FTC Cracks Down on Weight-Loss Provisions, Again14 Jan, 2014 By: Linda A. Goldstein
January is traditionally a big month for weight-loss advertising as consumers set out to make good on their New Year’s resolutions. This year, however, the Federal Trade Commission (FTC) issued its own resolutions against deceptive weight-loss advertising with the announcement of an industry wide sweep against four marketers of weight loss products, in what the FTC has termed “Operation Failed Resolution.”
The targets of this recent FTC action include: Sensa, the food additive that the marketers claimed helped promote weight loss by simply sprinkling it on your food; L’Occitane, which claimed that its skin cream would slim user’s bodies; HCG Direct, which marketed a human hormone; and Lean Spa, which marketed acai berry and colon cleanse dietary supplements.
While there is nothing new about FTC actions targeting allegedly deceptive weight-loss claims, there are a number of aspects of these settlements that marketers should be aware of as they reflect a consistent pattern of recent FTC actions.
First, the cases reinforce the FTC’s belief that weight-loss claims must be substantiated by at least one – and, in most cases, two – blind and randomized human clinical studies. Although the FTC’s authority to require such testing remains the subject of ongoing litigation by Pom Wonderful, there is no question that absent such studies, the FTC will not deem weight-loss claims to be properly substantiated.
And, any studies upon which marketers rely will be subject to rigorous scrutiny by the FTC. In the case of Sensa, for example, although the company did have clinical studies on the efficacy of the product, the FTC maintained that the studies were not sufficient to support the claims being made. All four of the consent orders require the marketers to have two double-blind human clinical studies in the future in order to support weight-loss claims.
Secondly, the cases reflect the magnitude of financial settlements that the FTC is seeking and its demand for full consumer restitution in false advertising cases. With the exception of L’Occitane, the FTC sought to recover virtually all of the cash it could from each company. In Sensa, for example, the FTC imposed a judgment of $46.5 million, $20 million of which was suspended due only to the company’s inability to pay. The settlement against Lean Spa requires the principal of the company to surrender $7 million in cash and personal assets, and in HCG Direct, a judgment of $3.2 million – representing all sales of the product – was imposed, yet suspended due to an inability to pay.
Finally, the cases reflect the FTC’s ever-expanding net of liability. In Sensa both the CEO and Dr. Alan Hirsch, who conducted two of the clinical studies cited in the ads, were named in the order, as were the principals in Lean Spa and HCG Direct. In the case of Lean Spa, the FTC sought additional assets from the principal’s wife as a relief defendant.
While these cases stand as a harsh reminder of the vigor with which the FTC pursues cases against what it perceives as “quick fix” weight-loss products, these actions may also make it increasingly difficult for marketers to have weight-loss advertisements cleared by the media. Along with the announcement of the four settlements, the FTC also issued what it has termed seven “gut check” claims – those that the FTC maintains experts say cannot be true. These seven claims are that a product:
- Causes weight loss of two pounds or more a week for a month or without dieting or exercise
- Causes substantial weight loss no matter what or how much the consumer eats
- Causes permanent weight loss even after the consumer stops using the product
- Blocks the absorption of fat or calories to enable consumers to lose substantial weight
- Safely enables consumers to lose more than three pounds per week for more than four weeks
- Causes substantial weight loss for all users
- Causes substantial weight loss by wearing a product on the body or rubbing it into the skin
Marketers who are currently running or contemplating releasing advertising for any weight-loss products or programs would be wise to review their scripts to ensure that they do not contain – either expressly or by implication – any of these seven claims. While these claims are similar to the “Red Flag” claims the FTC issued several years ago, these latest actions are certainly intended to serve as a warning to the industry that the FTC will continue to vigilantly monitor weight-loss claims.
Linda Goldstein is chair of the Advertising, Marketing and Media division of Manatt, Phelps & Phillips LLP, based in the firm’s New York office. She can be reached at email@example.com.