Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Weight-loss supplement marketers agree to settle false advertising charges, (Feb 5, 2016)
By Michael Menzhuber, J.D., LL.M.
Direct Alternatives and Original Organics LLC, and their owners Anthony Dill and Staci Dill, have agreed to a settle charges that they violated the FTC Act and Maine consumer protection laws in connection with their promotion and sale of their weight loss supplements “AF Plus” and “Final Trim,” the FTC announced today.
According to a joint complaint by the FTC and the State of Maine’s Office of the Attorney General, the defendants used radio ads to falsely claim that: (1) “AF Plus” and “Final Trim” users would quickly and easily lose significant weight, while continuing to eat their favorite foods, and reduce their waist size; and (2) these results were “proven” by scientific studies. In total, more than $16 million of the two products were sold over a four-year period.
The complaint further alleged that:
the “risk-free” trial offer for the defendants’ products was not free of risk and that consumers who returned the product were not refunded their original shipping fee;
consumers were enrolled in a poorly disclosed monthly continuity plan that the defendants made it difficult to receive refunds from; and
consumers were deceptively offered $80 gift cards, which they never received, for agreeing to trial memberships in two buying clubs and were auto-billed each month if they failed to cancel their membership within 30 days.
The court order settling the agencies’ charges prohibits the defendants from making deceptive claims about health products; engaging in deceptive marketing practices; and violating the Restore Online Shoppers’ Confidence Act when selling any good or service. In addition, the defendants are required to comply with the Electronic Fund Transfer Act for purchases made using a debit card or other electronic fund transfer.
Finally, the court order further imposes a $16,419,989 judgment on the defendants, which will be suspended after the defendants sell or liquidate a substantial portion of their assets.
The complaint and final stipulated final order were filed in the U.S. District Court for the District of Maine.
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