Nu Skin To Pay $1.5 Million Penalty To Resolve FTC Charges over Fat-Loss Claims for Supplements

Nu Skin International, Inc., the firm behind an international multi-level marketing system with thousands of distributors selling skin care products and nutritional supplements, has agreed to pay a $1.5 million civil penalty to settle Federal Trade Commission charges over the fat-loss, muscle-maintenance and other claims it made for supplements containing chromium picolinate and L-carnitine. The FTC alleged that Nu Skin could not produce adequate substantiation for the claims, and that Nu Skin therefore violated a 1994 FTC order requiring the firm to have competent and reliable scientific evidence to support benefits claims for any product they sell. The FTC said this is the third time in three years that a firm has paid a civil penalty exceeding $1 million to settle charges of alleged violations of a prior Commission order.

The claims at issue in this case were for "Metabotrim," "OverDrive," "GlycoBar," "Appeal Lite," and "Breakbar." In addition to the civil penalty included in the settlement announced today, Nu Skin has agreed to abide by the 1994 order in the future.

Unsubstantiated claims for products containing chromium picolinate, one of the hottest dietary supplements on the market, and L-carnitine have been the subject of several recent FTC cases, including one against the sole supplier of chromium picolinate in the United States. Nu Skin entered into the 1994 consent order with the FTC to resolve charges, among others, that the firm made false and unsubstantiated claims for three unrelated products -- a baldness treatment, a wrinkle lotion, and a burn cream. Nu Skin's net worth exceeds $100 million, according to public reports.

In the current case, the FTC's complaint detailing the charges cites numerous statements regarding the five products containing chromium picolinate and L-Carnitine, such as:

• "This supplement contains chromium picolinate, which has been found to help promote the use of carbohydrates for energy, instead of storing them as fat. Metabotrim also contains L-Carnitine, a supplement that encourages fat utilization for energy.";
• "GlycoBar contains both chromium picolinate and chromium chelate, believed to be essential for effective function of insulin, which regulates blood glucose levels and creates a muscle building effect by assimilating amino acids into proteins."; and
• "The ingredients in Metabotrim have been scientifically shown to establish and maintain proper metabolic rates assisting the body in burning fat while preserving lean muscle mass!"

The FTC challenged as unsubstantiated, and therefore violative of the 1994 consent order, the resulting implied and direct claims about the ability of these products to reduce fat, increase metabolism, and preserve or build muscle. Today's settlement, if approved by the court, would require Nu Skin to make the $1.5 million payment within 10 days, permanently enjoin the firm from further violating the 1994 consent order, and impose various record keeping and reporting requirements on the firm that are designed to assist the FTC in monitoring compliance.

The complaint and proposed consent decree were filed this morning by the Department of Justice at the request of the FTC in U.S. District Court for the District of Utah, Central Division. The Commission vote to authorize filing was 5-0.

NOTE: A consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the complaint, proposed consent decree, and documents associated with the earlier case against Nu Skin are available from the FTC's web site at http://www.ftc.gov and its Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC Docket No. C-3489)
(Civil Action No. 2:97-CV-0626G)