FTC Wins $2 Million Judgment in
"New Generation" Baldness Remedy Case
Judge Also Halts Sale of Products
FTC News Release
September 10, 1991
The Federal Trade Commission today announced that a federal district court has ordered Reno-based California Pacific Research, Inc. (California Pacific) and its owner, Robert E. Murphy, Jr., to pay $2 million plus court costs for falsely and deceptively claiming that their "New Generation" products prevent baldness and stimulate hair regrowth in those who have male pattern baldness — an inherited predisposition affecting up to 80 percent of the male population.
The FTC charged California Pacific and Murphy with making the claims in November 1988 in a complaint filed in US District Court for the District of Nevada. In its complaint, the FTC alleged that the defendants' baldness remedy claims were false, as were their claims that they had scientific evidence to substantiate them.
The court granted a preliminary injunction halting the allegedly false claim that the defendants had scientific evidence for their hair-loss and hair-regrowth claims until it could review the case. The defendants appealed and the FTC cross-appealed to the US Court of Appeals for the Ninth Circuit. The appeals were settled when the FTC and the defendants agreed to another preliminary injunction under which the defendants would temporarily stop making both the substantiation claims and the baldness remedy claims.
The court's final judgment, which is subject to appeal, supersedes that preliminary injunction. In addition to the required $2 million payment, the judgment permanently bans the defendants from selling any of the New Generation products, and from representing that any such products will reduce excessive hair loss or promote new hair growth.
The New Generation package consists of a three-month supply of several over-the-counter products including a cleanser/conditioner containing polysorbate 60 and water, a simple shampoo, and the "Ilona Schreck-Purola, MD, Exclusive Overnight Formula," another polysorbate 60-based product with added vitamins and common cosmetic ingredients. Polysorbate 60, the purported active ingredient, is a commonly-used cleansing ingredient in detergents and is also used as a preservative in foods.
The package sold for $49.95 and was advertised on local and cable television stations in a 30-minute talk-show commercial called "The Fred Lewis Show." Murphy appeared as a guest on the show saying that New Generation worked to regrow his hair, and the avowed discoverer of the formula, Dr Ilona Schreck-Purola, also appeared on the show to confirm the purported scientific basis for these claims. Consumers were given an "800" number to call and order the products.
In entering his final judgment in the case, Judge Bruce R. Thompson found that the defendants' claims were not cosmetic claims, such as, the products make hair look thicker and fuller, but rather, they were drug claims — claims that a product will affect the structure or function of the body. Drug claims such as these, the judge said, require scientific validation. And he found that the "unrebutted expert opinion" is that products like New Generation are ineffective in halting excessive hair loss and in regrowing new hair for those with male pattern baldness. Moreover, the judge noted, the Food and Drug Administration has determined that baldness remedy claims for non-prescription products like New Generation are either false, misleading or unsupported by scientific data.
Given these findings, the judge determined that the company and its owner made substantial profits in their business and that it is equitable that they disgorge some of those profits.
- Civil Action No. CV-N-88-602 (District of Nevada). FTC Matter No. X89-0013. FTC File No. 882-3167.
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This page was posted on August 27, 2006.