Blue Stuff Maker Settles for $3MThe Federal Trade Commission announced a $3 million settlement yesterday with the DRTV marketer of a topical pain reliever whose business practices came under the scrutiny of the Electronic Retailing Association.
Jack McClung, president of Oklahoma City-based Blue Stuff Inc. and McClung Advertising, agreed to pay the money to settle charges that he made unsubstantiated claims in advertising for the Blue Stuff and Super Blue Stuff creams. The payment will be used to refund consumers who bought Blue Stuff products.
Also, the Food and Drug Administration issued a warning to Blue Stuff Inc. that its product marketing violates federal drug advertising regulations.
The ERA had sent a letter earlier this year to the FTC asking that it investigate claims made in McClung's DRTV ads and alerting the agency that the Blue Stuff product, which the company claimed could be used to treat ailments including arthritis and allergies, should be regulated by the FDA.
According to the ERA, Blue Stuff once was the No. 1 infomercial product, based on industry rankings of how often a DRTV show airs. The high incidence of Blue Stuff airings suggested that more money was being spent to market Blue Stuff than any other infomercial product, thus making it likely that the product was experiencing a high rate of sales, the ERA said.
The 30-minute DRTV ads ran through most of 2001 and the first half of 2002, according to the FTC. In its letter, the ERA said that Blue Stuff DRTV and Web ads included testimonials purporting that the product could relieve pain in five minutes and be used to treat medical problems ranging from carpel tunnel syndrome to acne.
The products sold for $59.95 per eight-ounce jar, according to the FTC. Blue Stuff and Super Blue Stuff contained roughly the same ingredients, the FTC said.
In addition to the monetary settlement, Blue Stuff Inc. and McClung agreed to obtain credible substantiation prior to making further claims about the Blue Stuff and Super Blue Stuff products.
Two FTC commissioners filed statements of protest against the settlement on the grounds that the payment McClung is required to make is insufficient. Gross sales for the Blue Stuff products exceeded $83 million, FTC commissioner Orson Swindle said.
Swindle and commissioner Sheila Anthony also complained that the settlement failed to take into account proceeds of Blue Stuff sales that went to the Lloyd B. McClung Foundation, a charity sponsored by Jack McClung. Regardless of the good works it accomplishes, the foundation should be forced to return any donations obtained by deception, the commissioners said.