The marketers of the fruit drink Nopalea have agreed to pay $3.5 million in consumer refunds to settle FTC charges that they deceptively marketed the product as scientifically proven to reduce various ailments, including pain. The marketers named in the FTC complaint are dietary supplement maker TriVita, Inc., Ellison Media Company, and Michael R. and Susan R. Ellison, who control both companies.
The FTC’s complaint alleged that TruVita did not have the clinical studies to support the claims they were making about the health benefits of Nopalea, a fruit drink derived the nopal cactus, also know as the prickly pear. Nopalea cost up to $39.99 for a 32-ounce bottle.
Manon Fernet and the company she controls, which did business as the “Freedom Center Against Obesity,” have agreed to settle an FTC complaint against them that includes paying $500,000 and accepting a ban from manufacturing or marketing weight loss products in the United States.
According to the FTC’s complaint, the Canada-based marketers deceptively advertised their product as being able to cause fast, substantial and permanent weight loss without diet or exercise. Sold as Double Shot, the product was comprised of two capsules. One capsule was claimed to cause weight loss by burning stored fat as if the user had exercised one hour a day. The other capsule was claimed to prevent the absorption of all but 10% of the calories consumed.
The Attorneys General of Oregon, Washington and Vermont each have filed suit against Living Essentials, LLC, and Innovation Ventures, LLC, the makers of 5-Hour Energy drink, alleging that advertising for the product violates their states’ consumer protection laws by making deceptive and misleading claims.
The Federal Trade Commission has sued an operation selling green coffee bean extract as a dietary supplement for weight loss, alleging it made false and deceptive claims and used fake new sites and phony consumer endorsements to sell the product.
Named in the complaint are NPB Advertising, Inc., which also does business as Pure Green Coffee; Nationwide Ventures, LLC; Olympus Advertising, Inc.; JMD Advertising, Inc; Signature Group, LLC; Nicholas Scott Congleton; and Paul Daniel Pascual.
According to the FTC complaint, green coffee bean extract for weight loss began to become popularized after it was called “the magic weight loss cure for every body type” on a syndicated television show. A discussion on the show referenced a study that purportedly supported the claim, but no specific brand of green coffee extract was recommended.
Fortune Hi-Tech Marketing and additional defendants, settling claims by the Federal Trade Commission and three states that it operated an illegal pyramid scheme, have agreed to be banned from multilevel marketing and surrender at least $7.75 million in assets.
The surrendered assets will be used to compensate consumers enrolled in pyramid scheme. The original complaint, filed by the FTC and the states of Kentucky, Illinois and North Carolina, alleged that in addition to operating an illegal pyramid scheme and making false earnings claims, Fortune Hi-Tech Marketing provided consumers with false and misleading materials for recruiting new participants.
The FTC has approved the final consent order settling charges that L’Occitane, Inc. deceptively claimed that two of skin creams have body slimming capabilities and are clinically proven. The settlement requires L’Occitane to pay $450,000 for consumer redress, as well as prohibiting it from making future false and deceptive weight-loss claims.
The two products are Almond Shaping Delight, which sold for $48 for 7 ounces, and of Almond Beautiful Shape, which cost $44 for 6.7 ounces. L’Occitane claimed that the skin creams would slim users’ bodies, even though they had no scientific evidence to support the claim.
At the request of the Securities and Exchange Commission, a federal court in Los Angeles has frozen the assets of a group of businesses that the SEC alleges to be operating a pyramid scheme masquerading as a multilevel marketing organization. The companies are based in California and Hong Kong and controlled by “Phil” Ming Xu, a California resident.
According to the SEC, businesses operating under the names WCM and WCM777 posed as multilevel marketing companies selling third-party cloud computing services. The SEC complaint alleges that they raised more than $65 million by falsely promising returns on investment of 100 percent or more in 100 days.
The Direct Selling Association’s recent Code Responsibility teleconference featured a presentation on deceptive representations in earnings claims by FTC attorney Janice Kopec.
An earnings claim is a statement made by a company or its representative about the income an individual can earn from a business opportunity. The FTC requires any earning claims be presented in writing; any claims not supported by written documents are illegal. According to Ms. Kopec, the Earning Claims Statement must include:
- The name of the person making the claim and the date
- The specifics of the claim
- The start and end date those earnings were achieved
- The number and percentage of your buyers who got at least that result
- Any information about the buyers who got those results that might vary from prospective buyers – for example, where they’re located
- A statement that prospective buyers can get written proof for your earnings claims if they ask for it
Kopec talked about how the FTC examines earnings claims to determine whether they comply with the rule. Aside from the basic criteria – whether a claim is material, whether the proper disclosure statements are provided, etc. - the FTC looks at how the typical consumer will perceive the claims.
A federal judge has sentence Kevin Trudeau to 10 years in prison after his November conviction by a jury for criminal contempt of court by violating a 2004 stipulated order to pay a $37.6 million fine for misrepresenting in infomercials the content of his book, “The Weight Loss Cure They Don’t Want You to Know About.”
Federal prosecutors in a filing had asked that Trudeau be sentenced to at least 10 years in prison for repeatedly defying court orders to pay the fine, claiming to lack assets while allegedly living a lavish lifestyle. According to prosecutors, between 2010 and 2013, Trudeau spent at least $12 million on such things as first-class airfare, a single pair of cufflinks costing $12,000 and two residences that together cost more than $15,000 per month.
In his sentencing of Trudeau, U.S. District Judge Ronald Guzman agreed, saying, “He has treated federal court orders as if they were mere suggestions,” adding that, at most, Trudeau considered them “impediments to be sidestepped, outmaneuvered or just ignored.”
The FTC has won a $2.2 million judgment against Wellness Support Network, Inc. as the U.S. District Court for the Northern District of California found that WSN’s marketing of dietary supplements to treat and prevent diabetes violated Section 5 of the FTC Act. The FTC said that any money recovered will be used to reimburse consumers.
The court also prohibited WSN and its two principals from claiming that their supplements would treat and prevent diabetes without rigorous proof to support the claims, as well as from making other deceptive claims.