Markets Wired

Two marketers of the alleged pain relief product Biotape, Smart Inventions, Inc. and Jon Nokes, have entered into a settlement agreement that will provide up to $2.5 million in consumer refunds. In addition, a federal district court ruled that a third defendant, Darrell Stoddard – the inventor of Biotape who appeared in the product’s nationally televised infomercial – violated federal law and must give up the $86,000 he received from infomercial sales. The FTC had charged that all three defendants deceptively claimed that Biotape – an adhesive tape – provided significant, permanent relief from severe pain and that it was superior to other pain-relief products. The product infomercial claimed that Biotape was “a space age conductive mylar that connects the broken circuits that cause . . . pain.” The FTC will contact consumers regarding refunds.

The FTC’s settlement with Smart Inventions, Inc. and Jon D. Nokes, who disseminated the infomercial, bars them from claiming that Biotape, or any other substantially similar purported pain-relief product, produces significant and/or permanent relief from severe pain or is superior to other products and treatments in eliminating or relieving severe pain. The order also prohibits Smart Inventions and Nokes from making claims about the health benefits, performance, efficacy, or safety of certain products, including any drug or device, unless the claim is true and backed up by credible scientific evidence. The order additionally prohibits the defendants from claiming that a patent proves the efficacy or safety of those products.

The order against Smart Inventions, Inc. and Nokes enters a monetary judgment of $2,510,511 – the net consumer sales of Biotape. The judgment is suspended as long as they fulfill their obligations to provide funding for consumer refunds. Using information from a database, the redress administrator will send forms to all Biotape purchasers; if they return the form indicating they want redress, they will receive money back.

In addition, the defendants must either recall or repackage and re-label all of the products already in the marketplace that violate this order.

The order against Stoddard, entered after the federal district court granted the FTC’s motion for summary judgment, contains the same prohibitions against claims and the same repackaging and re-labeling requirements as in the order against Smart Inventions and Nokes. The order also requires Stoddard to give up $86,000, which represents the ill-gotten gains he received from infomercial sales of Biotape.

The Commission vote to authorize staff to file the stipulated final order was 5-0. The stipulated final order for permanent injunction as to Smart Inventions, Inc. and Nokes was entered in the U.S. District Court for the Central District of California on July 12, 2007. The summary judgment against defendant Stoddard was entered in the same court on July 27, 2007.

NOTE: A stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order has the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.