| U.S. Federal Trade Commission |
FTC News Release, Jan 6, 2005
Marketers of Herbal Dietary Supplement Promoted in Chinese-Language Community Settle FTC Charges
A company that heavily advertised an
herbal dietary supplement called “Sagee” to the
Chinese-language and Vietnamese-language communities has
settled Federal Trade Commission charges of making false and
unsubstantiated claims for the product.
The ads claimed that Sagee can improve brain
health and revitalize and rejuvenate the brain, as well as
alleviate or treat a number of serious, chronic brain-related
diseases. Under the terms of the settlement announced today,
the defendants, Sagee U.S.A. Group, Inc., and its president,
Xiao Hua Li, are prohibited from making any health benefits,
performance, or efficacy claims for any product that purports
to repair damaged brain cells; improve memory or
concentration; slow down the brain’s aging process; and treat
or alleviate conditions such as insomnia, migraine headaches,
or cerebral embolism, unless the defendants have reliable
scientific evidence to substantiate their claims.
“The FTC is committed to ensuring that
supplement sellers make only truthful claims backed by
scientific evidence - no matter what language they advertise
in,” said Lydia Parnes, Acting Director of the FTC’s Bureau of
Consumer Protection.
According to the complaint filed in federal
court, Sagee purported to treat or alleviate such conditions
as insomnia, migraine headaches, neuroticism, schizophrenia,
tinnitus, autism, Alzheimer’s disease, cerebral embolism,
cerebral hemorrhage, epilepsy, Parkinson’s disease, senile
dementia, and stroke. In addition, the defendants’ ads
contained statements that Sagee repairs brain cells, improves
memory, concentration, attentiveness, and response times,
slows down the brain’s aging process, and relieves
aging-related conditions of the brain. The defendants
advertised and sold Sagee through Chinese-language advertising
on radio and television, in newspaper ads, and on the
Internet. Some ads also appeared in Vietnamese and English.
The complaint alleges that the defendants
made unsubstantiated efficacy claims for Sagee and falsely
claimed that clinical studies support their therapeutic claims
for the product.
To settle the charges, the proposed
stipulated final judgment and order prohibits the defendants
from making unsubstantiated efficacy claims for any dietary
supplement, food, drug, device, or service. It also prohibits
the defendants from misrepresenting through endorsements, the
existence, contents, validity, results, conclusions, or
interpretations of any test, study, or research.
The order requires the defendants to pay
$10,000 in redress and contains a $1.38 million avalanche
clause that would become due if the court finds that the
defendants misrepresented their financial condition. In
addition, the order requires the company, based in City of
Industry, California, to send a notice to distributors
containing the terms of the stipulated final judgment and
warning them that if they fail to have their ads approved in
advance, or make any claims prohibited by the order, the
company will not ship further products to them. Finally, the
order contains various record-keeping provisions to assist the
FTC in monitoring the defendants’ compliance.
The Commission vote
authorizing staff to file the complaint and the stipulated
final judgment and order was 5-0. The complaint and
the stipulated final judgment and order were filed in the U.S.
District Court for the Central District of California, on
December 29, 2004. The stipulated final judgment and order
requires the court’s approval.
NOTE: This proposed
stipulated final judgment and order is for settlement purposes
only and does not constitute an admission by the defendant of
a law violation. Stipulated final judgments and orders have
the force of law when signed by the judge.
The text in this article was prepared by the U.S. Federal Trade Commission.