Weight-Loss Companies Charged With Fraud

Posted  09 January 2014

On Tuesday, the USA Federal Trade Commission charged four companies with deceptively marketing weight-loss products, asserting they made “unfounded promises” that consumers could shed pounds simply by using their food additives, skin creams and other dietary supplements. 

One of the companies targeted by the Federal Trade Commission, L’Occitane, have retail outlets in South Africa.


Weight-Loss Companies Charged With Fraud

The New York Times

Published: January 7, 2014 

WASHINGTON – “Get a gym body without going to the gym” by sprinkling a powder on your food. “Significantly slim your thighs and buttocks” using an almond-scented cream. Lose up to one pound a day with just two drops under the tongue. 

Such claims were too good to be true, according to the Federal Trade Commission. 

On Tuesday, the commission charged four companies with deceptively marketing weight-loss products, asserting they made “unfounded promises” that consumers could shed pounds simply by using their food additives, skin creams and other dietary supplements. 

The four companies – Sensa Products, L’Occitane, HCG Diet Direct and LeanSpa – will collectively pay $34 million to refund consumers. They neither admitted nor denied fault in the case. 

The case is part of a broader crackdown on companies that the government says “peddle fad weight-loss products.” Linda Goldstein, the chairwoman of the advertising and marketing division at the law firm Manatt, Phelps & Phillips, said the settlements made clear that the commission would accept only double-blind, placebo-controlled studies to document the medical effectiveness of diet regimes. 

The commission is also proposing new guidance for media outlets to help them catch potentially fraudulent claims. The F.T.C. said it would urge media companies not to accept advertisements 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.” 

The weight-loss industry has exploded in recent years. Consumers are expected to spend about $66 billion this year on diet soft drinks, health club memberships, dietary supplements and other products aimed at weight loss, according to Marketdata Enterprises. 

But that growth comes with potential pitfalls. Weight-loss products accounted for 13 percent of the fraud claims submitted to the F.T.C. in 2011, the most recent data available. That is more than twice the number in any other category. 

The F.T.C.’s latest initiative, called “Operation Failed Resolution,” follows a series of enforcement efforts in recent years against unfounded weight-loss schemes. 

In 2004, the commission announced “Operation Big Fat Lie,” charging six companies with false marketing. Among the fraudulent products that year was Himalayan Diet Breakthrough, a diet pill containing Nepalese mineral pitch, a pastelike material that “oozes out of the cliff face cracks in the summer season” in the Himalayas. The seller, AVS Marketing, claimed that users could lose as much as 37 pounds in eight weeks while still consuming unlimited amounts of food. 

In 1997, “Operation Waistline” targeted seven companies that marketed the weight-loss properties of products like “Fat Burners” diet supplements, “Svelte-Patch” skin patches, and “Slimming Soles” shoe insoles. Separately, the F.T.C. has also pursued dozens of cases against companies operating fake news sites that promote the weight-loss characteristics of acai berries. 

Over the last decade, the F.T.C. has also lobbied the media industry to stop accepting ads for weight-loss products whose claims are too good to be believed. That year, the commissioned announced its Red Flag education campaign for media companies to help them spot dubious weight-loss claims. 

In that time, the commission has seen “a significant reduction in the number of ads appearing” in major media outlets that screen advertising content before use, said Richard Cleland, an F.T.C. lawyer. 

As part of the recent spate of cases, the commission noted that one marketer piggybacked on the reputation of well-known media outlets as cover for their claims. For example, one television commercial for Sensa noted that Dr. Alan Hirsch, the creator of the product and a part-owner of the company, had “appeared on ‘Oprah,’ ‘Good Morning America,’ ‘Dateline,’ ‘Extra,’ the CBS ‘Early Show,’ CNN” and in hundreds of magazines and newspapers around the country. 

Sensa charged $59, plus shipping and handling, for a one-month supply of the powder. The powder was supposed to be sprinkled on food to make users feel full faster, so they ate less. 

But the company 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. Hirsch, who conducted studies on the product but whose findings “were not supported by scientific evidence.” 

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. Sensa officials did not respond to phone calls seeking comment. 

Dubious weight-loss claims are not limited to fledgling companies that advertise on late-night television. 

The commission also charged L’Occitane, a retailer with more than 2,000 boutiques worldwide, with deceptive marketing on two skin creams, Almond Beautiful Shape and Almond Shaping Delight. L’Occitane trumpeted that the creams, which cost $44 to $48 for about seven ounces, could trim inches from a user’s body in four weeks, resulting in a “noticeably slimmer, trimmer you.” 

The company “takes enormous care in developing our entire line of products and we want our customers to make well-informed decisions,” L’Occitane said in a statement. “As a result of the F.T.C. inquiry, L’Occitane has implemented a set of even more rigorous policies and procedures that will guide future clinical testing and ensure that our marketing and advertising comply with F.T.C. regulations and guidelines.” 

L’Occitane agreed to pay $450,000 to refund customers. 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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