Legal Library: Cases and Proceedings

In January 2022, New York City-based Vision Path, Inc., the online seller of direct-to-consumer Hubble lenses, agreed pay penalties and redress totaling $3.5 million to settle FTC charges that it violated the Contact Lens Rule in several ways, including by failing to obtain prescriptions and to properly verify prescription information, and by substituting Hubble lenses for those actually prescribed to consumers. The FTC also alleged the company violated the FTC Act when it failed to disclose that many reviews of Hubble lenses were not by unbiased consumers but were written by reviewers who were compensated for their reviews, and, in at least one instance, by one of its own executives.

In June 2022, the FTC took action against California-based Gravity Defyer Medical Technology Corporation and its owner Alexander Elnekaveh, filing a complaint in federal district court to permanently stop their allegedly deceptive pain-relief claims for Gravity Defyer footwear. In its complaint the FTC alleged that Elnekaveh violated a 2001 order barring him from such allegedly deceptive advertising by making scientifically unsupported claims and using misleading consumer testimonials to sell Gravity Defyer products.

The FTC’s October 2018 complaint against Redwood Scientific charged the defendants with a scheme that used illegal robocalls to deceptively market dissolvable oral film strips as effective smoking cessation, weight-loss, and sexual-performance aids. Announced in June 2019 as part of a crackdown on illegal robocalls against operations around the country responsible for more than one billion calls, an initial  settlement resolved the FTC’s charges against one defendant in the Redwood Scientific case, Danielle Cadiz. The order permanently banned Cadiz from all robocall activities, including ringless voicemails, and imposes a judgment of $18.2 million against Cadiz. In March 2022, the FTC announced the final court orders against all remaining defendants.

The FTC and the State of Maine’s complaint against Health Research Laboratories and its principal, announced in November 2017, alleged that the defendants deceptively marketed two of their health products, BioTherapex and NeuroPlus. In November 2018, the FTC mailed 16,596 checks totaling more than $750,000 to consumers who bought the two deceptively marketed supplements. The FTC and State of Maine subsequently filed a motion seeking a contempt order against the defendants in December 2019, for allegedly violating the final Commission order by continued to market and sell dietary supplements with claims that were not supported by competent and reliable scientific evidence. In November 2020, the FTC staff discontinued its contempt action and filed an administrative complaint against the defendants. The FTC announced a proposed order settling the complaint in March 2020.

The Federal Trade Commission is returning more than $930,000 to consumers who bought tea products that Teami marketed and sold using allegedly deceptive health claims.

The FTC sued Teami, LLC and its owners in March 2020, charging that the company made bogus health claims and paid for endorsements from well-known social media influencers who did not adequately disclose that they were being paid to promote the defendant’s products. Teami claimed without reliable scientific evidence that their Teami 30 Day Detox Pack would help consumers lose weight, and that its other teas would fight cancer, clear clogged arteries, decrease migraines, treat and prevent flus, and treat colds.

In March 2021, a New York-based company and its CEO agreed to settle FTC charges that they sold hundreds of thousands of indoor TV antennas and signal amplifiers to consumers using deceptive claims that the products would let users cancel their cable service and still receive all of their favorite channels for free. Among other things, the proposed consent order settling the FTC’s complaint prohibits the defendants from making claims about: 1) any product’s rating, ranking or superiority to other products; 2) the channels users will receive; or 3) any material aspect of a product’s performance, efficacy, or central characteristics, unless the claims are true and substantiated.

SLAC (also doing business as Aspyre), Navloan, Student Loan Assistance Center, and Adam Owens -- three California-based student loan debt relief companies and their owner -- have agreed to be permanently banned from the debt relief business in order to settle Federal Trade Commission charges that they falsely promised to lower or eliminate consumers’ student loans for an illegal upfront fee. The FTC also alleged that the companies and Owens failed to disclose that they paid consumers for positive Better Business Bureau (BBB) reviews.

On October 21, 2019, the FTC announced it had halted the deceptive online marketing tactics of two companies and their principals, the first of which allegedly sold fake indicators of social media influence, and the second of which allegedly used fake product reviews posted by its employees on a well-known retail website. In the first case, Devumi, LLC and its owner and CEO, German Calas, Jr., agreed to settle the FTC’s first-ever complaint challenging the sale of fake indicators of social media influence. In the second case, cosmetics firm Sunday Riley Modern Skincare, LLC and its CEO agreed to settle an FTC complaint charging them with misleading consumers by posting fake reviews of the company’s products on a major retailer’s website, at the CEO’s direction, and by failing to disclose that the reviewers were company employees. The court entered the final order on October 22, 2019.

The marketers of a dietary supplement called Synovia agreed to settle FTC charges by halting the deceptive tactics they allegedly used to mislead consumers into thinking Synovia could treat arthritis and alleviate joint pain. In December 2020, the Commission announced it was returning almost $775,000 to consumers who both the deceptively marketed product.

At the Federal Trade Commission’s request, a federal court has temporarily halted and frozen the assets of Grand Teton Professionals, an alleged credit repair scheme that charged illegal upfront fees and falsely claimed to repair consumers’ credit. The company and other defendants are charged with violating the FTC Act and several provisions of the Credit Repair Organizations Act, the Telemarketing Sales Rule, the Consumer Review Fairness Act, the Truth in Lending Act, and the Electronic Funds Transfer Act.

On October 21, 2019, the FTC announced it had halted the deceptive online marketing tactics of cosmetics firm Sunday Riley Modern Skincare, LLC and its CEO. Under the order settling the FTC’s complaint the defendants were banned from misleading consumers by posting fake reviews of the company’s products on a major retailer’s website, at the CEO’s direction, and by failing to disclose that the reviewers were company employees. The FTC announced approval of the final order in November 2020.

In October 2019, the Florida-based marketers and sellers of two aloe vera-based supplements agreed to settle FTC charges that they deceived consumers with false and unsupported claims that two products, TrueAloe and AloeCran, were effective treatments for a range of conditions affecting seniors, including chronic pain, ulcerative colitis, diabetes, and acid reflux. The court order resolving the complaint prohibits the sellters from making false and unsubstantiated health claims and requires them to pay $537,500. In May 2000, the FTC announced it was sending checks totaling more than $470,000 to consumers who bought the two supplements.

The FTC entered into a settlement with the operators of LendEDU.com to resolve allegations that LendEDU falsely claimed that the website provided “objective,” “accurate,” and “unbiased” information about consumer financial products, such as student loans, personal loans, and credit cards, when in fact they offered higher rankings and ratings to companies that paid for placement.

In March 2020, Nevada-based Health Center, Inc. (HCI) and its owner Peggy Pearce agreed to halt their allegedly deceptive advertising claims about three “cure-all” health and wellness products that targeted older consumers nationwide, in a settlement with the Federal Trade Commission. The order settling the FTC’s complaint prohibits HCI and Pearce from such deceptive conduct and imposes a partially suspended monetary judgment.