The Federal Trade Commission (FTC) recently filed a complaint against Roca Labs, Inc. (and several of its officers) alleging that it was unfairly using consumer non-disparagement clauses to squelch consumer complaints about its weight loss products. The complaint also alleged that the defendants were making unsubstantiated weight loss claims and failed to disclose that consumers providing testimonial were paid. 

The Federal Trade Commission (FTC) recently filed a complaint against Roca Labs, Inc. (and several of its officers) alleging that it was unfairly using consumer non-disparagement clauses to squelch consumer complaints about its weight loss products. The complaint also alleged that the defendants were making unsubstantiated weight loss claims and failed to disclose that consumers providing testimonial were paid.

The defendants sold weight loss products that consumers could order online only after affirmatively accepting certain terms and conditions. Those terms and conditions included a “non-disparagement clause.” Customers were subsequently warned that violations of the non-disparagement clause would be a breach of the defendants’ terms and conditions, which would require purchases to pay the “full price” of $1,580 instead of the “discounted” price of $480 that the consumer paid.

According to the FTC, when consumers complained and threatened to report the defendants to third parties such as the Better Business Bureau, the defendants threatened to sue those customers. The complaint alleges that the non-disparagement clause prohibited purchasers from speaking or publishing truthful, negative comments or reviews about the defendants and their products, and thus was an unfair act in violation of the FTC Act. The FTC further sought to enjoin the defendants for making misleading, deceptive, or false claims about the benefits of their weight loss products, including that their products will significantly reduce food intake and weight quickly and are comparable or superior to bariatric surgery. The FTC alleges that such claims were unsubstantiated or false, as well as misleading given the diet regime the defendants required consumers to follow. Finally, the complaint alleges that the defendants paid purchasers to provide video testimonials, but failed to disclose that material connection when using those testimonials in advertising.

TIP: Aggressive “non-disparagement clauses” intended to discourage consumers from truthfully describing their experiences with and stating their opinion about a company’s goods or services are likely to be deemed an unfair practice. This complaint is also another good reminder of the need to disclose any material connection between an advertiser and a consumer who is providing an endorsement.