Regulation

‘Operation Failed Resolution’: FTC targets deceptive advertising claims for 'fad' weight-loss products

07-Jan-2014 - By Stephen Daniells+
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Dietary supplements, food additives, and skin creams are at the center of a new law enforcement initiative from the US Federal Trade Commission to stop national marketers that used deceptive advertising claims to peddle fad weight- loss products.

In a webcast this morning, Jessica Rich, director of the FTC Bureau of Consumer Protection, announced four law enforcement actions that will recover about $34 million for consumers.

“Resolutions to lose weight are easy to make but hard to keep,” said Rich. “And the chances of being successful just by sprinkling something on your food, rubbing cream on your thighs, or using a supplement are slim to none.  The science just isn’t there.”

‘Unique’

Commenting independently on the announcement, Justin J. Prochnow, shareholder at Greenberg Traurig, LLP, told NutraIngredients-USA: “While the FTC has always viewed claims made for weight-loss products with a healthy dose of skepticism and scrutiny, the new actions by the FTC are somewhat unique in that the FTC is calling on the media to help stop deceptive advertising. 

“The action by the FTC to send letters out to 75 publishers and broadcasters to review the new ‘Gut Check’ guidance when screening ads for publication is certainly a new strategy and will likely result in companies needing to reevaluate their advertising campaigns. 

“It will be important for marketers to review the guidance as well to ensure that they are not making bogus claims or claims to which the FTC is particularly sensitive.”

The cases

The big case of the four focuses on the marketers of Sensa, who exhorted consumers to “sprinkle, eat, and lose weight”, said FTC.

“The FTC has alleged that one study the defendant described as an independent double-blind, placebo-controlled study was based on fabricated data, and too largely controlled by the defendants to be characterized as independent.  Two other studies were also fatally flawed.”

Sensa will pay $26.5 million to settle FTC charges that it deceived consumers with unfounded weight-loss claims and misleading endorsements. According to Rich, consumer sales of Sensa exceeded $364 million.

Supplements

FTC also announced a partial settlement in a case against supplement marketer LeanSpa, LLC. FTC alleges the company deceptively promoted acai berry and ‘colon cleanse’ weight-loss supplements through fake news websites.

The FTC is requiring LeanSpa principal Boris Mizhen and three companies he controls to surrender cash, real estate and personal property totaling approximately $7 million.  Mizhen’s wife, Angelina Strano – charged as a relief defendant who accepted money from the scheme but did not actively participate in it – will surrender nearly $300,000.

The proposed settlement bans the defendants from billing consumers for products or services by automatically charging them on a recurring basis unless they opt out.  And it prohibits the defendants from misrepresenting or failing to disclose facts about the products that involve costs, charges, terms for refunds, endorsements, and trial supplies.  The order also prohibits the defendants from falsely claiming that any product can cause rapid and substantial weight loss without the need for dieting or increased exercise.

The defendants also are required to have at least two human clinical trials to support any weight loss claims they make about the products they sell, and to have competent and reliable scientific evidence for any other health claims.  They are prohibited from claiming that products are clinically proven when they are not.

Skin creams and homeopathy

The two other cases related to L’Occitane and claims made in an advertising campaign in 2012 claiming that Almond Beautiful Shape could “trim 1.3 inches in just 4 weeks,” and that it was a “cellulite fighter;” and that Almond Shaping Delight has “clinically proven slimming effectiveness,” and will “visibly refine and reshape the silhouette, to resculpt and tone the body contours.”  L’Occitane’s ads also claimed that both products could produce a “noticeably slimmer, firmer you … (in just 4 weeks!).”

The final case is against Arizona-based HCG Diet Direct, which, “marketed an unproven human hormone that has been touted by hucksters for more than half a century as a weight-loss treatment”, said FTC.

According to FTC, the defendants sold HCG Diet Direct Drops, a diluted liquid form of human chorionic gonadotropin – a hormone produced by the human placenta that has been falsely promoted for decades as a weight-loss supplement.

Totals

In total, the weight-loss marketers will pay approximately $34 million for consumer redress, said FTC. In addition to the $26.5 million to be paid by Sensa, L’Occitane, Inc. will pay $450,000, and the LeanSpa settling defendants will surrender assets totaling an estimated $7.3 million.  The judgment against the HCG Diet Direct defendants is suspended due to their inability to pay.

FTC said that the defendants in the cases neither admit nor deny liability. The Agency also could not speak about any possible criminal actions.

When the FTC announced its webcast last week, a fall in the share price of some MLMs that market weight loss supplement products was reported, even though the companies were not named in today’s announcement. When asked about these companies, Rich said: “We read those stories, too. We’re aware of what you’re talking about.

“We cannot comment on companies that either we haven’t brought an action against in the past or we aren’t announcing today, because our investigations are non-public. So, I cannot comment on those other companies.

“We do have other investigations going on in the health area, but I can’t identify the companies we’re investigating.” 

Related topics: Product claims, Regulation, Weight management