The marketers of weight-loss supplements containing green coffee bean extract agreed to forfeit assets totaling $9.2 million and to a ban on advertising or selling weight-loss supplements using negative option sales plans to settle the Federal Trade Commission's charges of deceptive advertising. They also agreed to cease making unsupported health claims about other products.
According to the agency, Health Formulas LLC, 42 related entities, and two individuals controlling the operation touted their weight-loss supplements with claims such as "Burn fat without diet or exercise" and "Extreme weight loss!" despite lacking support for the claims. The marketing campaign included Internet, print, radio, and television ads as well as telemarketing.
Consumers were deceived into sharing their personal information by the defendants' "free trial" or discount programs that featured undisclosed costs, the FTC alleged, and were then enrolled—often without their consent—in a negative option program. Those who tried to cancel their membership were often unable to stop the automatic charges, the agency said, in part due to the defendants' failure to disclose material facts about the refund and cancellation policies.
"The defendants made misleading claims about their products, locked people into recurring charges, and debited bank accounts without permission," Jessica Rich, Director of the FTC's Bureau of Consumer Protection, said in a statement. "As a result of their outrageous behavior, they're now banned from using continuity programs or selling weight-loss products, and they've surrendered millions of dollars."
For the alleged violations of the Federal Trade Commission Act, the Restore Online Shoppers' Confidence Act, the Telemarketing Sales Rule, and the Electronic Funds Transfer Act, the defendants will surrender more than $9 million in assets (including a Ferrari). The remainder of the $105 million judgment will be suspended.
The final consent order further prohibits the defendants from a host of illegal activity, including a ban on negative options and weight-loss marketing. They are also forbidden from misrepresenting evidence used to support product claims and from committing telemarketing violations. The Health Formulas defendants must clearly disclose all material transaction terms and conditions during any sale, as well as information on cancellation and refund policies. Substantiation is required for any claims made about the health benefits or efficacy of any food, drug, or dietary supplement.
To read the complaint and court order in FTC v. Health Formulas, click here.
Why it matters: Enforcement actions against the marketers of green coffee bean extract weight-loss products continue to keep the agency busy, following prior actions against an entity that relied on fake news sites to promote its product and an advertiser that claimed its supplement would allow consumers to lose 17 pounds and 16 percent of their body fat in 12 weeks without diet or exercise.