Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC challenges claims made by marketers of weight-loss treatments, supplements, and skin creams, (Jan 7, 2014)

By Jeffrey May, J.D.

In a series of actions announced today, the FTC has targeted advertising claims made by marketers of a variety of weight-loss products, as well as genetically customized nutritional supplements. As part of “Operation Failed Resolution,” the FTC brought actions against Sensa Products, LLC, L’Occitane, Inc., and HCG Diet Direct, LLC, and it announced a partial settlement in a fourth case involving Leanspa, LLC that was originally filed in 2011. Separately, the agency announced consent agreement packages in matters against nutritional supplement marketers Genelink, Inc. and foruTM International Corporation (FTC v. Sensa Products, LLC, File No. 112 3102, Case: 1:14-cv-00072; In the Matter of L’Occitane, Inc., File No.: 122 3115; FTC v. HCG Diet Direct, LLC; File No.: 122 3192, Civil Action No.: 2:14-cv-00015-NVW; FTC v. Leanspa, LLC, File No.: 1123135, Civil Action No.: 311-cv-01715; In the Matter of Genelink, Inc., File No.: 112 3095; In the Matter of foruTM International Corp., File No. 112 3095).

Under the settlements announced as part of “Operation Failed Resolution,” the FTC hopes to recover approximately $34 million for consumer redress. The marketers of the powdered food additive Sensa, who exhorted consumers to “sprinkle, eat, and lose weight,” have agreed to pay $26.5 million; L’Occitane has agreed to pay $450,000 over the marketing of its Almond Beautiful Shape and Almond Shaping Delight skin creams; and the LeanSpa settling defendants, who allegedly promoted acai berry and “colon cleanse” weight-loss supplements through fake news websites, will surrender assets totaling an estimated $7.3 million. The judgment against the HCG Diet Direct defendants, whose marketing of liquid homeopathic hCG drops was challenged by the agency, was suspended due to their inability to pay. Under proposed settlements, the marketers have agreed to refrain from making challenged claims, among other conditions.

Separately, GeneLink, Inc. and its former subsidiary, foru International Corp., agreed to settle FTC charges that they made false or unsupported health claims that their personalized nutritional supplements treat diabetes, heart disease, arthritis, insomnia, and other ailments. The proposed settlements also would resolve charges that the companies failed to protect the security of personal information, including genetic information, Social Security numbers, bank account information, and credit card numbers.

Under the proposed consent orders, the marketers would be required to support claims that a drug, food, or cosmetic will treat, prevent, mitigate, or reduce the risk of any disease by modulating the effect of genes, or based on a consumer’s customized genetic assessment, with at least two adequate and well-controlled studies. The orders also would require that claims that a product effectively treats or prevents a disease in persons with a particular genetic variation must be backed up with randomized clinical trials conducted on subjects who have that genetic variation. The proposed consent orders also would prohibit the marketers from misrepresenting scientific research regarding such drug, food, or cosmetic, or any genetic test or assessment. To resolve the information security concerns, the companies would be required to maintain comprehensive information security programs and to submit to security audits by independent auditors.

Commissioner Ohlhausen dissent. Commissioner Maureen Ohlhausen voted against the consent agreements in the GeneLink and foru matters “because they impose an unduly high standard of at least two randomized controlled trials (or RCTs) to substantiate any disease-related claims, not just weight-loss claims.” Objecting to a “de facto two-RCT standard on health-and disease-related claims for food or other relatively-safe products,” Ohlhausen said: “It is my hope and recommendation that as we consider future cases involving health- and disease-related claims, the Commission and its staff engage in a further dialogue about our substantiation requirements to discern how best to assess the potential costs and benefits of allowing different types of evidence that might provide a reasonable basis to substantiate such claims.”

Chairwoman Ramirez/Commissioner Brill statement. Chairwoman Edith Ramirez and Commissioner Julie Brill issued a separate statement, explaining the remedy imposed against GeneLink and foru, which includes a requirement that the respondents have at least two RCTs before making disease prevention, treatment, and diagnosis claims. “Here, we believe that the two-RCT mandate is appropriate and reasonably crafted to prevent the recurrence of respondents’ alleged unlawful conduct,” the commissioners contended. “This requirement conforms to well-recognized scientific principles favoring replication of study results to establish a causal relationship between exposure to a substance and a health outcome.”

Companies: Sensa Products, LLC; L’Occitane, Inc., HCG Diet Direct, LLC; Leanspa, LLC; Genelink, Inc.; foruTM International Corp.

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