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FTC Charges Four Weight ­Loss Companies With Fraud




by:
James P. Nevin
Brayton Purcell, LLP - Novato Office

 
February 21, 2014

Previously published on February 20, 2014

The Federal Trade Commission (FTC) has cracked down on four companies that sell weight ­loss products. The FTC is fining Sensa, L'Occitane Inc., LeanSpa LLC, and HCG Diet Direct for using false advertising to sell their weight ­loss products. The companies will collectively pay $34 million to refund consumers. None of the companies admitted nor denied fault in the case.

Sensa, for example, claimed that consumers could "get a gym body without going to the gym" by sprinkling their product on food, while L'Occitane Inc. marketed an almond­-scented cream that they promised would "significantly slim your thighs and buttocks."

The marketers of Sensa, a weight­ loss powder sprinkled on food, will pay a large portion of the settlement: $26.5 million for charges that the company made unfounded weight­loss claims and used misleading endorsements. The money will be refunded to consumers who bought Sensa from retail chains such as Costco and GNC, as well as the Home Shopping Network and elsewhere on the internet. The settlement terms bar the company's CEO Adam Goldenberg and Sensa creator Alan Hirsch from making weight­loss claims about dietary supplements, foods, or drugs unless they have adequate and well­-controlled human clinical studies. Previously, Sensa's U.S. sales were more than $364 million according to Jessica Rich director of the FTC's consumer protection bureau.

L'Occitane will pay $450,000 for claiming its Almond Beautiful Shape and Almond Shaping Delight skin creams had clinically proven body slimming capabilities. Their ads claimed that Almond Beautiful Shape was a "cellulite fighter" and could "trim 1.3 inches in just 4 weeks." Their settlement requires a ban on the firm from claiming any product applied to the skin causes substantial weight loss or reduction in body size.

LeanSpa's Boris Mizhen and three companies he controls will surrender various assets worth an estimated $7 million in a partial settlement with the FTC over allegedly deceptive promotion through fake news websites of acai berry and "colon cleanse" weight­loss supplements.

HCG Diet Direct sold liquid drops containing a diluted form of human chorionic gonadotropin, a hormone produced by the human placenta, and claimed in ads that consumers could lose up to one pound a day by placing the solution under their tongues before meals while eating a very low­calorie diet. The proposed settlement bars the company and Ethington from making weight­loss product claims unless the claim is non­misleading and backed by at least two adequate and well­ controlled human clinical studies.

The weight­loss industry has grown significantly in recent years with consumers expected to spend about $66 billion this year on diet soft drinks, health club memberships, dietary supplements, and other products aimed at weight loss, according to Marketdata Enterprises. At the same time, weight ­loss products accounted for 13 percent of the fraud claims submitted to the FTC in 2011, which is twice the number in any other category.

The FTC has targeted a number of fraudulent weight ­loss schemes in recent years. Their latest initiative is called "Operation Failed Resolution." Previously, in 2004, the FTC charged six companies with false marketing in "Operation Big Fat Lie." In 1997 with "Operation Waistline," the FTC targeted seven weight­ loss companies. The FTC has also pursued dozens of cases against companies operating fake news sites that promote the weight­loss characteristics of acai berries.

Also, the FTC has lobbied the media industry to stop accepting weight­ loss product ads whose claims are too good to be true. They commissioned the Red Flag education campaign for media companies to help them sport dubious weight ­loss claims. Since then, the commission has seen a significant reduction in the number of ads appearing in major media outlets that screen advertising content before use, according to an FTC lawyer, Richard Cleland.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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