FTC Weight-Loss Settlements Include Over $3 Mil. In Fines, Redress
This article was originally published in The Tan Sheet
Executive Summary
The Federal Trade Commission announced a $1.2 mil. settlement with the manufacturer, marketers and endorser of a weight-loss patch containing seaweed extract March 10
|
The Federal Trade Commission announced a $1.2 mil. settlement with the manufacturer, marketers and endorser of a weight-loss patch containing seaweed extract March 10. Under two stipulated final orders filed in Atlanta, Ga. federal court, marketers agreed to pay $1 mil. in consumer redress in addition to a $175,000 fine. The orders further require that the marketers refrain from making certain false weight-loss claims and possess scientific evidence before marketing any other health product. FTC's complaint targets manufacturer Advanced Patch Technologies and principal Bernard Silverfarb; marketers Buckhead Marketing and Distribution and Pap Systems; and endorser Jesse Starkman. The commission asserts that the patch, marketed and distributed as Pound A Patch , was advertised in an infomercial from June 2002 to January 2003 as a topical product that could cause users to experience dramatic weight loss. The infomercial directed consumers to "place Pound A Patch on your upper body. Then carry on with your everyday lifestyle. Every three days peel off the patch and watch as you take off the pounds. Replace with a new patch and drop more pounds. It's that easy." The infomercial also presented testimonials by purported users of the patch, as well as statements by chemist Starkman describing the product's ability to increase metabolism, suppress appetite and reduce fat cell production. In addition to unsubstantiated weight-loss claims, FTC says the advertising claimed the patch "causes users to burn substantial calories, including as much as 4,000 calories in three days," and "delivers its ingredients into the bloodstream more quickly and efficiently than pills." In a separate settlement announced by the commission March 9, direct mail marketers agreed to pay $2.2 mil. in consumer redress and stop making certain unsubstantiated weight-loss and arthritis claims in sales brochures. The claims were related to Zymax and MillinexES , both containing ephedra, and Serotril , containing St. John's wort. Promotional materials asserted that the products could cause substantial weight loss in short periods without the need for diet or exercise. The firms also marketed CartazyneDS , a supplement claimed to cure arthritis and rebuild cartilage. The complaint, originally filed last year in California federal court, targeted California residents Michael Levey and Gary Ballen, along with corporate entities Bentley Myers International, Publisher's Data Services and Nutritional Life (1 (Also see "Ephedra Warning On Labels, Ad Materials Stipulated In Two FTC Settlements" - Pink Sheet, 7 Jul, 2003.), p. 3). Levey and co-defendants also were charged with violating a 1993 order prohibiting Levey from making false advertising claims, following allegedly deceptive infomercials for the EuroTrym Diet Patch , among several other products. Defendant Levey, president and co-owner of Bentley Myers and co-owner of Publisher's Data Services, died in August 2003. The Commission voted to refer the amended complaint and proposed consent decree in a 4-1 vote, with Commissioner Orson Swindle dissenting on the basis that the amount of monetary relief is "woefully inadequate." "Although $2.2. mil. is a sizeable amount of money, this payment is miniscule in comparison to the amount of the defendants' gross sales and consumer harm," Swindle stated. Compassion over the defendant's death "should not justify allowing the family to keep money that rightfully belongs to consumers who were deceived by the defendants' false health claims." Further, "any settlement that leaves defendants or their families with substantial ill-gotten wealth not only sets a bad precedent but also shows, in a manner of speaking, that 'crime does pay,'" Swindle concluded. FTC's enforcement efforts continue the agency's focus on fraudulent weight loss claims in advertising. The commission released a media reference guide titled "Red Flag: Bogus Weight Loss Claims" in December and targeted a Florida-based marketer of children's weight loss pills last month (2 (Also see "Slap On The Wrist? FTC Puts Out Media Guidance On Weight Loss Ad Claims" - Pink Sheet, 15 Dec, 2003.), p. 15 and 3 (Also see "Skinny Pill Supplements’ Weight-Loss Claims Bloated – FTC" - Pink Sheet, 9 Feb, 2004.), p. 12). |