division
 United States Postal Service
 Washington, D.C.  20260

 APPEARANCE FOR RESPONDENT:
 Fred M. Schwartz, Esq.
 420 Jericho Turnpike
 Jericho, NY 11753

 BEFORE: Judge Edwin S. Bernstein

The Complaint alleged that Respondent is engaged in conducting a scheme to obtain money through the mail by means of false representa- tions in violation of 39 U.S.C. 3005. When Respondent failed to appear at the April 8, 1981 hearing, I received Complainant's evidence and made the following bench decision at the hearing:

This is my decision from the bench. In Docket Number 10/120, in the Complaint filed on February 18, 1981, the Postal Service alleged that Respondent, Nature's Harvest, Inc., was engaged in conducting a scheme to obtain money through the mail by means of false representations in violation of 39 U.S.C. 3005.

Respondent generally denied each and every allegation contained in the Complaint in its Answer that was filed on March 10, 1981. By Notice of Answer and Hearing served upon Respondent by certified mail on February 23, 1981, the hearing in this case was scheduled for today, April 8, 1981, at 10:00 a.m. in this location.

Respondent failed to appear for the hearing. Therefore, Respondent has defaulted as described in Rule 11 of the Rules that govern these proceedings, 39 C.F.R. 952.11(b).

Additionally, I granted Complainant's application for production of documents and its amendment of that application by an Order dated March 23, 1981, and an Amended Order dated March 27, 1981. Both the Order and the Amended Order were served upon Respondent's counsel, Fred M. Schwartz, Esq. When Respondent failed to appear at this hearing, I heard and received Complainant's evidence.

This consisted of the testimony of Mr. Gilbert Lee Barta and Dr. Peter N. Horvath. Mr. Barta is an inspector with the Investigations Bureau of the Postal Services' Inspection Service. Another inspector, Mr. DuPilka, began the investigation of the product in question.

The advertisement contained in Complainant's Exhibit 1 had been received by the Postal Service in connection with its order of a different product from a firm other than Respondent. The Postal Service decided to make a test purchase of the product in question, Bio-Gro Hair Renewal Gel. Using a fictitious name, T. R. Thomas, the Postal Service completed the order application contained at the lower righthand corner of Exhibit 2a and mailed the money order contained at 2c in the envelope photocopied as Exhibit 2d to Respondent.

It received the product and prepared a transcript of the product label which is set forth in exhibit 3. Mr. Barta testified that that exhibit was an accurate transcript of the label found on the product which the Postal Service obtained in its test purchase.

Dr. Horvath is a board-certified dermatologist. His excellent credentials include teaching positions at Georgetown University Medical School, Walter Reed Army General Hospital, and the United States Naval Hospital at Bethesda, Maryland. His testimony demonstrated expertise in the field of hair growth problems and hair retention problems.

He testified that there is no safe or effective treatment for male pattern baldness or hair loss. The primary cause of hair loss is predisposition or inherited or genetic factors. This is male pattern baldness. He stated that science has developed no cure for male pattern baldness and no way to restore hair that is lost as a result.

He testified that baldness also can be temporary. Temporary baldness can be caused by such things as pregnancy, fever, nervousness, types of syphilis, and alopecia areata. Where baldness is temporary, hair will subsequently resume growth on its own.

His testimony is that there was no product known which will affect either temporary or permanent loss of hair. Dr. Horvath analyzed the ingredients listed in Exhibit 3, the transcript of Respondent's product label. He stated that none of these ingredients have any effect in reducing baldness, in restoring hair that is permanently lost or making hair grow.

His testimony applied to the ingredients individually as well as in combination. He stated that this conclusion is based upon his personal knowledge of the field and his review of peer literature. Such developments would be well known in a short period of time, and certainly Dr. Horvath would know of them given his expertise and the fact that he keeps current with developments in peer literature.

Specifically with respect to the ingredient Biotin, Dr. Horvath stated that in 20 to 25 years that Biotin has been known, there are between three and ten reported cases in which a Biotin deficiency could cause hair loss. This covers the entire world.

Similarly, with respect to Vitamin A, there are perhaps 25 to 30 cases of effects on hair of Vitamin A deficiencies during the approximately 50 years that Vitamin A has been known and investigated.

Dr. Horvath also examined the writings of Dr. Kai Setala, a Finnish doctor mentioned in the paragraph at the lower lefthand corner of Respondent's advertisement, Exhibit 1. Dr. Horvath found only two writings of Dr. Setala to be relevant. The first was an article written in 1974; the second was an article written in 1978.

The 1974 paper did not mention any ingredient contained in Respondent's product. The 1978 paper referred to a study which began with a test sample of 24 people and ended testing with but 11 of these. One of the ingredients of Respondent's product, Polysorbate, was tested. The Polysorbate that Dr. Setala tested was Polysorbate 60, which was somewhat similar to Polysorbate 20 contained in Bio-Gro Hair Renewal Gel.

Dr. Horvath was not impressed with the study and did not feel that it proved that Polysorbate helped the growth of hair. He noted that the test group was arbitrarily reduced from 24 to 11 subjects; and that the study was based upon a false premise which was that cholesterol increased testosterone production and that if you removed cholesterol from the scalp it would help baldness. And Dr. Horvath also found some sloppiness in connection with statistics in the study. For example, a 19-year-old patient was described as being bald for 24 years.

Complainant also introduced into evidence a set of six exhibits. Upon consideration of Complainant's evidence, I make the following findings of fact and conclusions of law.

I find that as alleged in the Complaint, Respondent, Nature's Harvest, Inc., is engaged in conducting a scheme or device to obtain money or property through the mails by means of false representations in violation of 39 U.S.C. 3005.

First, Respondent has defaulted in appearing and has presented no evidence. Additionally, Respondent has not produced the documents in Appendix A to my Order dated March 23, 1981. Rule 21(j) of the Rules governing these proceedings states, "Failure of a party to comply with an order pursuant to this rule may result in the presiding officer's" inferring "from the disobedient party's failure to comply with the order that the facts to which the order related would, if produced or admitted, be adverse to such party's interests."

In addition to the fact that Respondent has defaulted in appearing at the hearing and defaulted in complying with the Order to Produce the documents specified, I find that upon a review of Complainant's evidence that Complainant has proved its case in a persuasive fashion.

Inspector Barta's testimony proved that Respondent utilizes the mails in connection with the sale of Bio-Gro Hair Renewal Gel. The lower righthand corner of Complainant's Exhibit 1 contains a coupon which contemplates mailing of that coupon to obtain the product. The heading on the coupon reads "SATISFACTION GUARANTEED - MAIL TODAY." There are references to postage in the coupon.

Under the name T. R. Thomas, which is fictitious, the Postal Service inspectors ordered the product by filling out the coupon and enclosing the coupon together with a postal money order in an envelope addressed to Respondent at the address contained in the caption on this case. The product was sent to the inspectors by mail.

It is also obvious that the Respondent's advertisements make the representations alleged in subparagraphs 3(a) through 3(e) of the Complaint.

Upon motion by Complainant's counsel at the hearing, subparagraph 3(f) was dismissed from the Complaint.

Complainant's Exhibit 2a, the advertisement, substantiates the contentions in paragraph 3(a) of the Complaint that Bio-Gro Hair Renewal Gel "will reduce hair loss, produce normal hair growth and actually restore hair, no matter what causes the excessive hair loss, baldness, or other problems prompting its use." The heading of the advertisement reads, "Why Be Bald? NOW...AT LAST...ACTUALLY GRO HAIR]" The first full paragraph reads, "Reduces Fallout, Fights 'Male pattern Baldness.'" The second paragraph reads "Encourages normal growth, reduces fallout, and fights 'male pattern baldness.' Users report gratifying results, even in so-called 'hopeless' cases...real, honest-to-goodness hair growth in just 6 to 8 weeks."

Similarly, the ad substantiates the allegations in subparagraph (b). That paragraph alleges that Respondent represented that "Bio-Grow 'fights male pattern baldness' and restores hair regardless of the degree of hair loss the individual has already experienced."

Paragraph 3(c) of the Complaint alleges that "Bio-Gro has been scientifically proven as an effective treatment for excessive hair loss, baldness and other scalp problems and has proved successful for at least 80 percent of all users." That is the representation that allegedly is made by Respondent. The ad refers to a "success rate of 80 percent." It refers to a "doctor-proven formula." There is a reference to "(t)his exciting hair renewal method was discovered by famed Dr. Kai Setala of Finland. It has since been tested in European medical centers." The heading "Fabulous Scientific Breakthrough" also supports that allegation in the Complaint.

In paragraph 3(d) of the Complaint, Complainant alleged that Respondent represented that "Biotin as contained in Bio-Gro when topically applied is an effective remedy for baldness and excessive hair loss." That too is substantiated by the ad which includes the language, "Contains Miracle Biotin (Vitamin H) Doctor-Proven Formula." And in the last paragraph in the lefthand column, "We provide the formula in a pleasant, easy-to-use gel containing Biotin, the amazing 'Vitamin H'." Additionally, the last paragraph in the center column refers to the "Biotin system."

The evidence also substantiates the allegation contained in paragraph (e) of the Complaint that Respondent has represented that "vitamins and panthenol in Bio-Gro will nourish the hair follicles, hair and scalp." Illustrative of the ad's language in support of this allegation is a line --beginning in the last paragraph on the lefthand side - which reads, "But that's not all --it's jam-packed with nutrients known to healthify hair and scalp --Vitamins A, D, E, and Panthenol."

I further find that the representations made by Respondent as alleged in the Complaint are material and are false. I find believable the testimony of Dr. Horvath that there is no known cure for baldness and there is no known ingredient which will produce hair growth and restore permanently lost hair. I also credit his testimony that hair temporarily lost will be restored when the body is ready to restore that hair and that there is no ingredient which will accelerate that restoration process.

I further credit his testimony that rubbing vitamins into the scalp would have no beneficial effect. Dr. Horvath has testified that there is no ingredient contained in Respondent's product which would have a beneficial effect upon hair growth, with the exception of Biotin and Vitamin A in a minute number of cases.

Dr. Horvath testified that there are perhaps three to ten known cases of hair loss due to Biotin deficiency in the more than 20 years that the nutrient has been known and tested in the entire world and that there are perhaps 25 to 30 cases in which Vitamin A deficiency has affected hair loss in the approximately 50 years that Vitamin A has been known and tested. And this covers the entire world.

I also was impressed by Dr. Horvath's testimony with regard to Dr. Kai Setala's studies as applied to his product and its ingredients. The only study which may have application was a study reported by Dr. Setala in the 1978 paper. The only ingredient discussed in the paper contained in Respondent's product was Polysorbate. There was some indication that Polysorbate was helpful to hair growth on the part of Dr. Setala.

However, for the reasons given by Dr. Horvath, I find that that study is far from conclusive. As indicated, the test sample was 24 people, a number that Dr. Horvath testified was small. That sample was arbitrarily reduced from 24 to 11 individuals. The reasons for the reduction were not quite clear. Dr. Horvath stated that one reason given was that "they did not fit into the study." The study was also based upon a false premise that cholesterol increases testosterone and that reduction of cholesterol in the scalp can have a beneficial effect upon hair loss. And there was also some sloppiness in connection with the tables of the study, as Dr. Horvath testified. A 19-year-old patient was reported as being bald for 24 years. Such errors in a sampling this small undercut the credibility of the study.

Dr. Horvath's conclusions were corroborated in some respects by Complainant's Exhibit 6, which is a report on Hair Grower and Hair Loss Prevention Products of the Advisory Review Panel on OTC Miscellaneous External Drug Products, contained in the Federal Register at Volume 45, Number 218, on November 7, 1980, as a proposed rule of the Food and Drug Administration.

Dr. Horvath testified that he knows many of the individuals on the Panel and he knows of the reputation of the individuals on the Panel and that he finds those individuals to be highly expert in the field of hair growth evaluation. I accept his conclusion.

The fact that the Panel was appointed by the United States Commissioner of Food and Drugs adds to the conclusion that the individuals on the Panel were of high professional caliber.

In the first paragraph of its summary, the report states, "This document proposes that hair grower and hair loss prevention drug products be classified in Category II as being not generally recognized as effective and as being misbranded for over-the-counter (OTC) use."

The report continues in the next to the last paragraph on page 73955, stating, "Should FDA accept the conclusions and recommendations of the Panel, the agency would propose that hair grower and hair loss prevention drug products be eliminated from the OTC market." At the top of page 73956, righthand column, the report states, "The Panel concludes that all hair grower and hair loss prevention active ingredients reviewed are safe, but none is effective for OTC use."

At page 73957, paragraph number 3, Other Ingredients, with respect to vitamins the report stated, "The Panel was not able to locate nor is it aware of any data demonstrating the safety and effectiveness of the following ingredients."

At page 73958, under the heading Roman three, with respect to lanolin which is contained in this product, the report stated, "The Panel has classified the following hair grower and hair loss prevention ingredients as not generally recognized as effective and as being misbranded for OTC use." Additionally, in the second paragraph on that page, the report stated, "Nothing done to the hair shaft once it emerges from the surface of the scalp will influence the hair growth."

The report concludes at page 73959 that after evaluating various ingredients alleged to affect hair growth and hair loss that "the data failed to demonstrate the effectiveness of these ingredients." Continuing in the same paragraph, the report states, "...the Panel concludes that all claimed hair growers and hair loss prevention active ingredients reviewed are not effective for OTC external use."

Both the testimony of Dr. Horvath and Exhibit 6 confirm that Respondent's advertisement is making false statements when it states "Now At Last, Actually Grow Hair; Fabulous Scientific Breakthrough; 'Bio-Gro' Hair Renewal Gel Contains Miracle Biotin...Reduces Fallout, Fights 'Male Pattern Baldness,' Encourages New Growth...Incredible formula actually GROWS HAIR] Amazing vitamin-packed gell...Encourages normal growth, reduces fallout, and fights 'male pattern baldness.' Users report gratifying results, even in so-called hopeless cases...real, honest-to-goodness hair growth in just 6 to 8 weeks...it's jam-packed with nutrients known to healthify hair and scalp...Scientific researchers report surprisingly favorable results with the Biotin system...many of the tests had a success rate of 80 percent...Fabulous European discovery" and "Reduces Excess Male Hormone Build-Up, The Cause of Most Baldness."

The advertisement is also false in its pictures. There is a picture before, which shows a substantial bald spot in the ad. Below that is a picture labelled after which shows hair covering that bald spot. Below the pictures of before and after with respect to this scalp are illustrations which appear to show at the left hair follicles that are not connected with hair above the surface, and on the right, apparently afterward, hair follicles which look much healthier and which are attached to healthy-looking hairs above the skin surface.

In this connection, the totality of this ad as well as its individual statements convey the materially false impressions alleged in the Complaint. It should be noted that the meaning of advertising representations is to be judged from a consideration of an advertisement in its totality and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine , 333 U.S. 178 (1948); Vibra-Brush Crop. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y., 1957); Borg-Johnson Electronics, Inc. v. Christenberry , 169 F. Supp. 746 (S.D.N.Y., 1959).

Express representations are not required. It is the net impression which the advertisement makes upon purchasers to whom it is directed, and even if an advertisement is so worded as not to make any express representation, if it is artfully designed to mislead those responding to it, the mail fraud statutes are applicable. G.J. Howard Co. v. Cassidy, 162 F. Supp. 568 (1958). See also Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council , 425 U.S. 748 (1976). Therefore, an Order of the type authorized by 39 U.S.C. 3005 substantially in the form that I will attach to the written copy of this decision should be issued against Respondent.

This concludes my bench decision and concludes the hearing.

I affirm that decision.