Showing posts with label CONSUMER FRAUD. Show all posts
Showing posts with label CONSUMER FRAUD. Show all posts

Monday, December 15, 2014

FTC KEEPS PRESSURE ON WEIGHT-LOSS FAD PRODUCTS

FROM:  U.S. FEDERAL TRADE COMMISSION 
Federal Trade Commission Continues Crackdown on Fad Weight-Loss Products
Case Is Second Settlement with Marketers of HCG Products this Year

Marketers who pitched homeopathic HCG drops as a quick and easy way to lose substantial weight have agreed to pay $1 million to settle Federal Trade Commission charges that their weight-loss claims were deceptive and not supported by scientific evidence. The defendants have stopped selling HCG Platinum drops, and under the settlement, Kevin Wright and his Utah-based companies, HCG Platinum, LLC and Right Way Nutrition, LLC, are banned from making similar weight-loss claims in the future.

The settlement marks the second time this year the FTC has taken legal action against marketers of HCG weight-loss products. In January, a company called HCG Diet Direct settled similar charges brought by the FTC.

“Fad weight-loss products like HCG drops come and go, but consumers shouldn’t be fooled by their empty promises,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The foundation of successful weight loss is to eat a healthy diet and to increase physical activity.”

HCG, or human chorionic gonadotropin, is a hormone produced by the human placenta that for decades has been falsely promoted for weight loss. In November 2011, Wright and six other HCG marketers received warning letters issued jointly by FDA and FTC staff, advising them that their products are mislabeled drugs under the Federal Food, Drug, and Cosmetic Act, and warning that it is illegal to make weight-loss claims that are not supported by competent and reliable scientific evidence.

Selling the products at GNC, Rite Aid, Walgreens, and on their own websites, Wright and his companies promised consumers that HCG Platinum drops would cause rapid and substantial weight loss, and that consumers likely would lose as much as 43 and even 50 pounds, as claimed in product testimonials.

The defendants, who also made claims on Facebook, on product packaging, and in Internet pop-up ads and magazines, directed consumers to place the HCG drops under their tongues before meals and stick to a very low calorie diet. The defendants marketed two of their three formulations as “homeopathic,” meaning the listed ingredients were diluted to the point they were undetectable. They typically charged between $60 and $85 for a 30-day supply of all three formulations, and sold approximately $10 million of the products from 2010 to earlier this year, when they were sued.

The settlement bans the defendants from making a number of specific weight- loss claims about any over-the-counter drug, patch, cream, wrap, or any other product. It also requires the defendants to substantiate any future claims that using a product causes weight loss, rapid weight loss, or a specific amount of weight loss or that consumers can expect to lose as much weight as the product’s endorser, unless they have at least two adequate and well-controlled human clinical studies. Claims regarding the health benefits, safety, performance, or efficacy cannot be made unless they are not misleading and are substantiated by competent and reliable scientific evidence. The defendants also are barred from misrepresenting the results of any scientific study.

The order also imposes a $10 million judgment, representing all net sales of HCG Platinum drops, which will be suspended, provided the defendants pay the FTC $1 million. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgment will become due.

Thursday, March 20, 2014

DEFENDANTS SETTLE CHARGES IN "WORK-AT-HOME" OPPORTUNITY SCAM

FROM:  FEDERAL TRADE COMMISSION 
Defendants Behind ‘Online Entrepreneur’ Work-at-Home Scheme Settle FTC Charges

The operators of a business opportunity scheme have agreed to settle Federal Trade Commission charges that they defrauded consumers through the sale of a work-at-home program that purportedly provided consumers with their own websites that would enable them to earn a significant income by affiliate marketing with websites of well-known companies such as Prada, Sony, Louis Vuitton, and Verizon.

The settlement is part of a federal-state crackdown on scams that falsely promise jobs and opportunities to “be your own boss” to people who are unemployed or underemployed. Under the settlement, the defendants behind the operation, The Online Entrepreneur, will be banned from selling business and work-at-home opportunities.

According to an FTC complaint filed in November 2012, the defendants sold the “Six Figure Program” to consumers as a purportedly no-risk, money-back guaranteed opportunity to make money via their own website, falsely claiming that, for a $27 fee, they would enable consumers to affiliate with well-known companies’ websites and earn commissions. After purchasing the program, consumers learned that they had to pay $100 or more in additional costs just to set up their websites. The court subsequently halted the allegedly deceptive practices, froze the defendants’ assets, and put the companies into receivership pending a court hearing.

The settlement order announced today permanently prohibits The Online Entrepreneur Inc., Ben and Dave’s Consulting Associates, Inc., and David Clabeaux from selling business and work-at-home opportunities, misrepresenting that consumers are likely to earn money and misrepresenting any material fact about a product or service. They also are barred from failing to clearly disclose the terms of any offer before consumers provide billing information, and making a representation unless it is true and the defendants have competent and reliable evidence to substantiate the claim. In addition, the order prohibits these defendants from selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.

The order imposes a judgment of more than $2.9 million, which will be suspended when Clabeaux has surrendered real estate, personal property, and bank and investment accounts. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. Litigation continues against the remaining defendant, Benjamin Moskel.

The Commission vote authorizing the staff to file the proposed consent judgment was 4-0. The consent judgment was entered by the U.S. District Court for the Middle District of Florida on March 13, 2014.

NOTE:  Consent judgments have the force of law when approved and signed by the District Court judge.

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