FTC Charges Direct Marketers of Ephedra Weight Loss Products With Making Deceptive Efficacy and Safety Claims

The Federal Trade Commission today announced three enforcement actions against direct marketers of weight-loss products containing ephedra. The two settlements and one complaint, filed in U.S. district court, target deceptive efficacy, safety, and “no side effects” claims for weight loss supplements containing ephedra (also known as Ma Huang). The FTC actions challenge false advertising claims that the ephedra supplements cause rapid, substantial, and permanent weight-loss without diet or exercise, and that “clinical studies” or “medical research” prove these claims. The FTC also challenges claims that the ephedra weight-loss products are “100% safe,” “perfectly safe,” or have “no side effects.”

The FTC previously brought four enforcement actions challenging deceptive safety and “no side effects” claims for ephedra supplements marketed for body-building and energy, and as alternatives to street drugs like Ecstasy.

“In these cases, the marketers both overstated the benefits and understated the risks of using the products,” said Howard Beales, Director of the FTC’s Bureau of Consumer Protection. “With these enforcement actions, we’re putting the marketers of ephedra supplements on notice that the law demands substantiation for your advertising claims, and the FTC will do its best to make sure you have it.”

The FTC also is challenging weight-loss claims for several other non-ephedra dietary supplements. One case challenges safety and efficacy claims for a dietary supplement used to treat impotence in men, and another challenges claims that a glucosamine and chondroitin dietary supplement “cures” arthritis.

The two settlements announced today require Health Laboratories of North America, Inc., USA Pharmacal Sales, Inc., and their principals to stop making false and deceptive advertising claims, to include warnings about the health risks of ephedra and certain other products, and to pay a total of $370,000 in consumer redress. The third case, against Michael S. Levey and others, will proceed to litigation.

The FTC charges California residents Michael S. Levey and Gary Ballen; Bentley Myers International Co., based in Vancouver, Canada; and Publisher’s Data Services, Inc. and Nutritional Life, Inc., both based in Beverly Hills, California, with violating the FTC Act in marketing dietary supplements purported to cause rapid and substantial weight loss without diet or exercise and to “cure” arthritis.

Levey and Ballen control the companies. In addition, the FTC is charging Levey and the three companies with violating a 1993 FTC order in connection with these marketing activities. The complaint, filed by the Department of Justice on behalf of the FTC, alleges that the defendants:

• made false or unsubstantiated claims that three purported weight loss products – Zymax and MillinexES (both containing ephedra), and Serotril (containing St. John’s wort) – cause substantial weight loss in a short period of time, without the need to diet or exercise;
  
  
• made unsubstantiated “no side effects” claims for the Zymax and MillinexES ephedra products;
  
  
• falsely represented that clinical studies prove that Zymax and MillinexES cause substantial weight loss in a short time without diet or exercise; and
  
  
• made unsubstantiated claims that CartazyneDS, a dietary supplement containing glucosamine and chondroitin, “cures” arthritis, “rebuilds” cartilage in human joints “within days,” and is an effective alternative to joint replacement surgery.

The complaint alleges that the defendants advertised these weight loss and arthritis products in brochures that used fictitious expert endorsements, fake consumer testimonials, and false “before and after” pictures. The defendants allegedly used different business names in marketing their products, such as “Denman Scientific Research” in ads for Zymax, “Cartazyne Sciences International” in ads for CartazyneDS, and “Serotril Sciences, International” in ads for Serotril.

The complaint also alleges that Levey violated the 1993 order by failing to notify the FTC within 30 days after he became affiliated with Bentley Myers and Publisher’s Data Services. The FTC’s 1993 cease and desist order against Michael Levey and his company, Positive Response Marketing, Inc., was based on allegations that Levey made false and misleading representations in television infomercials for the EuroTrym Diet Patch, the Foliplexx hair-loss product, and the Y-Bron impotence treatment, and performed deceptive demonstrations in infomercials for the Magic Wand kitchen mixer. In addition to requiring a $275,000 redress payment, the order prohibits Levey from making unsubstantiated advertising claims and from using deceptive endorsements and demonstrations, and imposes certain recordkeeping and reporting obligations.

The FTC is seeking monetary civil penalties from Levey and the three companies for violations of the 1993 order, and also is seeking consumer redress and injunctive relief from all the defendants.

The Commission vote to refer the Levey complaint to the Department of Justice for filing was 5-0. The complaint was filed at the FTC’s request by the Department of Justice in U.S. District Court for the Central District of California, on June 30, 2003.

The FTC’s complaint names Health Laboratories of North America, Inc. (HLNA), based in Scottsdale, Arizona, and its director, Marc Kaplan. According to the FTC, the defendants marketed two products under the brand name “Berry Trim Plus” primarily through direct mail. Both products contained Hydroxycitric Acid or “HCA,” an extract from brindall berries, and one also contained ephedrine alkaloids from Ma Huang. The FTC alleges that HLNA made numerous false and unsubstantiated weight-loss claims for Berry Trim Plus through testimonials such as, “Teacher Loses 70 lbs. In Only 8 Weeks Easily,” and other statements. The FTC alleges that the HLNA defendants falsely represented that Berry Trim Plus products cause rapid and substantial weight loss, including as much as 70 pounds in eight weeks, without dieting or increasing exercise, and that clinical studies prove that Berry Trim Plus causes rapid and substantial weight loss. The FTC complaint further alleges that the defendants did not have a reasonable basis to advertise that Berry Trim Plus is “100% safe” and “perfectly safe” to use, and that it prevents fat absorption from whatever the user eats.

The HLNA settlement order prohibits the defendants from making false and unsubstantiated weight-loss claims, as well as unsubstantiated safety claims. The order also prohibits the defendants from misrepresenting the contents, validity, results, conclusions, or interpretations of any test or study. The order requires that a prominent warning about health risks be made in any advertisement, promotional item, or product label for an ephedra product. The warning includes information that ephedra use can result in serious injury, and even death. The order requires HLNA to pay $195,000 in consumer redress. If, however, the defendants have made any material misrepresentation or omission on their financial statements, the court may enter a $35 million judgment against them.

The FTC’s complaint names USA Pharmacal Sales, Inc., and its co-owners, John Pence and Arthur Sussman. The defendants, based in Palm Harbor, Florida, marketed and sold three weight-loss products and an erectile dysfunction supplement. The META-BIOLOGICAL weight-loss cocktail contains ephedrine alkaloids derived from Ma Huang, caffeine, and 19 other ingredients. FAT•SPONGE IN A PILL is comprised of chitosan and glucomannan, and digestive aids for lactose-intolerant people. CALOTROL/MD contains chitosan, gymnema sylvestre, HCA, and chromium picolinate. The erectile dysfunction supplement, VIRILE V, contains yohimbine, androstenedione (a steroid hormone), and 12 other active ingredients. According to the FTC, the defendants advertised their weight loss and erectile dysfunction products through free-standing inserts in regional newspapers and direct mail. The defendants also used an expert medical endorser in some advertisements to tout their products’ efficacy and safety.

The FTC’s complaint alleges that advertisements for the purported weight-loss products made false claims that the products cause rapid, substantial, and permanent weight loss without the need to reduce caloric intake. The complaint also alleges that the ads made false claims that “clinical tests” or “medical research” proves that the products cause rapid, significant, or permanent weight loss. The complaint further alleges that the defendants made unsubstantiated claims that the META-BIOLOGICAL ephedra weight-loss product is safe. In addition, the FTC alleges that the defendants made deceptive efficacy and safety claims for the erectile dysfunction supplement. According to the FTC, there is no reliable evidence to suggest that ephedra, an ingredient in META-BIOLOGICAL, or androstenedione and yohimbe, ingredients in VIRILE V, are safe. In fact, the complaint alleges that they have been associated with health risks.

The USA Pharmacal settlement order prohibits the defendants from making false or unsubstantiated claims that the weight-loss products or any substantially similar product causes rapid, substantial, or permanent weight loss or fat loss. The order also bars them from representing that clinical or medical studies support such claims. The order requires that the defendants place a prominent warning about health risks in any advertisement, promotional item, or product label for an ephedra product. The warning includes information that ephedra use can result in serious injury, and even death. USA Pharmacal likewise must place health risk warnings on materials that make claims for any products that contain yohimbe or androgen.

USA Pharmacal has agreed to pay $175,000 in consumer redress. If, however, the defendants have made any material misrepresentation or omission on their financial statements, the court may enter a judgment for $9.2 million against them.

Both the HLNA and USA Pharmacal settlements require the defendants to take reasonable steps to monitor and ensure that all employees and agents comply with the order, and to terminate any employee who knowingly violates the order. Also, both settlements contain various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize the staff to file the complaint and stipulated final judgment in the HLNA case was 5-0. The documents are being filed in the U.S. District Court for the District of Columbia.

The Commission vote to authorize the staff to file the complaint and stipulated final judgment in the USA Pharmacal case was 5-0. The documents are being filed in the U.S. District court for the Middle District of Florida, Tampa Division.

Resources for consumers, businesses, and the press are available at www.ftc.gov/dietfit. The FTC has the following tips for consumers who are interested in weight-loss products or programs:

• Products and programs that promise quick and easy weight loss are bogus. To lose weight, you have to lower your intake of calories and increase your physical activity.
  
  
• There are no miracle weight-loss products. Be skeptical of products and programs that claim they can keep weight off permanently. Be skeptical about exaggerated claims.
  
  
• Consumers who want advice on how to find a healthy weight loss plan should visit the Partnership for Healthy Weight Management Web site at www.consumer.gov/weightloss.

NOTE: The Commission authorizes the filing of 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 actually has violated the law. The case will be decided by the court.

NOTE: The stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final judgment and order have the force of law when signed by the judge.

Copies of the complaints and stipulated final judgments and orders 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.

(FTC Docket No. C-3459 (Levey/Bentley); Civil Action No. CV-03-4670 GAF (AJWx)
(FTC File No. 012-3099 (Health Labs); Civil Action No. not available at press time)
(FTC File No. 002-3319 (USA Pharmacal); Civil Action No. not available at press time)