The Federal Trade Commission filed suit against Roca Labs and Roca Labs Nutraceutical, along with their principals, alleging that they violated Section 5 of the Federal Trade Commission Act by making deceptive claims about weight loss products and by threatening to sue consumers who shared their negative experiences online.
Included in the terms and conditions of purchase of the defendants' Anti-Cravings powder, among other weight loss products, was a "gag clause" intended to keep consumers quiet, the agency said. The online terms stated: "You agree that regardless of your personal experience with RL, you will not disparage RL and/or any of its employees, products, or services. This means that you will not speak, publish, or cause to be published, print, review, blog, or otherwise write negatively about RL, or its products or employees in any way."
In addition, the defendants included a stand-alone insert in product packaging that stated: "You were given a discount off the unsubsidized price of $1,580 in exchange for your agreement to promote our product and when possible share your weight loss success with us (keep those YouTube videos coming). As part of this endorsement you also agree not to write any negative reviews about RLN or our products. In the event that you do not honor this agreement you may owe immediately the full price of $1,580."
The Florida-based marketers threatened to sue—and actually did sue—consumers who complained to the Better Business Bureau or shared a negative experience online, the FTC said, and consumers who did post negative reviews were told they owed the "full price" for their purchases, usually hundreds of dollars more than the product was advertised for.
"Roca Labs had an adversarial relationship with the truth," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "Not only did they make false or unsubstantiated weight-loss claims, they also attempted to intimidate their own customers from sharing truthful—and truly negative—reviews of their products."
In online and social media advertising, the defendants claimed that their weight-loss products were a safe and effective alternative to gastric bypass surgery for individuals seeking to lose 50 pounds or more. Users were allowed to continue "to eat what you like" with "no menus, no diet restrictions," and lose up to 21 pounds per month, with a 90 percent success rate, according to the defendants' website. Testimonials and "third-party" reviews were used by the defendants to promote their products, but the FTC said the "Success Videos" were solicited from purchasers who received their products half-price for a positive review.
The FTC's complaint presented claims under both the unfairness and deceptive prongs of the FTC Act. Unfairness charges were based on the gag clauses, while the weight loss claims and the failure to disclose that the positive reviews were compensated constituted deceptive and misleading advertising, the agency alleged.
Requesting a permanent injunction as well as financial redress for consumers, the agency noted the defendants have sold at least $20 million of their products since 2010.
To read the complaint in FTC v. Roca Labs, click here.
Why it matters: According to the FTC, the defendants managed to violate both the unfair and deceptive prongs of Section 5 of the FTC by making unsubstantiated weight loss claims and instituting gag clauses. Non-disparagement clauses in contract terms have received publicity lately as consumers fight back against such provisions. Now that the FTC has joined the fight, marketers using such clauses definitely want to reconsider using a similar provision.