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US Federal Trade Commission charges TV weight-loss companies with fraud

US Federal Trade Commission charges TV weight-loss companies with fraud
January 9, 2014

With high profile promotions offering 'quick-fix' solutions to meet New Year's fitness resolutions, the USA's Federal Trade Commission has this week charged four companies with deceptively marketing weight-loss products, asserting they made "unfounded promises" that consumers could shed pounds simply by using their food additives, skin creams and other dietary supplements.

The Federal Trade Commission (FTC) targetted claims such as "get a gym body without going to the gym" by sprinkling a powder on food; "significantly slim your thighs and buttocks" using an almond-scented cream; and liquid that would see users lose 3 kilograms a week by from just two drops being applied under the tongue.

The four companies - Sensa Products, L'Occitane, HCG Diet Direct and LeanSpa - will collectively pay US$34 million to refund consumers, although the companies neither admitted nor denied fault in the case.

The case is part of a broader US Government crackdown on companies that "peddle fad weight-loss products."

Linda Goldstein, the chairwoman of the advertising and marketing division at the law firm Manatt, Phelps & Phillips, told the New York Times that the settlements made clear that the commission would accept only double-blind, placebo-controlled studies to document the medical effectiveness of diet regimes.

The FTC is also proposing new guidance for media outlets to help them catch potentially fraudulent claims, saying it will urge media companies not to accept advertisements that make dubious weight-loss claims.

In a statement, the FTC Bureau of Consumer Protection Director Jessica Rich stated "resolutions to lose weight are easy to make but hard to keep.

"And the chances of being successful just by sprinkling something on your food, rubbing cream on your thighs or using a supplement are slim to none. The science just isn't there."

US consumers are expected to spend about US$66 billion this year on diet soft drinks, health club memberships, dietary supplements and other products aimed at weight loss, according to Marketdata Enterprises.

However, that growth comes with potential pitfalls with weight-loss products accounted for 13% of the fraud claims submitted to the FTC in 2011, the most recent year for which data available. That is more than twice the number in any other category.

The FTC's latest initiative, called 'Operation Failed Resolution', follows a series of enforcement efforts in recent years against unfounded weight-loss schemes.

In 2004, the commission announced 'Operation Big Fat Lie', charging six companies with false marketing. Among the fraudulent products that year was Himalayan Diet Breakthrough, a diet pill containing Nepalese mineral pitch, a pastelike material that "oozes out of the cliff face cracks in the summer season" in the Himalayas. The seller, AVS Marketing, claimed that users could lose as much as 16 kilograms in eight weeks while still consuming unlimited amounts of food.

Over the last decade, the FTC has also lobbied media organisations to stop accepting ads for weight-loss products whose claims are too good to be believed. That year, the commissioned announced its Red Flag education campaign for media companies to help them spot dubious weight-loss claims.

In that time, the Commission has seen "a significant reduction in the number of ads appearing" in major media outlets that screen advertising content before use, said Richard Cleland, an FTC lawyer.

As part of the recent spate of cases, the commission noted that one marketer piggybacked on the reputation of well-known media outlets as cover for their claims.

For example, one television commercial for Sensa noted that Dr. Alan Hirsch, the creator of the product and a part-owner of the company, had "appeared on 'Oprah,' 'Good Morning America,' 'Dateline,' 'Extra,' the CBS 'Early Show,' CNN" and in hundreds of magazines and newspapers around the country.

Sensa charged $59, plus shipping and handling, for a one-month supply of the powder. The powder was supposed to be sprinkled on food to make users feel full faster, so they ate less.

But the company failed to disclose that some consumers were paid for their endorsements, the commission said. The FTC also took aim at Adam Goldenberg, the chief executive of Sensa, and Dr. Hirsch, who conducted studies on the product but whose findings "were not supported by scientific evidence."

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