DMAA Conviction, FTC Settlement: Health And Wellness Regulatory News
This article was originally published in The Rose Sheet
Second Shanghai DMAA supply conviction
Two down, three to go in prosecutions of suspects from Shanghai arrested on criminal charges stemming from an FDA investigation sales of dietary supplements containing stimulants the agency says are not dietary ingredients. The second conviction linked to indictments announced in October 2017 was announced April 12 after Zhang Xiao Dong (aka Mark Zhang), sales manager for Genabolix USA Inc. and Shanghai Yongyi Biotechnology Co. Ltd., firms that sell raw ingredients for use in supplements, pleaded guilty in Dallas federal court to committing mail fraud in connection with selling synthetic stimulant ingredients, including the substance known as 1,4- dimethylamylamine,, to a purported supplement manufacturer in the US. Zhang pleaded guilty faces a statutory maximum sentence of 20 years imprisonment; his sentencing is scheduled for Oct. 15. Earlier in April, the Department of Justice announced that Genabolix USA and Shanghai Yongyi Biotechnology's supply chain Gao Mei Fang (aka Amy Gao) pleaded guilty in US District Court for the Northern District of Texas. (Also see "UAS Labs Expands Probioitic Portfolio: Health And Wellness Industry News" - HBW Insight, 4 Apr, 2018.) Zhang, Gao and three other suspects were arrested in September while attending a trade show in Las Vegas. The other three were identified as Hu Chang Chun (aka. James Hu), Genabolix principal; Xu Jia Bao (Fred Xu), Shanghai Waseta principal; and Li Ting Ting (Sunny Lee), Shanghai Waseta overseas sales manager. (Also see "Five Shanghai Suspects Charged After FDA Undercover Work On Spiked Supplements" - HBW Insight, 25 Oct, 2017.)
'Free trial" whitener businesses settle with FTC
The Federal Trade Commission bans three people behind an operation that lured people into subscription agreements using a low-cost “al” offer for tooth whiteners and other products from using negative-option online sales under settlements imposing more than $92m in penalties. FTC on April 16 announced it resolved its charges against Blair McNea, Jennifer Johnson, Danielle Foss and 59 corporate entities of using deceptive claims, hidden disclosures and confusing terms that tricked consumers into providing billing information, supposedly to pay shipping and a nominal cost for a trial product; McNea owned all of the companies and Johnson and Foss were principals in some. The operations charged consumers for two ongoing subscriptions to nearly identical products, meaning consumers who believed they'd agreed to buy a single trial product for about $5 were charged about $200 a month until they canceled both unauthorized subscriptions. The orders impose a judgment of more than $9m, the amount consumers lost to the scam, with the defendants’ additional assets, including money, vehicles and proceeds from the sale of two homes also to be surrendered under the orders entered in US District Court for the Western District of Nevada on April 10. FTC in July 2017 said the defendants used affiliate networks to drive traffic from blog posts, banner ads and fraudulent "customer satisfaction surveys" to at least 87 websites where the deceptive negative-option billing snares lay in wait. (Also see "FTC Takes On 'Labyrinth' Behind Deceptive Tooth Whitener 'Trial' Offers" - HBW Insight, 7 Aug, 2017.)
From the editors of the Tan Sheet.