“HCG” Spells FTC Lawsuit For Weight Loss Product Firm

FTC is suing HCG Platinum and owner Kevin Wright after he declined a settlement over alleged deceptive marketing of human chorionic gonadotropin products. The firm was one of seven warned in an FDA/FTC 2011 joint action about unapproved new drugs and unsubstantiated claims.

HCG Platinum LLC declined a settlement offer from federal regulators and will contest 2011 warnings about making unsubstantiated claims for its weight loss product via false and misleading advertising.

The Federal Trade Commission filed a complaint against the firm and its owner, Kevin Wright, in U.S. District Court for the District of Arizona on Oct. 30. Wright refused to agree to a settlement with the agency and continues marketing human chorionic gonadotropin products, some branded as homeopathics and others as dietary supplements, said FTC Staff Attorney James Prunty.

Wright, who also heads consumer health product firm Right Way Nutrition LLC, markets products online and through retail chains and other stores, FTC said in a release. Both firms “promise consumers that HCG Platinum liquid drops will cause rapid and substantial weight loss, and they claim consumers will likely lose as much weight as the endorsers in their advertisements,” according to FTC.

Wright has sold more than $13 million in HCG Platinum products since 2010. FTC has asked the court to order Wright “to surrender the ill-gotten gains” he received from “deceptive marketing of HCG Platinum products,” the agency said.

Buffdale, Utah-based HCG Platinum was one of seven firms that FTC and FDA warned in a November 2011 joint action about marketing HCG products as unapproved new drugs and making unsubstantiated claims. The firms sold the products OTC in stores and online as pellets, sprays and oral drops (Also see "Agencies Target “Fraud-Driven” HCG Weight-Loss Ingredient" - Pink Sheet, 12 Dec, 2011.).

Prunty said FTC offers firms that fail to respond satisfactorily to warnings about deceptive advertising an opportunity to agree to a settlement before the agency files suit. “If a company receives a warning letter and we decide afterward that it has sufficiently corrected its advertising claims, then we don’t charge it with deceptive advertising, and there’s nothing to settle,” he said in an email.

Based on the seven firms’ responses to the FTC/FDA warnings, “we ultimately opted to investigate [HCG Platinum] and file a complaint against it for deceptive advertising,” Prunty said.

The complaint does not state a proposed settlement and the court will decide whether to hold Wright accountable for FTC’s charges and whether to order injunctions against making future unsubstantiated claims and consumer redress.

The other firms that FDA and FTC warned in 2011 for marketing HCG weight loss products are:

• HCG Diet Direct, Tucson, Ariz.
• theoriginalhcgdrops.com, New York
• Natural Medical Supply, doing business as HCG Complete Diet, American Fork, Utah
• Nutrifusion Systems, Sandy, Utah
• hcg-miracleweightloss.com, Orofino, Idaho
• HCG Drops, St. George, Utah.

FTC declined to comment on whether any of those six also will be a target of litigation, saying information on those cases is “non-public.” The agency has not published additional information on those firms’ responses to the warnings.

Class-Action Settlement Proposed

Although HCG Platinum refused to settle with FTC, the firm agreed in April 2012 to a settlement in California state court in a class-action claim alleging that information stated on labels and in advertisements for HCG Platinum, HCG Platinum Original Formula, X-14 and X-30 violate consumer protection laws and were fraudulent. A court order on whether to approve the settlement is pending.

The firm denied the allegations and causation of harm or damage to consumers, but agreed to the settlement as “fair, adequate, and reasonable and that it is in the best interests of the settlement class,” according to the settlement proposal notice posted by plaintiff’s attorney Gillian Wade, of Milstein Adelman LLP in Santa Monica, Calif., and defense attorney Michaela Sozio, of Tressler LLP in Los Angeles.

Consumers who purchased HCG Platinum products in the U.S. between Dec. 13, 2006, and Feb. 9, 2012, were eligible to recover in the case. Reimbursement was set at $79.99 for each unit of HCG Platinum or HCG Platinum Original Formula; $31.99 for each unit of X-14; and $58 for each unit of X-30, according to the settlement.

HCG Joins Misleading Claims List

The FTC/FDA warnings added HCG – a hormone produced by the human placenta – to the list of ingredients under the agencies’ scrutiny for false and misleading weight loss claims.

FDA officials at the time said HCG products are “potentially dangerous” if taken as directed, partly because very low-calorie diets recommended on the product labels can increase the risk of conditions including gallstones and heart arrhythmias. However, the agency has not reported health problems linked to the HCG products marketed by the firms targeted in the warning letters.

Prunty noted FTC’s enforcement did not address whether HCG could be dangerous if used as directed on the product labels.

“Historically, the FTC has always been concerned about products marketed for weight loss and has filed dozens of court and administrative actions,” he said, pointing out acai berry, green tea and chitosan as examples of other ingredients with suspect weight loss claims.

“The critical concern is not the substance, but the weight loss claims made about the product sold, and the paucity of scientific evidence supporting the claims.”