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January 9, 2014

FTC Pursues Diet Companies: A Weighty Subject

Seller Beware: Consumer Protection Insights for Industry

As thousands of Americans rang in the New Year with resolutions to get fit, the Federal Trade Commission (FTC) continued its battle against weight loss products making claims that seem too good to be true. On Tuesday, January 7, 2013, the FTC settled deceptive advertising charges with four marketers of weight loss products. The four companies will pay a total of more than $30 million and have been ordered to stop making unsupported health-related claims. The settlements are part of a broader effort by the FTC to combat false advertisements in the weight loss products industry, which the agency claims often include false or misleading statements.

In the second-biggest deceptive advertising settlement by the FTC, Sensa Products, along with its parent company, CEO Adam Goldenberg, and part-owner Dr. Alan Hirsch, were charged with deceptive advertising for making unsubstantiated claims about the Sensa food additive, which the company says makes consumers eat less by enhancing the smell and taste of food. As part of the settlement, Sensa Products was fined $46.5 million, but will pay $26.5 million due to its inability to pay the entire amount. These funds will be made available to provide refunds to Sensa customers.

L'Occitane, which advertised a skin cream that it claimed would make users slimmer, and HCG Diet Direct, which marketed an unproven weight loss hormone, also settled claims with the FTC. L'Occitane agreed to pay $450,000 for refunds to consumers. HCG Diet Direct was fined $3.2 million, which was suspended due to its inability to pay. The FTC also reached a settlement with LeanSpa with regard to its acai and "colon cleanse" weight loss product advertisements, but continues litigation against certain LeanSpa affiliates.  LeanSpa was charged with creating false news websites to promote its products.

On the same day the settlements were announced, the FTC published updated guidance for publishers and broadcasters screening weight loss ads for publication, with specific focus on reaching media sales professionals. The FTC also provided guidance to consumers on how to evaluate weight loss claims before purchasing products.

In light of the FTC's continuing efforts to combat advertisements containing misleading or unsubstantiated weight loss claims, marketers and publishers should continue carefully to evaluate advertisements using the FTC guides and avoid statements that contradict or are unsupported by science. As for those New Year's resolutions to get fit? It looks like the FTC is encouraging everyone to lose weight the old fashioned way.

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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