On December 11, 2014, the Federal Trade Commission ("FTC") announced a settlement with HCG Platinum, LLC and its related health supplement providers (collectively, "HCG") concerning allegedly false advertising practices. The settlement is valued at roughly $10 million. The FTC alleged that HCG made claims concerning products that it sold which were either untrue and/or without substantiation. The settlement agreement reflects the FTC's increased scrutiny into the advertising practices of online health supplement companies and their marketers.
Alleged False Advertising by Health Supplement Company
HCG advertised that its products "cause[], or assist[] in causing, rapid weight loss, including one to two pounds per day for multiple weeks." HCG also advertised that its products are safe and "clinically proven to burn fat, reduce weight, and lower cholesterol." However, according to the FTC, the advertised benefits of HCG's products were "false or not substantiated at the time the representations were made."
FTC's Settlement with Health Supplement Company for False Advertising
HCG, its principals and related entities are permanently enjoined from advertising that their products cause weight loss of two pounds or more a week for a month or more without diet or exercise. They are further enjoined from advertising that their products cause substantial weight loss, cause permanent weight loss, or block the absorption of fat or calories. However, HCG and its principals are not prohibited from making advertisements consistent with actual Food and Drug Administration approval and/or findings. Although the settlement is for a total of $10 million, only $1 million will be collected by the FTC, with the rest of the monetary penalty suspended.
Protect Yourself
In January of this year, we blogged about a similar FTC settlement. The FTC has been aggressively pursuing health supplement providers and their marketers for claims made in connection with online advertising. As such, it is critical that product providers and marketers remain abreast of ever-evolving regulations in the dietary supplement and marketing space.
If you are a health or dietary supplement provider, a marketer of such products, or if you have been served with legal process relating to your marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.
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