Legal Review: FTC Hits Green Coffee Marketers With a Trifecta of Charges1 Jun, 2014 By: Linda A. Goldstein Response
The Federal Trade Commission (FTC) recently dealt another blow against marketers attempting to capitalize on the notoriety of unsubstantiated fad diet trends. Last month, the FTC sued a Florida dietary supplement company, alleging it made deceptive weight-loss claims about a dietary supplement containing green coffee extract. The agency alleges in its complaint that the makers of the supplement, called Pure Green Coffee, attempted to cash in on the recent popularity of green coffee extract by deceiving and misleading consumers through several forms of media.
In 2012, popular health guru Dr. Mehmet Oz aired a segment about green coffee extract on his syndicated TV talk show. In the segment, Dr. Oz discussed the weight loss benefits of green coffee extract supplement, referring to a clinical study that purportedly showed that pure green coffee use can result in substantial weight loss and body fat loss in a short period of time without diet or exercise and deemed the substance “the magic weight-loss cure for every body type.”
Just a few weeks later, according to the FTC, the defendants behind Pure Green Coffee — Nicholas Congleton, Paul Pascual, Bryan Walsh, and the companies they control — began selling their Pure Green Coffee extract, charging about $50 for a one-month supply. Since May 2012, the defendants have sold more than 536,000 bottles of the product.
The FTC alleged that the defendants used footage from the TV show, misleading consumers into believing that Dr. Oz had sanctioned their particular product. Additionally, the defendants failed to disclose that some customers were paid $200 for video testimonials and received a 30-day supply of supplement for free in exchange for an endorsement. Furthermore, the FTC alleged that the defendants created numerous websites that were set up to look like legitimate news sites or blogs — but were in fact advertisements — as well as other fake “news” sites run by affiliate marketers whom they paid to advertise the Pure Green Coffee product. The fake news sites featured mastheads of fictitious news organizations such as Womens Health Journal and Healthy Living Reviewed, as well as logos appropriated from actual news organizations, like CNN and MSNBC.
The FTC also had strong objections to the advertising content itself. The complaint alleges that many of the weight loss and body fat claims were based on faulty studies, including the one referenced by Dr. Oz. While the marketers described the key study as being “randomized, double-blind, placebo-controlled” — the gold standard for clinical studies — the FTC argued the study was insufficient to support the claims, pointing to problems such as a small sample size and unreliable results.
According the FTC’s complaint, none of the studies cited by the defendants provided the necessary evidence to establish the validity of the marketer’s core claims: that the product could result in weight loss and body fat loss without diet or exercise and other unsupported statements, such as “Discover the Shocking Truth About America’s Hottest Diet.”
The FTC charged the defendants with several violations of the FTC Act, including false and unsubstantiated efficacy claims. The FTC also charged the defendants with deceptively failing to disclose that consumers who endorsed the supplement had received it for free and were paid to provide a video testimonial.
This case brings together several of the hottest advertising issues on the FTC’s radar during the past few years: endorsements and testimonials, weight-loss substantiation, and advertising positioned as a news sites.
Much of the FTC’s press release dealt with fake news sites. Jessica Rich, director of the FTC’s Bureau of Consumer Protection, noted, “Not only did these defendants trick consumers with their phony weight-loss claims, they also compounded the deception by advertising on pretend news sites, making it impossible for people to know whether they were seeing news or an ad.”
With the recent increase in the use of native advertising and advertorials, the FTC’s action shows that the agency is carefully reviewing the presentation of information to consumers in this format. Advertising that does not clearly identify itself as such could run the risk of attracting FTC attention.
Finally, the case is a reminder that ensuring that a material connection between an endorser or testimonialist and the advertiser is properly disclosed is still an issue that remains at the forefront of FTC enforcement. ■