COURT HALTS SUPPLEMENT MARKETERS FROM DECEPTIVE ADS, ILLEGAL DEBITING OF ACCOUNTS

FROM:  U.S. FEDERAL TRADE COMMISSION 

At FTC’s Request, Court Stops Supplement Marketers From Deceptive Advertising and Illegally Debiting Consumers’ Accounts

At the Federal Trade Commission’s request, a U.S. district court has temporarily stopped a group of marketers in Nevada and California from conducting business using “free” trial offers and health claims that the agency charges are deceptive and illegal to pitch green coffee bean extract and another dietary supplements. The FTC is seeking to permanently stop their allegedly deceptive conduct.

This is the first FTC action alleging violations of the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits marketers from charging consumers in an Internet transaction, unless the marketer has clearly disclosed all material terms of the transaction and obtained the consumers’ express informed consent.

“The defendants behind Simple Pure used nearly every trick in the book to deceive consumers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They not only deceived consumers about the effectiveness of their products, but also repeatedly debited consumers’ accounts without their approval.”

According to the FTC’s complaint, Health Formulas, LLC, its related entities, and principals (Simple Pure) use telemarketing, the Internet, print, radio, and television advertisements to pitch a variety of dietary supplements and other weight-loss, virility, muscle-building, or skin cream products. Examples of Simple Pure’s advertising claims include: 1) “Burn fat without diet or exercise”; 2) “Shed pounds fast!” and 3) “Extreme weight loss!”  The FTC alleges that the defendants have no basis for the weight-loss claims they make about their products.

In addition, the defendants allegedly trick consumers into disclosing their credit and debit card information, and then enroll them without authorization in a negative option program in which defendants continually charge consumers’ accounts. The charge for Simple Pure’s weight-loss supplements, with names like Pure Green Coffee Bean Plus and RKG Extreme, typically ranges from $60 to $210 per month. Some consumers were sold additional products that cost between $7.95 and $60.

The FTC charges that the defendants failed to provide the disclosures required for a negative-option program, failed to provide a way for consumers to stop the automatic charges, and also failed to disclose material facts about their refund and cancellation policy.

The complaint charges the defendants with violating the FTC Act, the ROSCA, and the Commission’s Telemarketing Sales Rule (TSR). It also charges the defendants with violating the TSR’s Do Not Call provisions by calling consumers who had asked them to stop calling. Finally, the complaint charges the defendants with violating the Electronic Funds Transfer Act by debiting consumers’ accounts on a recurring basis without their prior written authorization.

Defendants in the case include: 1) Health Formulas, LLC, also doing business as (d/b/a) Simple Pure Nutrition; 2) Pure Vitamins, LLC; 3) Longhorn Marketing, LLC also d/b/a Men’s Health Formulas, LLC, Life Vitamins, and Unleash the Thunder; 4) Method Direct, LLC, also d/b/a Extamax, LLC, Vitaman Labs, Inc., Vitafit, and Playboy Offer/DVD Entertainment; 5) Weight Loss Dojo, LLC, also d/b/a Fitness DVDs; 6) VIP Savings, LLC, also d/b/a VIP Saving Center; 7) DJD Distribution, LLC; 8) MDCC, LLC, also d/b/a Method Direct Calling Center; 9) Chapnick, Smukler & Chapnick, Inc.; and 10) Brandon Chapnick, Keith Smukler, Danelle Miller (also known as Danelle Folta and Danelle Kenealy), and Jason Miller, individually and as members of the corporate defendants.

Information for Consumers

Consumers should carefully evaluate advertising claims for weight-loss products. For more information, see the FTC’s guidance for consumers of products and services advertised for Weight Loss & Fitness. The FTC also has information about understanding free trial offers, including “Free” Trial Offers?, which includes a video on potential risks of such offers, and a short online audio tip on free trials.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada on October 7, 2014, and the court entered a temporary restraining order against the defendants on October 9, 2014.

The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.

FTC CHARGES SUPPLEMENT MARKETERS WITH MAKING DECEPTIVE CLAIMS

FROM: U.S. FEDERAL TRADE COMMISSION 

Supplement Marketers Settle FTC Charges that “BrainStrong Adult” Memory Improvement Claims Are Deceptive

Supplement marketers i-Health, Inc. and Martek Biosciences Corporation have agreed to settle FTC charges of deceptive advertising for claiming that their BrainStrong Adult dietary supplement will improve adult memory and prevent cognitive decline. The complaint also alleges the marketers falsely claimed they had clinical proof that BrainStrong Adult improves adult memory.

“Supplement marketers must ensure that adequate scientific proof supports their specific advertising claims,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.  “When the results of a scientific study don’t match the hype, consumers are likely to be misled.”

Since at least March 2011, i-Health and Martek have sold BrainStrong Adult for about $30 for a 30-day supply at major retail stores, including CVS Pharmacy, Walmart, Walgreens, and Rite Aid; and online through drugstore.com and Amazon.com.  They advertised the product – which contains the Omega-3 fatty acid DHA – on television, on Twitter, and at brainstrongdha.com.

In the television ad, a woman forgets why she walked into a room. Through a voice over, her dog tells the audience she is there to find her sunglasses, which are sitting on top of her head.  Another voice over then asks, “Need a memory boost?  Introducing BrainStrong…Clinically shown to improve adult memory.”

The proposed administrative settlement covers any dietary supplement, food, or drug promoted to prevent cognitive decline or improve memory, or containing DHA. It bars the companies from claiming that any such product prevents cognitive decline or improves memory in adults unless the claim is truthful and supported by human clinical testing. The settlement also prohibits claims about the health benefits, performance, safety, or effectiveness of these products unless the claims are backed up by competent and reliable scientific evidence. Finally, the companies cannot claim they have clinical proof to support their claims when they do not.

For consumer information see: What’s in a health claim? Should be a healthy dose of proof.

The Commission vote to accept the agreement containing the proposed consent order for public comment was 3-1-1, with Commissioner Ohlhausen voting no, and Commissioner McSweeny not participating. Chairwoman Ramirez and Commissioner Brill issued a joint concurring statement, Commissioner Wright issued a separate concurring statement, and Commissioner Ohlhausen issued a dissenting statement.

The FTC will publish a description of the consent agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 9, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in “Supplementary Information” section of the Federal Register notice. Comments should be submitted electronically using this form. Instructions for submitting comments in paper form are listed in the “Accessibility” portion of the form.

NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.