FTC Announces Law Enforcement Actions Against Marketers of Fraudulent Weight-loss Products

“Fraudulent weight-loss products target people desperate to lose weight and willing to try almost anything,” said Federal Trade Commission Chairman Timothy Muris in announcing law enforcement actions against three marketers of weight-loss products. In each of these cases, the defendants allegedly falsely claimed that their product will cause substantial weight loss without dieting or exercise. “Despite claims to the contrary, there are no magic bullets or effortless ways to burn fat. Claims for diet products or programs that promise weight loss without sacrifice or effort are bogus. And some can even be dangerous,” Muris added.

Beauty Visions Worldwide

In the first action, the FTC filed for an ex parte temporary restraining order against Canadian marketers who advertise and sell seaweed-based weight-loss patches called “Hydro-Gel Slim Patch” and “Slenderstrip,” which they claimed cause users to lose substantial amounts of weight rapidly without reducing caloric intake or increasing exercise. The defendants’ advertising targeted U.S. consumers with claims such as:

• “No starvation diets, small portions or missed meals!”
• “No impossible back-breaking exercises!”
• “Just fast and easy, LASTING weight loss!”

The FTC complaint was filed against No. 1025798 Ontario, Inc., doing business as The Fulfillment Solutions Advantage, Inc.; The FSA Group, International Access; Beauty Visions Worldwide; Slimshop; Hydro-Gel Slim Patch; and Slenderstrip (collective “Beauty Visions Worldwide”) and its principals, Robert Van Velzen and Nancy Sprague. In the United States, the defendants market weight-loss products using several company names, including Beauty Visions Worldwide.

According to the FTC, the defendants falsely represented that Hydro-Gel Slim Patch and Slenderstrip cause rapid and substantial weight loss, including as much as a pound a day over multiple weeks and months, without reducing caloric intake or increasing exercise; that these products work for all users; and that Hydro-Gel Slim Patch causes permanent weight loss.

The FTC received assistance in its investigation from Health Canada, Canada’s Competition Bureau, and the Toronto Strategic Partnership. The Toronto Strategic Partnership consists of cross-border fraud law enforcement members including: the Anti-Rackets Section of the Ontario Provincial Police; the Toronto Police Service Fraud Squad; the Ontario Ministry of Consumer and Business Services; Canada’s Competition Bureau; the York Regional Police Service; the United States Postal Inspection Service; the Ohio Attorney General’s Office; and the FTC. The Better Business Bureau in Buffalo, New York, also provided assistance during the investigation.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed under seal in the U.S. District Court for the Western District of New York on December 3, 2003. On the same day, the Court granted the Commission’s request for an ex parte temporary restraining order, which provides for an asset freeze, an accounting, expedited discovery, an order for the defendants to show cause why a preliminary injunction should not be issued, and other equitable relief.

Universal Nutrition

In the second action, Universal Nutrition Corporation, MTM Marketing & Consulting Inc. and their owner, Robert J. Michnal, have agreed to pay $1 million in consumer redress to settle allegations that the defendants made false and unsubstantiated claims for “ThermoSlim,” a purported weight-loss product containing ephedra and other ingredients. Among other requirements, the settlement bans the defendants from making false and unsubstantiated claims for ephedra in connection with the marketing of any weight-loss product.

According to the FTC complaint, since at least 2000, the defendants advertised ThermoSlim primarily through a 30-minute nationally-disseminated infomercial. ThermoSlim advertising claims that consumers could experience “95 pounds gone in 60 days,” and made safety claims such as, “this is the safest ... product available for weight loss.” The complaint alleges that, through these and other advertisements, the defendants falsely claimed that ThermoSlim causes rapid and substantial weight loss without the need to increase exercise or reduce caloric intake; ThermoSlim users can eat all they want, including hamburgers, french fries, milkshakes, and cheesecake, and still lose substantial weight; ThermoSlim enables users to lose as much as 30 pounds in 30 days, or 60 to 95 pounds in 60 days; scientific studies prove that ThermoSlim is safe for weight loss and that the product causes rapid and substantial weight loss without the need to increase exercise or reduce calories; and ThermoSlim causes permanent weight loss.

In addition to requiring the $1 million consumer redress payment, the settlement prohibits the defendants from misrepresenting the existence, contents, validity, results, conclusions, or interpretations of any test or study. It requires the defendants to possess competent and reliable scientific evidence to support future claims about the absolute or comparative weight-loss or other health benefits, performance, safety, efficacy, or side effects of any health-related service or program, weight-loss product, dietary supplement, food, drug or device. The order further requires a prominent warning that ephedra use can result in serious injury, and even death, in any advertisement, promotional item, or product label for an ephedra product.

In addition, the settlement prohibits the defendants from selling their customer mailing list, and contains various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance with the settlement.

The Commission vote authorizing staff to file the complaint and stipulated final judgment and order was 5-0. The complaint and proposed stipulated final judgment and order was filed on December 9, 2003. The final order is subject to court approval.

Mark Nutritionals - Final Defendant Settles with the FTC

Harry Siskind, former President and CEO of Mark Nutritionals, Inc. has agreed to pay a total of $1 million to the FTC and the states of Texas, Illinois, and Pennsylvania. Siskind will pay half of the $1 million to the federal government as part of the settlement with the FTC. Siskind’s agreement with the FTC also requires him to post a $1 million bond before selling a weight-loss product or service in the future.

On December 5, 2002, the FTC filed a complaint in federal district court alleging that Siskind, together with the other named defendants, made false and unsubstantiated claims that “Body Solutions Evening Weight Loss Formula” (Evening Formula) causes substantial and permanent weight loss without diet or exercise. The complaint named as defendants Mark Nutritionals, Inc., based in San Antonio, Texas, and its officers, Harry Siskind and Edward D’Alessandro, Jr. The FTC announced settlements with Mark Nutritionals and D’Alessandro in October 2003.

In addition to the $500,000 payment and the $1 million bond requirement, the stipulated final order with Siskind prohibits all false or misleading weight-loss claims, including claims that a product will cause substantial weight loss without reducing caloric intake or increasing exercise; substantial weight loss even if users eat substantial amounts of high calorie foods; and substantial long-term or permanent weight loss. It also prohibits the use of the term “weight loss” in the name of any purported weight-loss product or the use of any other term that communicates the same or similar meaning, unless at the time the term is used, there is competent and reliable scientific evidence to substantiate that the product will cause clinically significant weight loss. The order further requires Siskind to possess competent and reliable scientific evidence to substantiate any future representations about the safety or efficacy of any food, drug, dietary supplement, or other health-related product or service. Finally, the settlement prohibits Siskind from misrepresenting any test, study, or research concerning any food, drug, dietary supplement, or other health-related product or service.

The stipulated final order contains a suspended judgment of $155 million with two “avalanche” clauses: one that requires him to pay the full $155 million if he fails to pay timely the agreed $500,000 to the FTC; and one that requires him to pay the amount in full if it is discovered that he made material misrepresentations on his financial disclosure statements. The settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendant’s compliance.

The FTC coordinated its case against Siskind with Attorneys General from the states of Texas, Illinois, and Pennsylvania. Those states filed separate law suits against Siskind in state court. These states have reached separate agreements with Siskind requiring the payment of $500,000 in monetary relief.

The Commission vote to authorize staff to file the stipulated final order was 4-0-1, with Commissioner Pamela Jones Harbour recused. The order was filed in the U.S. District Court for the Western District of Texas, San Antonio Division, on December 8, 2003, and requires the court’s approval.

The FTC today also released its report entitled “FTC Staff Report on Deception in Weight-Loss Advertising Workshop: Seizing Opportunities and Building Partnerships to Stop Weight-Loss Fraud.” The report provides an overview and analysis of the issues addressed at the Deception in Weight-Loss Advertising Workshop held in November 2002.

NOTE: The stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated final judgment and orders have the force of law when signed by the judge.

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 defendant has actually violated the law. The case will be decided by the court.

Copies of the complaints and the proposed settlements are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1- 877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(Beauty Visions: FTC File No. 032 3198; Civil Action No. 03-CV-0910A(SC)
(Universal Nutrition: FTC File No. 022-3189; Civil Action No. 1-03-CV-3822)
(Mark Nutritionals: FTC Matter No. X030012; Civil Action No. SA-02-CA-1151 XR)