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Supplement Marketers Settle FTC Deceptive Advertising Charges

A health products company and its owner have agreed to settle charges by the Federal Trade Commission and the State of Maine that they deceived consumers with promises that their products could treat everything from arthritis to memory loss.  The proposed federal court order bars the defendants from engaging in a wide range of business practices that the agencies allege have caused financial injury to consumers.

According to the agencies’ complaint, Health Research Laboratories, LLC and its sole owner marketed BioTherapex, a dietary supplement that purportedly targets the liver to address a host of ailments, and NeuroPlus, a brain supplement, using a variety of false and unsupported claims.

Primarily through direct mail marketing campaigns targeting consumers across the United States and Canada, the defendants allegedly advertised that BioTherapex, which they sold for $39.95 per bottle, could treat arthritis, relieve joint and back pain and cause significant weight loss.

The defendants allegedly advertised that NeuroPlus, which they sold for $39.99 per bottle, could protect the brain against Alzheimer’s disease and dementia, reverse memory loss, and improve memory and cognitive performance.

The complaint alleges that these health and efficacy claims are false or unsubstantiated.

According to the agencies, the defendants also styled their direct mail brochures as scientific journals featuring fictitious medical doctors and consumer testimonials.

Brochures for BioTherapex allegedly highlighted the results of a purported 1,200-person clinical study on the product that was never actually conducted.

The complaint also alleges the defendants engaged in an array of deceptive marketing practices, including:  misrepresenting the terms of the purported “risk free” trial period during which consumers could try the products; enrolling consumers in auto-renewal plans without adequately disclosing that they were doing so; obtaining and charging consumers’ debit card numbers without proper authorization, in violation of the Electronic Fund Transfer Act; failing to disclose all material terms and conditions for additional third-party upsells in violation of the FTC’s Telemarketing Sales Rule; failing to disclose material terms of their refund and cancellation policy in violation of the TSR; and misrepresenting the cost of their products to Canadian consumers.

The proposed court order bans the defendants from making any of the seven “gut check” weight-loss claims that the FTC has publicly advised are always false with respect to any dietary supplement, over-the-counter drug or any product rubbed into or worn on the skin.

The order also prohibits the defendants from making the claims challenged in the complaint unless they have competent and reliable scientific evidence in the form of human clinical testing.

The order requires the defendants to have competent and reliable scientific evidence to support any other claims about the health benefits or efficacy of any dietary supplement, food or drug, and prohibits them from misrepresenting the existence or outcome of tests or studies.  In addition, it prohibits them from misrepresenting the existence of consumer testimonialists and expert endorsers.

The order prohibits the defendants from misrepresenting the terms of free or risk-free trial offers, refunds, cancellations, negative option plans or automatic shipments, and they must get consumers’ consent for negative option offers prior to using consumers’ billing information to obtain payment.

Finally, the order imposes a judgment of $3.7 million, which will be suspended upon payment of $800,000.

Contact an FTC advertising compliance and defense attorney if you are interested in the implementation of preventative compliance measures or are the subject of a regulatory investigation.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. You can find him on Twitter @FTCLawDefense.

 

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

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