Last week, the Federal Trade Commission (“FTC”) announced a $32 million settlement with NutriMost, LLC, NutriMost Doctors, LLC and their owner (collectively, “Defendants”). The FTC alleged that the Defendants’ weight loss marketing materials misled consumers into believing that the Defendants’ product would cause consumers to lose 20-40 pounds in 40 days. According to the FTC, “[w]hat the Defendants allegedly failed to say, however, was that to achieve the weight loss advertised, users would have to follow a restrictive diet, including a very low-calorie diet of about 500 calories a day.” Although the settlement reflects a $32 million judgment, the judgment is suspended due to a represented inability by the Defendants to pay it, conditional upon the Defendants’ payment of $2 million in consumer refunds.
What are the Terms of the FTC’s Weight Loss Marketing Settlement Agreement?
In its complaint, the FTC alleged that the Defendants used endorsements and testimonials without disclosing that the providers of these endorsements and testimonials had material connections to the Defendants and/or their franchisees. The settlement agreement with the FTC permanently bars the Defendants from failing to disclose, “clearly and conspicuously” and in “close proximity” to the representations, a material connection between the endorser and the Defendants (or their franchisees) in future weight loss marketing. The Defendants are also barred from making any further claims that their products: 1) enable users to lose weight, “including 20-40 pounds;” 2) are safe for users; 3) enable users to achieve permanent weight loss; 4) enable users to burn a specific number of calories; 5) target abnormal fat; or 6) effectively treat, mitigate or cure a disease unless the representation is true at the time it is made and the Defendants possess and rely upon competent and reliable scientific evidence to substantiate the representation as true. Moreover, if the Defendants engage in any further weight loss marketing, they must disclose, again clearly and conspicuously, that users are required to follow a calorie-restricted or very low calorie diet, if applicable.
Weight Loss Marketing Cautionary Tale
Late last year, we blogged about a $30 million judgment against a weight loss marketer for alleged violations of the FTC Act. Companies engaged in weight loss marketing should consult with counsel familiar with state and federal regulations applicable to weight loss marketing or face the consequences. As the Defendants in the instant FTC case have learned, failure to do so may result in a multi-million dollar judgment.