Friday, June 5, 2020

Unsubstantiated Weight Loss Claims and Non-Disparagement Clauses Draw the Ire of the FTC

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Richard B. Newmanhttp://www.hinchnewman.com
Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

In the latest installment of the Federal Trade Commission’s core mission to protect consumers against unfair and deceptive trade practices, the Commission has settle charges against the marketers of a weight-loss system advertised as using “breakthrough technology” and “personalized supplements” to help consumers permanently lose “20 to 40+ pounds in 40 days” without significantly cutting calories.

According to the complaint, NutriMost, LLC; NutriMost Doctors, LLC; and their owner deceptively marketed the NutriMost weight-loss program to consumers.  The product was sold at the individual defendant’s eight locations in the Pittsburgh area and by franchisees and licensees, nationwide.

The FTC also alleges that on their websites, on Facebook, and in traditional radio and newspaper ads, defendants claimed the NutriMost System, inter alia, helps users burn between 2,000 and 7,000 calories of fat per day and would “turn off fat storage and turn on fat burning.” Defendants allegedly charged consumers $1,895 for the program.

The complaint charges defendants with promoting the system without appropriate support, as “having the technology to access nearly every factor of fat burning, fat storage and metabolism,” using a scan to address the “body’s top organ stressors, as well as find the best products to balance those . . . stressors.”  The Commission alleges that defendants did not inform consumers, until after they purchased the system, that to achieve the weight loss advertised users would have to follow an extremely restrictive diet.

The complaint also charges defendants with using endorsements and testimonials for the system without disclosing that the endorsers had material connections to defendants or their franchisees.

The FTC also alleges that the defendants required buyers to sign a contract agreeing not to make any negative statements or comments about the NutriMost System, and that if consumers violated this requirement, they would have to pay the defendants $35,999.

Lastly, defendants allegedly provided program licensees and franchisees with the means and instrumentalities to violate the FTC Act by giving them misleading and deceptive marketing materials, as well as the form contract containing the gag clause prohibiting negative reviews.

The court order settling the FTC’s charges bars the marketers of the “NutriMost Ultimate Fat Loss System” from, without limitation: (i) misrepresenting that users do not need to follow a restrictive diet; (ii) making weight-loss and health claims unless they are non-misleading and are supported with competent and reliable scientific evidence; (iii) providing third-parties such as franchisees with the means and instrumentalities with which to make misleading statements of material fact or engage in unfair practices; (iv) using deceptive endorsements in their marketing materials; and (v) including non-disparagement clauses in their contracts.

The order also requires defendants to disclose that physician monitoring is required to minimize the potential for health risks for caloric intakes of less than 800 calories a day.

The order imposes a $32 million judgment against defendants, which will be suspended based on defendants’ financial condition after they pay $2 million for consumer refunds.

If you are a marketer of dietary supplements, or are the subject of an Attorney General or FTC investigation or enforcement action, contact an experienced advertising compliance lawyer to discuss how to mitigate potential exposure or otherwise respond.

Connect with the author on LinkedIn at FTC Compliance and Defense Lawyer.

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

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