Sprinkle some magic powder on your food and you'll have a gym body without going to the gym in no time. Slim down just by rubbing some sweet smelling cream in strategic places. Do these promises of fitness without dieting and exercising sound too good to be true? The FTC thought so and charged Sensa, LeanSpa, L’Occitane and Diet Direct with consumer fraud. The FTC announced that all four companies had settled their cases by agreeing to pay a total of $34 million in the aggregate.
The FTC created "Operation Failed Resolution” to target diet, fitness and weight loss companies that promote products with false or misleading advertising. Fraud relating to the $66 billion diet and weight loss industry accounted for 13% of fraud claims to the FTC in 2012. Proceeds from the $34 settlement will go towards reimbursing defrauded consumers who purchased weight loss products from these companies.
Sensa Takes a Powder
Charges were settled with Sensa Products LLC, its CEO, Adam Goldenberg, and Sensa creator and owner, Dr. Alan Hirsch. The company agreed to pay $26.5 million to settle charges that it provided unfounded weight-loss claims and misleading endorsements. While a substantial sum of money, the FTC claimed that Sensa collected at least $364 million in sales of its magic weight loss powder from at least 2008 through 2012. Sensa was well known from print advertisements claiming that consumers could "get a gym body without going to a gym" and that one could "eat yourself skinny." But Sensa's weight loss infomercials packed the hardest sales pitch regarding its pricey powder:
Right now hundreds of thousands of people are already losing millions of pounds without dieting. They’ve discovered the most revolutionary weight-loss breakthrough of the 21st century. It’s called Sensa, the amazing new clinically proven sensation that you sprinkle on to take the weight off. Whether you need to lose 10 pounds, 50 pounds or more, now you can, without dieting. Simply sprinkle Sensa on, eat all the foods you love, and watch the pounds come off. It’s that easy. You’ll lose weight faster and easier than you ever dreamed possible.
LeanSpa Gets Leaner
LeanSpa promoted trial usage of acai berry and “colon cleanse” weight-loss products for a nominal shipping costs. But the FTC alleged that LeanSpa made it extremely difficult for consumers to cancel recurring shipments of the products, which ended up costing consumers approximately $80 for the trial and the cost of recurring monthly shipments.
The FTC's settlement with LeanSpa requires that principal owner, Boris Mizhen, and three companies under his control are to surrender cash and property worth approximately $7 million. Mr. Mizhen's wife is to pay $300,000 for receiving proceeds from the unlawful operation but was not accused of being an active participant.
L’Occitane Gets Noticeably Slimmer
L’Occitane allegedly made fraudulent claims of weight loss benefits concerning its Almond Beautiful Shape and Almond Shaping Delight skin creams, which were sold for roughly $6.50 per ounce. Its unsubstantiated advertising claims made during 2012 include the ability to trim over an inch of fat in just one month and a proven remedy to reduce cellulite.
The FTC proposed settlement with L’Occitane requires them to pay $450,000. It also bans the company from making numerous claims about its products that concern cellulite, fat or weight loss unless the claim is backed by significantly reliable clinical studies.
HCG Diet Direct Gets Dropped
Diet Direct promised consumers that they could lose up to 1 pound per day - or 40 pounds in 40 days - by simply ingesting a few drops of a human hormone extract. Back in 2011, Diet Direct and several other companies were warned by the FTC that their claims were misleading and that there was no reliable scientific evidence that proved that the active ingredient was effective for weight loss. Furthermore, Diet Direct fraudulently claimed that its homeopathic diet drops were FDA approved and failed to disclose that people endorsing the products were compensated and may have also been related to or employed by HCG Diet Direct.
From 2009 through 2012 the company was alleged to have generated approximately $3 million in sales. The proposed settlement bars the company and its director, Clint Ethington, from making claims that any dietary supplement or food will induce weight loss unless substantiated by reliable scientific evidence. In addition, the order contains a $3.2 million judgment against Diet Direct and Ethington, which is currently suspended based upon the claim by defendants that they are unable to pay the full amount of the judgment. Determination of those claims is currently in being made by the FTC.
Harsher Penalties Needed to Trim Weight Loss FraudWhile these settlements are certainly an accomplishment, consumer fraud is rampant. The penalty against Sensa seems large, but $26.5 million represents less than 10% of the company's operating revenues during the period of the fraud. If the FTC wishes to discourage the unscrupulous from engaging in fraud, the law must impose harsher penalties against the wrongdoers. With modest penalties, even these large settlements may be factored into operations as a cost of doing business and not nearly enough to deliver a fatal knockout blow.
- Legal Practice:
- Consumer - Consumer Protection
- US Federal
News Popular Diet and Weight Loss Companies Settle FTC Fraud Charges
By Michael Wechsler, Jan 8, 2014 |
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