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The Federal Trade Commission has announced two proposed settlements that will conclude their sweep against online marketers that allegedly used fake news sites to promote weight-loss products.
The two settlements, one with Beony International and owner Mario Milanovic and one with Beony International employee Cody Adams, each impose a $13 million judgment. However, that will be suspended when the defendants pay more $1.6 million and sell a 2008 Porsche. However, if the financial information the defendants provided is later determined to have been false, the full amount of the judgments will be imposed.
The Federal Trade Commission has upheld an Administrative Law Judge’s May 2012 decision that the marketers of POM Wonderful Pomegranate Juice and POMx supplements deceptively advertised their products as being able to would treat, prevent, or reduce the risk of heart disease, prostate cancer and other conditions.
Circa Direct LLC and Andrew Davidson will pay more than $2 million to settle the FTC complaint charging them with deceptive advertising by operating fake news websites to promote acai berry weight loss products. This follows September’s $1 million settlement with the Coleadium, Inc. affiliate network, also known as “Ads4Dough,” and its owner will pay $1 million to settle a similar FTC complaint.
POM Wonderful lost the latest round in its lawsuit claiming the Federal Trade Commission’s enforcement of advertising rules and regulations exceeds its authority and violates POM Wonderful’s First and Fifth Amendment rights when a Federal district court judge in Washington DC dismissed POM’s suit.
However, U.S. District Judge Richard Roberts did not address those issues in the September 30 decision. Instead, he agreed with the FTC that “declaratory relief is not proper because a declaratory judgment would not fully resolve the controversy between the parties.”
Jason Pharmaceuticals, a subsidiary of Medifast Inc., has agreed to pay a $3.7 million civil penalty to settle a Federal Trade Commission complaint alleging that it made unsupported claims about its weight loss program in violation of a 1992 FTC settlement order. The 1992 order barred Jason Pharmaceuticals from making unsupported claims regarding user’s success in losing weight or maintaining weight control using its products.
Jason Pharmaceuticals sells Medifast-brand low-calorie meal substitutes. The FTC complaint alleges that since at least November 2009 the company had been using unsupported claims in radio and print advertising that Medifast programs and products would result in weight loss of two to five pounds each week. They complaint also alleged that the company represented the experience of the consumers featured in the ads as typical, and that users would lose more than 30 pounds using the program.
The FTC has charged two marketers of bed bug treatments using natural ingredients such as cinnamon and cedar oil with making unsubstantiated claims that their products could prevent or eliminate infestations. The FTC also alleged that one of the marketers claimed that its products worked on head lice, as well.
In one of the two cases, RMB Group, LLC and its principals have agreed to settle the charges relating to their “Rest Easy” bed bug products. In the case against Cedarcide Industries, Inc. and others, challenging their marketing of “Best Yet!” bed bug and head lice treatments, the defendants have not settled, and the FTC is beginning litigation against them.
According to the FTC complaint, Cedarcide Industries, Inc. claims that the cedar-oil based products they market under the name BEST Yet!, will treat and prevent bed bug and head lice infestations. The products are sold nationwide to consumers and also to hotels for bed bugs and to school districts for treating head lice.
The FTC complaint charges that the Cedarcide defendants make:
- unsupported claims that Best Yet! is effective at stopping and preventing bed bug infestations and that it is more effective than synthetic pesticides at doing so;
- false claims that scientific studies prove Best Yet!is effective at stopping and preventing bed bug infestations, and that it is more effective than synthetic pesticides at doing so;
- a false claim that the Environmental Protection Agency has warned consumers to avoid all synthetic pesticides for treating bed bug infestations;
- unsupported claims that Best Yet! is effective in stopping and preventing head lice infestations, killing head lice eggs, dissolving the glue that binds head lice eggs (known as nits) to hair, and killing head lice and their eggs in a single treatment; and
- false claims that scientific studies prove Best Yet! is effective in stopping and preventing head lice infestations.
- false claims that Best Yet!was invented for the U.S. Army at the request of the U.S. Department of Agriculture, and that the USDA has acknowledged the product as the number one choice of bio-based pesticides.
According to the FTC, RMB Group, LLC marketed Rest Easy, a liquid containing cinnamon, lemongrass, peppermint, and clove oils for consumer use, primarily when staying in hotel rooms. The FTC complaint charges that the made unsupported claims that Rest Easy kills and repels bed bugs, and that a consumer can create a barrier against them by spraying the product around a bed.
Under the settlement, the defendants are barred from representing that Rest Easy or any other pesticide kills or repels bed bugs or creates a barrier against them, and making any claims about the performance of such a product, unless they are true and backed by competent and reliable scientific evidence.
Skechers USA, Inc. will pay $40 million to settle charges made by the FTC that Sketchers deceived consumers when it advertised that its Shape-ups shoes would help people lose weight, strengthen and tone their muscles, and improve their cardiovascular health. The FTC complaint also alleged that Skechers made similar claims about its Resistance Runner, Tones and Tone-ups shoes.
Consumers who bought any of these shoes will be eligible for refunds, either directly from the FTC or through a court-approved class action lawsuit.
The FTC complaint charged that Skechers violated federal law by making deceptive advertising claims, including falsely representing that clinical studies backed up the claims. Under the FTC’s settlement, unless they are true and backed by scientific evidence, Skechers is barred from making any claims about strengthening, weight loss or any other health or fitness benefits, including claims regarding calorie burn, blood circulation, aerobic conditioning, muscle tone and muscle activation. Skechers also is barred from misrepresenting any tests, studies or research results regarding toning shoes.
The final judgment is available here.
The FTC is sending 27,339 checks totaling $698,000 to consumers who purchased Oreck Corporation’s Halo vacuum cleaner or ProShield Plus portable air cleaner. The refunds are the result of the settlement of the FTC complaint alleging that Oreck’s advertising for the products made false and unproven claims for the products.
The Halo is an upright vacuum with an ultraviolet light that shines onto the floor while vacuuming. The ProShield Plus is a portable air cleaner that filters air particles using an electrostatic charge. Oreck’s advertising made a number of claims for the products, including that they could reduce the risk of flu and other illnesses, and eliminate virtually all common germs and allergens.
Under the settlement reached with the FTC, Oreck is barred from making any of the allegedly deceptive claims challenged by the agency unless it has competent and reliable scientific evidence to support the claims.
An administrative law judge has upheld the FTC’s complaint and ruled that POM Wonderful LLC, its sister corporation Roll Global LLC, and principals Stewart Resnick, Lynda Resnick, and Matthew Tupper made deceptive claims in some advertisements that their POM Wonderful 100% Pomegranate Juice and POMx supplements (POM products) would treat, prevent, or reduce the risk of heart disease, prostate cancer and other conditions.
Chief Administrative Law Judge D. Michael Chappell’s initial decision would bar the POM respondents from making any representation about the health benefis of POM products or any other food, drug or dietary supplement unless the representation is not misleading and POM has scientific evidence that substantiates the claims.
The FTC sought to have POM respondents obtain FDA pre-approval before making any representations that any POM product is effective in the “diagnosis, cure, mitigation, treatment, or prevention of any disease.” Judge Chappell ruled that this requirement “would constitute unnecessary overreaching.”
The FDA and FTC have issued warning letters to companies marketing over-the-counter products containing human chorionic gonadotropin (HCG) hormone that are labeled “homeopathic” remedies for weight loss.
The two agencies say the joint action is the first step in keeping these products from being marketed online and in retail outlets.
HCG is FDA-approved as a prescription drug for the treatment of some cases of female infertility and other medical conditions, but is not approved for weight loss. The letters warn the companies that they are not only in violation of federal law by selling unapproved drugs, but that they are making unsupported weight loss claims.
The labeling for the “homeopathic” HCG products states that they should be taken in conjunction with a very low calorie diet. According to the FTC, the weight loss claims are deceptive since there is no substantial scientific evidence that HCG increases weight loss beyond that resulting from the calorie-restricted diet. In addition, the FDA says that people on very low calorie diets may be at risk for a number of harmful side effects and should only use such diets under medical supervision.
According to the Warning Letters, the companies have 15 days to notify the FDA of the steps they have taken to correct the violations cited. Failure to do so may result in legal action, including seizure and injunction, or criminal prosecution.