Yesterday, the Federal Trade Commission (the “FTC” or “Commission”) announced that it has obtained a temporary restraining order from a federal court in California against a number of advertisers, marketers and distributors of weight-loss supplements – both individually and on behalf of their respective businesses. The Commission’s complaint alleges that the defendants made deceptive misrepresentations and sent unsolicited commercial email to consumers.
How much weight should marketers give to the FTC’s latest supplement-related campaign?
Deceptive Marketing of Weight-Loss Supplements
According to the FTC’s complaint, Sale Slash, LLC (“Sale Slash”), Purists Choice LLC (“Purists Choice”) and the companies’ owner/manager Artur Babayan and marketer Vahe Haroutounian have advertised, marketed, promoted and sold various weight-loss supplements to consumers since at least 2012, including Premium Green Coffee and White Kidney Bean Extract.
The Commission alleges that the defendants marketed their weight-loss products through use of banner advertisements and unsolicited email messages, which contained links to “news” websites displaying testimonials, endorsements and research apparently conducted in connection with the supplements. Consumers were purportedly able to purchase the defendants’ dietary products from these websites.
FTC’s Deceptive Marketing and CAN-SPAM Claims
In yesterday’s statement, the Commission referred to the subject defendants as “a fraud trifecta.” According to Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, “the company made outlandish weight-loss claims for its diet pills using fake news sites, phony celebrity endorsements, and millions of unwanted spam emails.”
The Commission’s lawsuit brings six separate claims against Sale Slash, Purists Choice, Babayan and Haroutounian. The FTC alleges that the defendants violated the FTC Act, which prohibits unfair and/or deceptive marketing practices, by representing that their weight-loss supplements:
- Cause rapid and substantial weight loss without diet or exercise; and
- Were approved by Oprah Winfrey, the cast of the daytime talk show The Doctors and other celebrities.
Additionally, the Commission’s complaint claims that the defendants have violated the CAN-SPAM Act for sending unsolicited commercial email:
- With materially false or misleading header information;
- With misleading subject headings;
- Without a clear and conspicuous opt-out notice and feature; and
- Without including a valid physical postal address.
Marketers with Doubts: Cut the Fat and Establish Best Practices
With the issuance of last Monday’s order, the court has overhauled the subject defendants’ marketing strategies and frozen their assets until May 11, at which time the parties must appear at the courthouse to argue against further injunctive action. This case demonstrates how critical it is for marketers to remain abreast of applicable regulations in the marketing space, including the FTC Act and CAN-SPAM Act, or risk bearing substantial (and even personal) liability.