FTC Takes Action Against Marketers of Top-Selling Xenadrine EFX

The Federal Trade Commission has filed a federal district court complaint charging Robert Chinery, Jr., Tracy Chinery, and their company, RTC Research & Development, LLC (the Chinery defendants) with making misleading weight loss claims for the popular dietary supplement Xenadrine EFX.

In addition, the Commission has accepted a consent agreement with another group of entities, Cytodyne, LLC, Evergood Products Corp., and Melvin Rich (the Rich respondents), for their role in the advertising and marketing of Xenadrine EFX, which contains, among other ingredients, green tea extract, yerba mate, and bitter orange. A 120-tablet bottle – a one-month supply – retailed for approximately $40. Since its introduction in 2002, Xenadrine EFX’s sales have topped $160 million.

According to the FTC, the defendants and respondents advertised Xenadrine EFX heavily in print and on TV, including in such publications as People, TV Guide, Cosmopolitan, Glamour, Let’s Live, Men’s Fitness, and Women’s World. They also disseminated Spanish language ads for Xenadrine EFX. The advertisements claimed that Xenadrine EFX causes rapid and substantial weight and fat loss, such weight loss without the need to diet or exercise, permanent or long-term weight loss, and is clinically proven to work. The ads relied heavily on testimonials from supposedly satisfied customers, some of whom claimed to have lost over 100 pounds.

The Chinery Defendants

The FTC’s complaint alleges that the New Jersey-based Chinery defendants made false and unsubstantiated claims for Xenadrine EFX, including that it was clinically proven to cause rapid and substantial weight loss and clinically proven to be more effective than leading ephedrine-based diet products. According to the complaint, Robert Chinery commissioned several studies of Xenadrine EFX, none of which showed substantial weight loss. The complaint alleges that in one of these studies, subjects taking Xenadrine EFX lost an average of only 1.5 pounds over the 10-week study, while a control group taking a placebo lost an average of 2.5 pounds over the same period.

The complaint also alleges that the defendants falsely represented that persons appearing in the ads achieved the reported weight loss solely by using Xenadrine EFX. According to the FTC complaint, consumer endorsers, in fact, lost weight by engaging in rigorous diet and/or exercise programs. The complaint alleges that the defendants also failed to disclose that the endorsers were paid from $1,000 to $20,000 in connection with their testimonials.

Another company controlled by the Chinery defendants, Nutraquest, was not named in the complaint; it is currently in bankruptcy and facing numerous product liability, class action, and advertising claims relating to an ephedra product, Xenadrine RFA-1.

The Rich Respondents

The New York-based Rich respondents have entered into an administrative settlement with the FTC. The consent order requires the respondents to pay $100,000 to the FTC. It also prohibits the Rich respondents from claiming that Xenadrine EFX or any other substantially similar product causes rapid and substantial weight or fat loss and prohibits the claim that any weight-loss product causes rapid and substantial weight loss without diet or exercise.

The settlement further prohibits the respondents from claiming that any weight-loss product, dietary supplement, food, drug, or device causes weight or fat loss, causes permanent or long-term weight loss, or causes users to lose weight or fat without diet or exercise unless they have competent and reliable scientific evidence to substantiate the claims. It also requires that the respondents have competent and reliable scientific evidence for any claims they make about the health benefits, performance, efficacy, safety, or side effects of any such product and prohibits them from misrepresenting any test, study, or research for any such product.

In addition, the settlement prohibits the respondents from misrepresenting the experience described in any user testimonials for any weight loss product, dietary supplement, food, drug or device. It requires the respondents to disclose any material connection – including monetary payments – between the endorser and the respondents or any person or entity involved in manufacturing, marketing, or selling the product.

The Commission vote to authorize the staff to file the complaint against the Chinery defendants was 5-0. The complaint was filed in the U.S. District Court for the District of New Jersey on July 11, 2005.

The Commission vote to accept the proposed consent agreement with the Rich respondents for public comment was 5-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through August 10, 2005, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-159, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

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 defendants have actually violated the law. The case will be decided by the court.

Copies of the complaints, proposed consent agreement, and an analysis of the agreement to aid in public comment 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 in English or Spanish (bilingual counselors are available to take complaints), 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.

(Chinery defendants: Civil Action No. 05-3460 (GEB))
(Rich respondents: FTC File No. 032-3144)