The Federal Trade Commission reached a $26.5 million settlement with Sensa Products LLC –the second largest deceptive ad settlement in its history – and settled with three other marketers of “fad” products over weight-loss claims it deemed “bogus,” the agency announced.

During a Jan. 7 press conference at its headquarters in Washington, FTC also announced the launch of a wide-scale media-targeted effort dubbed “gut check,” designed to encourage publishers, broadcasters and media groups to identify and reject advertising featuring deceptive weight loss claims.

Both the settlement and the media program are under the FTC's project “Operation Failed Resolution,” which has been in place for several years to tackle faulty weight-loss ads, a practice the agency has identified as the most problematic area for the fast-growing supplements category Also see "FTC Prioritizes Weight-Loss Claims As Industry Endures “Growing Pains”" - Pink Sheet, 4 June, 2007..

“Resolutions to lose weight are easy to make but hard to keep,” said Jessica Rich, director of FTC's Bureau of Consumer Protection. “The chances of being successful just by sprinkling something on your food, rubbing cream on your thighs or using a supplement are slim to none. The science isn't there.”

The Sensa settlement is the second biggest in FTC's history in regards to deceptive claims, following a $40 million agreement with Skechers shoes in 2012.

The FTC also settled with HCG Diet Direct, which marketed an unproven human hormone; L'Occitane Inc. for a skin cream that it claims slims users' bodies; and LeanSpa LLC for claims related to acai berry and colon cleansing weight loss supplements.

The anticipated settlements received from all four companies will total $33 million, which the FTC plans to return to consumers who purchased the products. According to a statement made by FTC Commissioner Joshua D. Wright, economic injury caused to consumers of these products is estimated at $420 million.

“The chances of being successful just by sprinkling something on your food, rubbing cream on your thighs or using a supplement are slim to none. The science isn't there.” – Jessica Rich, FTC Bureau of Consumer Protection director

Wright acknowledges that in crafting remedial relief, the Commission faces a “tradeoff between deterring deceptive advertising and preserving the benefits to competition and consumers from truthful claims.” He suggests the balance is one that the Commission will continue to improve upon.

In addition to punishing the offending marketers, the actions are intended to send a message to other companies making questionable claims, suggested Rich. “We do like to periodically bring new cases and new suits, both to deter conduct by companies in this area and also remind consumers about the many claims in this area that are not accurate, and to be very wary of them.”

“Eat Yourself Skinny!”

Under the settlement, El Segundo, Calif.-based Sensa Products is ordered to pay $26.5 million for a number of violations to the FTC Act, including false and unsubstantiated claims for its Sensa powdered weight-loss product.

The agency also named parent company Sensa Inc. as a defendant, as well as Sensa CEO Adam Goldenberg and Dr. Alan Hirsch, who created Sensa and endorsed the product in ads.

According to FTC, Sensa Products promoted its powder as a food additive that enhances food's smell and taste, making users feel full after so they eat less and lose weight without dieting.

According to FTC's compliant filed in the U.S. District court in the Northern District of Illinois, Eastern Division, the company has since “at least 2008,” promoted Sensa via infomercials, TV spots, radio spots, magazine ads, freestanding newspaper inserts, online ads and other promotional materials that encouraged consumers to “sprinkle, eat and lose weight.”

The advertiser claimed that the product, sprinkled on food, causes consumers to lose “30, 40, 90 pounds and more without dieting or exercise,” according to the FTC complaint. One of the claims for the product states: “Everything you've ever heard about dieting is wrong. You don't need to diet or lose weight.” Another states: “Eat Yourself Skinny!”

FTC alleged that the claims violate the FTC Act on six counts, including that the advertiser had false or unsubstantiated efficacy claims and failure to disclose material connections with consumer endorsers.

Under the settlement order, the defendants are barred from making weight-loss claims about dietary supplements, foods or drugs, unless they have two adequate and well-controlled human clinical studies supporting the claims, FTC notes in its settlement summary. They must also disclose any material connections with the endorsers of a product or program.

Though the order imposes a $46.5 million judgment against the Sensa companies, it required them to pay a total of $26.5 million, “with the rest suspended due to their inability to pay.”

Additional Settlements

FTC also settled with Arizona-based HCG Diet Direct and its director for the firm's liquid homeopathic hCG drops, which the marketer “falsely promised” would cause consumers to “rapidly lose substantial weight.”

The drops – HCG Diet Direct Drops –are a diluted liquid form of human chorionic gonadotropin, a hormone produced by the human placenta that has been promoted falsely for decades as a weight-loss supplement, according to the FTC summary ([A#05131104005]).

The marketer, which previously was served with warning letters by FTC and FDA, was ordered to pay a $3.2 million judgment, but the amount is suspended based on the defendants' inability to pay. The order also bars the company from making any other claims about any dietary supplement, food or drug without competent and reliable scientific evidence.

L'Occitane reached a settlement with FTC in which it would stop making deceptive claims for its Almond Beautiful Shape and Almond Shaping Delight skin creams, which it promoted as having body slimming capabilities. The company also will pay $450,000 for consumer redress.

FTC also reached a settlement requiring LeanSpa principal Boriz Mizhen and three companies he controls to surrender cash, real estate and personal property totaling about $7 million.

“Gut Check” For Media

During the press conference, FTC appealed to media outlets in an effort to discourage future marketers of “bogus” weight-loss products.

“Enforcement is just one of the tools we use to tackle deceptive advertising. Another is encouraging media to weed out deceptive ads,” Rich said. Consumers are “more likely to believe claims promoted in their favorite magazines or favorite stations,” she said.

FTC is calling on the media to follow new voluntary guidelines to identify and reject bogus weight-loss ads.

Labeling its effort the “gut check” program, FTC is sending a letter to 75 publishers, broadcasters, media groups and trade associations on “how to spot bogus claims and alert them to new resources” on FTC's website that can be helpful to them.

The letter, titled “Gut Check: A Reference Guide for Media on Spotting False Weight Loss Claims,” states that while there is no “one-size-fits all” way to spot every deceptive weight loss claim, there are certain red flags, and so FTC created a list of seven common bogus claims (see box).

FTC Guide For Media On False Weight-Loss Claims

Causes weight loss of two pounds or more a week for a month or more without dieting or exercise
Causes substantial weight loss no matter what or how much the consumer eats
Causes permanent weight loss even after the consumer stops using product
Blocks the absorption of fat or calories to enable consumers to lose substantial weight
Safely enables consumers to lose more than three pounds per week for more than four weeks
Causes substantial weight loss for all users
Causes substantial weight loss by wearing a product on the body or rubbing it into the skin

Urging the media to comply, FTC notes “no legitimate media outlet wants to be associated with fraud. Accuracy is your company’s stock in trade. Why sully your good name by being known as a publication or station that promotes rip-offs?” The agency adds: “Reputable advertisers don’t want to associate their brands with media outlets used by con artists.”

“This is not a shot across the bow” of media outlets, added Rich. “This is a request for teamwork.”

While FTC has the authority to take action against media outlets in regards to their running deceptive ads, “it is not something we've done or plan to do,” said Mary Engle, associate director in the Division of Advertising Practices. Engle said the agency is counting on voluntary participation.

FTC Settles Big With Sensa, Other Weight-Loss Marketers

More from United States

More from North America