Antitrust Law Daily Wrap Up, ADVERTISING NEWS: FTC sues weight loss product marketers attempting to stop negative online reviews, (Sep 28, 2015)

By Michael Menzhuber, J.D., LL.M.

The FTC has filed a complaint against Florida-based marketers of a line of weight-loss supplements, who allegedly made baseless claims about their products and then threatened to enforce “gag clause” provisions to stop consumers from posting negative reviews and testimonials online (FTC v. Roca Labs, Inc., FTC File No. 142 3255).

According to the FTC, consumers who shared their negative experiences online or complained to the Better Business Bureau were sued, or threatened to be sued, for violating the non-disparagement provisions of the “Terms and Conditions” they supposedly agreed to when they bought the products. The complaint alleges that these gag clause provisions—and the defendants’ related warnings, threats, and lawsuits—harm consumers by unfairly barring purchasers from sharing truthful, negative comments about the defendants and their products.

The defendants advertised their weight-loss products, Roca Labs “Formula” and “Anti-Cravings” powder, via the Internet and through online search and social media advertising such as Google, Bing, Yahoo, and Facebook. A three-to four month supply of the products started at $480 and, since 2010, the defendants have sales of at least $20 million. In addition to representing that these products were safe and effective alternatives to gastric bypass surgery, the defendants also claimed that users: (1) could lose as much as 21 pounds in one month and (2) had a 90 percent success rate in achieving substantial weight loss.

Testimonials and supposed “third-party” reviews were used to illustrate the weight-loss success consumers achieved with their products. The defendants solicited “Success Videos” from purchasers by offering to pay 50 percent of the products’ price for providing positive reviews. The also charged the “full price” for their products, hundreds of dollars more than advertised or actually paid, to consumers who posted negative reviews.

In addition to the FTC’s unfairness charges based on the defendants’ enforcement of its gag clauses, the FTC alleges that the defendants: (1) made weight-loss claims that were false or unsubstantiated; (2) failed to disclose that they compensated users who posted positive reviews; and (3) violated consumers’ privacy by disclosing personal health information to payment processors, banks, and in public court filings.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

News: Advertising ConsumerProtection FederalTradeCommissionNews