FTC “Big Fat Lie” Settlements Half Complete; “Red Flag” Efforts March On
This article was originally published in The Tan Sheet
Executive Summary
FTC's settlement with the marketer of Himalayan Diet Breakthrough brings the commission to its half-way point in settling the six complaints filed against dietary supplement firms under "Operation Big Fat Lie.
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FTC's settlement with the marketer of Himalayan Diet Breakthrough brings the commission to its half-way point in settling the six complaints filed against dietary supplement firms under "Operation Big Fat Lie." AVS Marketing and its president William R. Heid will pay $400,000 in consumer redress for "deceptively marketing" their purported weight-loss pill, according to the June 20 settlement. Claims that Himalayan Diet Breakthrough causes "rapid and substantial" weight loss without dieting were specifically targeted by FTC in the suit. Along with monetary provisions, all three of the "Big Fat" settlements contain injunctive provisions that prohibit the defendants from making fraudulent weight-loss claims in the future. A fourth settlement will be announced "soon," FTC added. FTC announced its "Operation Big Fat Lie" initiative - a series of lawsuits targeting supplement marketers making false weight-loss claims - in November (1 (Also see "“Operation Big Fat Lie”: FTC Files Suits, Fights Bogus Weight-Loss Ads" - Pink Sheet, 15 Nov, 2004.), p. 14). In addition to the June 20 settlement, two other suits brought under the initiative have been settled. The marketers of 1-2-3 Reduce Fat and Fat Seltzer Reduce faced a suspended judgment of $43,000 in a settlement announced May 17, while Ultra LipoLean marketer Selfworx.com agreed to pay $100,000 in consumer redress in a settlement announced May 31 (2 (Also see "FTC Reduces Acceptable Claims For Ultra LipoLean Supplement In Final Order" - Pink Sheet, 6 Jun, 2005.) p. 12). The three cases together total $500,000 in consumer redress and over $25 mil. in suspended judgment, which can include avalanche clause fees. In a separate same-day settlement, FTC targeted the marketers of the dietary supplements Propolene and FiberThin for making claims cited in the commission's "Red Flag" education campaign launched in December 2003 (3 (Also see "Slap On The Wrist? FTC Puts Out Media Guidance On Weight Loss Ad Claims" - Pink Sheet, 15 Dec, 2003.), p. 15). The Red Flag campaign encouraged media outlets to refrain from publishing ads containing weight-loss claims that are "too good to be true," such as statements that a product will "cause substantial weight loss no matter how much the consumer eats" or "block the absorption of fat or calories." In the settlement against Propolene and FiberThin, marketers FiberThin LLC, Obesity Research Institute and their owners Henry Den Uijl and Bryan Corlett are enjoined from making false and misleading claims about any supplement product. The settlement was filed in Southern California federal court June 14. The defendants also are ordered to pay $1.5 mil. in consumer redress. Other defendants named in the complaint include James Ayers and Jonathan Kelley, MD, who acted as "expert endorsers" in an infomercial for the products. The Propolene settlement is one of several involving companies making "Red Flag" claims for their products. FTC announced in December that SG Institute of Health & Education and its owners Pedro Salas and Vanessa Salas were barred from "falsely claiming Revopatch Plus or any other product applied to the skin causes substantial weight-loss or that the FDA has approved sea kelp for controlling weight." The settlement also forbids the defendants from any future misrepresentation of FDA approval and includes a $1 mil. avalanche clause fee. Litigation against the manufacturer of Revopatch Plus, Transdermal Products International Marketing, is pending. FTC also announced a settlement in March with Phoenix Avatar and its principals for "marketing their bogus diet patches using massive amounts of illegal spam." The final order contains an injunctive provision and suspends a judgment of $230,000. The defendants will pay $20,000. FTC believes its efforts to curb the number of unsubstantiated weight-loss claims through its "Red Flag" initiative have been successful. The percentage of ads containing at least one Red Flag claim dropped from 49% in 2001 to 15% in 2004, according to the commission's 2004 "Weight-Loss Advertising Survey." Although the commission does not claim sole credit for the reduction, it "believes these results support the Commission's continuing efforts to encourage the media to screen out facially false weight-loss advertisements," FTC said. |