Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Marketer of green coffee bean weight loss supplement settles FTC charges, (Jan 26, 2015)

By Linda O’Brien, J.D., LL.M.

Marketer Lindsey Duncan and two companies he controlled have agreed to settle FTC charges that they deceptively touted the supposed weight-loss benefits of green coffee bean extract through a campaign that included appearances on “The Dr. Oz Show,” “The View,” and other television programs, the agency announced today.

The FTC alleged that Duncan and his companies, Pure Health LLC and Genesis Today, Inc., deceptively claimed that the supplement could cause consumers to lose 17 pounds and 16 percent of their body fat in just 12 weeks without diet or exercise, and that the claim was backed up by a clinical study. In September 2014, the FTC settled charges against Applied Food Sciences, Inc., the company that sponsored the severely flawed study that Duncan discussed on “The Dr. Oz Show.”

According to the FTC’s complaint, filed in the U.S. District Court for the Western District of Texas (FTC v. Genesis Today, Inc., File No. 122-3283), Duncan began selling the extract after agreeing to appear on “The Dr. Oz Show”, but before the show aired, and tailored a marketing campaign around his appearance on the show to capitalize on the “Oz effect” – a phenomenon in which discussion of a product on the program causes an increase in consumer demand.

While discussing green coffee bean extract during the taping of Dr. Oz, Duncan urged viewers to search for the product online using phrases his companies would use in search advertising to drive consumers to their websites selling the extract. He reached out to retailers, describing his upcoming appearance on “The Dr. Oz Show,” saying he planned to discuss the clinical trials that purportedly proved the supplement’s effectiveness. He and his companies also began an intensive effort to make the extract available in Walmart stores and on Amazon.com when the program aired.

The defendants continued to use Duncan’s Dr. Oz appearance in their marketing campaign after the show aired, the complaint stated, posting links to the episode on websites and using retail point-of-sale displays showing messages such as “New Health Discovery! As Seen on TV, ‘The Dieter’s Secret Weapon.’” After appearing on Dr. Oz, Duncan and his companies sold tens of millions of dollars’ worth of the extract, according to the FTC.

The FTC also alleged that Duncan and several of the companies’ paid spokespeople portrayed themselves on television shows as independent sources of information about green coffee bean extract and other natural remedies, while failing to disclose their financial ties to the companies.

Under the FTC settlement, the defendants are barred from making deceptive claims about the health benefits or efficacy of any dietary supplement or drug product, and will pay $9 million for consumer redress.

The proposed stipulated court order requires the defendants to substantiate any future weight loss claims with at least two well-controlled human clinical tests. Any claims the defendants make about the health benefits and efficacy of any dietary supplement or drug cannot be misleading and must be substantiated by competent and reliable scientific evidence. Further, the order prohibits false claims that the benefits of any such product are scientifically proven.

The order also bars the defendants from misrepresenting the status of any endorser, and requires them to disclose all material connections between them and anyone who endorses their products. Finally, it imposes a $9 million redress judgment, with an initial payment of $5 million due within two weeks of when the court enters the order.

“Lindsey Duncan and his companies made millions by falsely claiming that green coffee bean supplements cause significant and rapid weight loss,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “This case shows that the Federal Trade Commission will continue to fight deceptive marketers’ attempts to prey on consumers trying to improve their health.”

The Commission vote authorizing the staff to file the complaint was 5-0. The vote authorizing the filing of the proposed stipulated court order was 3-2, with Commissioners Ohlhausen and Wright voting no. The majority, Chairman Ramirez, Commissioner Brill, and Commissioner McSweeny, issued a statement in support of the complaint and order. Commissioners Ohlhausen and Wright issued a dissenting statement.

Companies: Pure Health LLC; Genesis Today, Inc.

News: Advertising ConsumerProtection FederalTradeCommissionNews