Four companies to pay combined US$34M to settle FTC lawsuit accusing companies of deceptively marketing products, saying they made 'unfounded promises' that consumers would lose weight by using their food additives, skin creams, other dietary supplements
January 7, 2014
(New York Times)
– The Federal Trade Commission on Tuesday charged four companies with deceptively marketing products, saying they made “unfounded promises” that consumers would lose weight by using their food additives, skin creams and other dietary supplements.
As part of the settlement, the four companies — Sensa Products, L’Occitane, HCG Diet Direct and LeanSpa — will pay a total of $34 million. The companies neither admitted nor denied fault in the case.
The case is part of a broader crackdown by the government on companies that it says “peddle fad weight-loss products.” The commission is also proposing new guidance for media outlets to help them catch potentially fraudulent claims. The commission said it would urge media companies not to accept advertisements for companies or products that make dubious weight-loss claims.
“Resolutions to lose weight are easy to make but hard to keep,” Jessica Rich, the director of the commission’s Bureau of Consumer Protection, said in a statement. “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.”
As part of the case, Sensa and two executives settled allegations that they made unsupported claims that the company’s product allowed consumers to lose weight without dieting and without changing their exercise regimen.
Sensa charged $59, plus shipping and handling, for a one-month supply of the powder. The powder was to be sprinkled on food to make users feel full faster, so they ate less. The company also failed to disclose that some consumers were paid for their endorsements, the commission said.
The F.T.C. also took aim at Adam Goldenberg, the chief executive of Sensa, and Dr. Alan Hirsch, the creator of the product and a part owner of the company, who conducted studies on the product but whose findings “were not supported by scientific evidence,” the commission said.
The commission imposed a $46.5 million judgment on the company, which sold $364 million of Sensa in the United States from 2008 to 2012. But the company will remit little more than half the settlement amount “due to their inability to pay,” officials said.
The commission also charged L’Occitane, which has more than 2,000 retail boutiques worldwide. The government said the company made deceptive claims that two products, Almond Beautiful Shape and Almond Shaping Delight, could trim inches from a user’s body in four weeks, resulting in a “noticeably slimmer, trimmer you.” The cost: $44 to $48 for about seven ounces.
L’Occitane agreed to pay $450,000 for customer refunds for the products. An F.T.C. official said that amount would provide for a refund of “substantial portions” of consumer spending on the products.
The commission also settled claims against HCG Diet Direct, which sold HCG Diet Direct Drops. The product contains a form of a hormone naturally produced by human placenta that has been “falsely promoted for decades as a weight-loss supplement,” the commission said.
LeanSpa settled charges that the company and its principal executive used fake news websites to promote acai berry and colon cleanse weight-loss products. Consumers were charged recurring monthly payments after signing up for a supposedly free trial, the commission said.
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