Markets Wired

The U.S. Justice Department, at the Federal Trade Commission’s request, has filed suit in federal court in a case affecting consumers nationwide. The government has charged three companies and two individuals with making advertising claims for their fat and weight-loss pills, Relacore and Akävar 20/50, that violate a 2006 FTC order barring them from making health or weight-loss claims without a reasonable basis. The defendants made claims such as “eat all you want and still lose weight” and, “And we couldn’t say it in print if it wasn’t true!” on product packaging, on the Internet, and in widely read magazines such as Redbook, Star, and Family Circle. The Commission seeks to stop the defendants from making such claims and make them pay civil penalties.

“The Federal Trade Commission ordered the defendants to stop making baseless and bogus advertising claims,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “We wouldn’t put our orders in writing if we weren’t going to enforce them.”

The government’s complaint alleges that Basic Research, LLC, Carter-Reed, LLC, Dennis W. Gay, and Mitchell Friedlander have advertised Relacore by claiming, without competent and reliable scientific evidence, that it reduces “stress-induced” abdominal fat more than diet and exercise alone, and reduces abdominal fat in those who diet and exercise but retain fat due to stress from dieting.

According to the complaint, Basic Research, Dynakor Pharmacal, LLC, Gay, and Friedlander also have claimed, without a reasonable basis, that Akävar 20/50 lets you “eat all you want and still lose weight,” and that it automatically restricts caloric intake with no willpower required of users to limit food or caloric intake. They also have misrepresented scientific research by claiming that a test proves those claims, and that the product causes substantial weight loss and causes weight loss for virtually all users.

“The government alleges that these defendants made claims that their product would allow you to ‘eat all you want and still lose weight’ without a reasonable basis,” said Tony West, Assistant Attorney General for the Department of Justice’s Civil Division. “Claims like these are harmful to both the health and pocketbooks of those who use these supplements. Working with our partners at the Federal Trade Commission, we will continue to challenge unlawful advertising claims.”

United States Attorney Brett Tolman said, “The U.S. Attorney’s Office takes a dim view of unlawful claims in the marketplace, especially when they involve companies and individuals ordered by the FTC not to make the claims.”

In 2006, the Commission ordered Basic Research, LLC to pay $3 million on behalf of six companies and three principals, including Gay and Friedlander. The Commission’s order settled FTC charges that their deceptive weight-loss claims violated federal law, and it prohibited them from making unsubstantiated health or weight-loss claims and misrepresenting the results of scientific studies in the future. (see May 11, 2006, press release http://www.ftc.gov/opa/2006/05/basicresearch.shtm) Violations of FTC orders carry a civil penalty of up to $16,000 per violation.

The Commission vote to refer the complaint announced today to the Department of Justice for filing was 4-0. The complaint was filed in the U.S. District Court for the District of Utah.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,700 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. D09318)
(Basic Research)