Four Fad Weight Loss Companies Pay $34 Million to Settle FTC Charges | Adweek Four Fad Weight Loss Companies Pay $34 Million to Settle FTC Charges | Adweek
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Sprinkle, Eat and Pay Up Big Time: Sensa Sheds $26.5 Million to Settle FTC Charges

Sensa is 1 of 4 fad diet products swept up in FTC enforcement sting

Sensa, the heavily advertised weight-loss product that promised dieters all they needed to do to was “sprinkle, eat and lose weight” will pay a hefty $26.5 million to settle charges with the Federal Trade Commission it deceived consumers.

The settlement is the second largest in the agency’s recent history, right up there with the FTC’s $25 million settlement in September 2011 with Reebok and second only to the FTC’s $40 million settlement with Skechers in 2012.

Sensa was one of four marketers of fad weight-loss products that were swept up in an FTC enforcement action dubbed “Operation Failed Resolution.” All four companies will pay a total of $34 million to settle FTC charges.

The other companies that will pony up are L’Occitane and HCG Diet Direct. L’Occitane, which had no evidence to back up the claim that its skin cream would slim down your body, will pay $450,000. HCG Diet Direct, which marketed a human hormone that is unproven as a weight-loss treatment will surrender about $7.3 million in assets.

A fourth company, LeanSpa, that marketed acai berry and colon cleanse supplements through fake websites, was granted a suspended settlement from the FTC because of the company’s inability to pay.

The size of the settlements alone should send a clear message to national marketers that the FTC is setting a high bar when it comes to weight-loss claims.

“Resolutions to lose weight are easy to make but hard to keep. And 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 just isn’t there,” Jessica Rich, the director of the FTC’s bureau of consumer protection, said in a statement.

Like her predecessor, Rich has put deceptive health and fitness claims at the top of the FTC’s enforcement agenda. She told Adweek that such marketing deceptions are “the worst” because they not only rip off consumers, but they also prevent consumers from seeking workable solutions.

All four marketers are prohibited from making any deceptive claims in the future about any weight-loss product without backing up the claims with two clinical trials, a precedent the FTC set with previous health and fitness enforcement actions.

Sensa’s claims were particularly egregious, lacking any competent and reliable scientific evidence to back up the claim, the FTC said in its complaint. What’s more, Sensa, which marketed its product widely across radio, print, TV, infomercials, the Internet and in retail stores, charged $59 plus shipping and handling for just a one-month supply of the flavored powder. Between 2008 and 2012, Sensa sales in the U.S. totaled more than $364 million.

Under the FTC’s order, the defendants, including Sensa CEO Adam Goldenberg and Sensa creator, endorser and Sensa part-owner Dr. Alan Hirsch are barred from making weight-loss claims about dietary supplements, foods or drugs unless the product claims are backed by two clinical studies. The total judgment was for $46.5 million with the company paying $26.5 million now and the rest suspended due to inability to pay. If Sensa gave false financial information to the FTC, the full amount would be due.

L’Occitane claimed in its 2012 advertising campaign that its Almond Beauty Shape and Almond Shaping Delight skin creams could “trim 1.3 inches in just 4 weeks.” The online and in-store retailer charged $48 and $44 for 7 ounces and 6.7 ounces of its products. The settlement bans the company from claiming any product applied to the skin causes substantial weight loss or reduction in body size.

HCG Diet Direct agreed not to make deceptive claims in the future about its product, a diluted liquid form of a human hormone produced by the human placenta. The company was one of six that received a warning letter from the FTC in November 2011, advising the company that the product was a mislabeled drug and that it was illegal to make weight-loss claims without reliable scientific evidence to prove it. Not only did the company advertise in ads on YouTube, but it also falsely marketed the product as “FDA approved.” The FTCs order imposed a $3.2 million judgment, representing all sales of the product, which was suspended because of the company’s inability to pay.

LeanSpa’s principal Boris Mizhen and the three companies he controls will surrender cash, real estate and personal property. His wife, Angelina Strano, will pay nearly $300,000. Both the FTC and the state of Connecticut shut down Mizhen’s operation in December 2011 for marketing via a fake website. The FTC’s settlement bans the defendants from billing consumers on a recurring basis, after charging them $79.99.

All four FTC commissioners voted in favor of the proposed consent decrees, which are subject to court approval. 

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