## Facts

- QT, Inc. and related entities marketed the “Q-Ray Ionized Bracelet” as providing immediate and significant pain relief and as a “miraculous cure for chronic pain.”
- Advertising represented that these therapeutic claims were “test-proven” and that the bracelet worked through scientific mechanisms such as “ionization,” “Q-Rays,” and “balancing” or “enhancing” “bio-energy.”
- The trial court found these scientific explanations to be meaningless and unrelated to any medical effect, and found the bracelet had no therapeutic efficacy beyond placebo.
- The record supported findings that “Q-Rays” do not exist, the bracelet was not meaningfully “ionized,” and any net charge would dissipate quickly.
- Defendants made additional false claims, including that “gold” and “silver” versions were made of brass, that the bracelet’s effect wore off after a year or two to induce repurchase, and that each bracelet had an individual “memory cycle” to discourage resale.
- The FTC brought suit under §§ 5 and 12 of the Federal Trade Commission Act and sought injunctive and monetary relief.
- After a bench trial before a magistrate judge by consent, the court enjoined the claims and ordered approximately $16 million (plus interest) in disgorgement for consumer redress.

## Issues

1. Whether defendants’ objective health-efficacy and “test-proven” claims about the bracelet were materially false or misleading and lacked adequate scientific substantiation in violation of §§ 5 and 12 of the FTC Act.
2. Whether the district court properly ordered approximately $16 million (plus interest) in disgorgement as equitable relief, and whether the amount was supported by the evidence.

## Decision

- The Seventh Circuit affirmed the judgment.
- The court held that defendants’ advertising conveyed factual claims about pain relief and mechanism of action, and that the claims were false or unsubstantiated.
- The court rejected defendants’ argument that liability depended on imposing a rigid requirement of placebo-controlled, double-blind clinical trials; the dispositive point was defendants’ lack of any reliable scientific support.
- The court held that consumer-reported placebo effects did not justify objectively false scientific or therapeutic representations.
- The court affirmed disgorgement of about $16 million, concluding the FTC provided a reasonable approximation of unjust gains and defendants failed to rebut it; the remedy was restitutionary rather than punitive.

## Legal Principles

- Objective health and efficacy advertising claims must be supported by a reasonable basis grounded in reliable scientific evidence; materially false or misleading claims violate §§ 5 and 12 of the FTC Act.
- Scientific-sounding representations about a product’s mechanism and “test-proven” status are actionable factual claims when presented as verifiable support for therapeutic benefits.
- Placebo responses do not cure material deception where the advertiser’s claims about efficacy or scientific mechanism are objectively false or misleading.
- In FTC actions seeking equitable monetary relief, a reasonable approximation of unjust enrichment may support disgorgement; once shown, the burden shifts to defendants to demonstrate the figure is inaccurate.
- Disgorgement aimed at depriving wrongdoers of ill-gotten gains and enabling consumer redress is equitable and not an impermissible penalty when tied to profits from deceptive practices.

## Conclusion

The Seventh Circuit held that deceptive, unsubstantiated health claims and fabricated scientific explanations for the Q-Ray bracelet violated the FTC Act, and it upheld injunctive relief and roughly $16 million in disgorgement because the FTC reasonably estimated unjust gains and defendants did not refute the calculation.


FTC v. QT, Inc., 512 F.3d 858 (7th Cir. 2008)