FTC settles final charges against supplement sellers

The final three of nine defendants that marketed joint health and a cognitive health supplements have agreed to settle allegations brought by the Federal Trade Commission (FTC) and Maine that they engaged in misrepresentations in promoting the products, the FTC announced. The defendants were charged with violating the FTC Act, the Electronic Fund Transfer Act and its implementing Regulation E, the Telemarketing Sales Rule, and the Maine Unfair Trade Practices Act. Synergixx, LLC, an ad agency, and two individuals including the company’s principal, are barred from engaging in a wide range of marketing practices and ordered to pay a $6.5 million monetary judgment that is suspended based on their inability to pay. The settlement orders are similar to the orders against the other defendants, which the FTC announced in February.

The FTC and Maine charged nine defendants with making false and misleading claims that purported cognitive health supplement CogniPrin: (1) reversed mental decline by 12 years; (2) improved memory by 44 percent; and (3) improved memory in as little as three weeks and is clinically proven to improve memory; and that purported cognitive health supplement FlexiPrin: (1) reduced joint and back pain, inflammation, and stiffness in as little as two hours; (2) rebuilt damaged joints and cartilage and; (3) had been clinically proven to reduce the need for medication in 80 percent of users and to reduce morning joint stiffness in all users.

Synergixx and Fusco advertised CogniPrin and FlexiPrin through 30-minute radio spots that were formatted to sound like educational talk shows, and created inbound call scripts that allegedly deceptively claimed that consumers could try the supplements “risk-free” with an unconditional 90-day money-back guarantee, without disclosing that consumers would have to enroll in an auto-ship continuity plan to qualify for the “risk-free” trial offer, and would have 14 days or less to try the products. The FTC also charged Synergixx and its principal with failing to make important disclosures when they “up-sold” consumers negative option buying clubs and discount medical programs with ongoing fees, charging many consumers for poorly disclosed auto-ship continuity plans they did not want.

One individual, whom defendants presented as an objective medical expert, was charged with providing endorsements without examining the products or exercising his represented expertise. Synergixx and its principal allegedly failed to disclose that he was paid a percentage of FlexiPrin and CogniPrin sales revenues.

The two orders against Synergixx and its principal and the medical expert bar the defendants from making the false or unsubstantiated health claims challenged in the complaint, require them to have competent and reliable scientific evidence when making health-related claims, and require them to clearly disclose their material connections between product sellers and product endorsers. Also, the defendants are barred from misrepresenting the existence or outcome of tests and studies when they promote health products. Additionally, Synergixx and its principal are barred from employing deceptive marketing practices relating to cancellations, negative-option payment plans, upsold merchandise, and deceptive pricing practices.

FTC nails opiate withdrawal supplement company for misleading statements

Catlin Enterprises, Inc. (Catlin) is now barred from making scientifically unsubstantiated claims that their opiate withdrawal treatment alleviates withdrawal symptoms and increases the chances of overcoming opiate dependency. A Texas district court ordered the permanent injunction following the Federal Trade Commission’s (FTC) complaint against Catlin.

Complaint and order

The FTC alleged that Catlin falsely advertised its products Withdrawal Ease and Recovery Ease and participated in deceptive acts throughout the process of labeling, advertising, distribution, and sale of the products. According to Catlin’s statements, Withdrawal Ease significantly alleviates opiate withdrawal symptoms and significantly increases the likelihood of overcoming dependency, while Recovery Ease significantly alleviates post-acute withdrawal symptoms.

The injunction prevent Catalin and its officers, agents, employees, and other people actively participating in the company from engaging in any steps of the process of making and selling any dietary product intended to provide withdrawal assistance or other health benefits and represented as having such benefits unless such statements are not misleading. Any representation of benefits much be based on reliable scientific evidence, obtained from human clinical testing of the product or an equivalent product. The testing must be conducted by qualified researchers and be randomized, double-blind, and placebo controlled.

A $6.6 million judgment was entered and suspended premised upon the accuracy of sworn financial statements. Catalin must provide the FTC with customer information to allow the FTC to “administer consumer redress,” when requested, then destroy this information when instructed to do so by the FTC.

CogniPrin and FlexiPrin supplement marketers charged by FTC and Maine AG

The Federal Trade Commission (FTC) and the Attorney General (AG) of Maine have filed a complaint against nine dietary supplement marketers, including three corporations and six individuals, for their roles in a deceptive campaign to sell a joint health supplement (FlexiPrin) and a cognitive health supplement (CogniPrin) in violation of state and federal laws. The FTC and Maine AG have also jointly announced that six of the marketers (two corporations and four individuals) have agreed to settlements, in the form of proposed stipulated orders, with the state and federal governments.

Complaint

The FTC and the Maine AG allege that XXL Impressions LLC, Jeffrey R. Powlowsky, J2 Response LLP, Justin Bumann, Justin Steinle, Synergixx, LLC, Charlie Fusco, Ronald Jahner, and Brazos Minshew made false and misleading claims that the supplement CogniPrin:

  • reverses mental decline by 12 years;
  • improves memory by 44 percent; and
  • improves memory in as little as three weeks and is clinically proven to improve memory.

And that the supplement FlexiPrin:

  • reduces joint and back pain, inflammation, and stiffness in as little as two hours;
  • rebuilds damaged joints and cartilage; and
  • has been clinically proven to reduce the need for medication in 80 percent of users and to reduce morning joint stiffness in all users.

The complaint alleges that the marketers employed unfair or deceptive acts or practices in the advertising, marketing, distribution, and sale of FlexiPrin and CogniPrin. The marketers also allegedly sold these products directly to consumers, primarily through radio and print advertising nationwide and in Canada, which garnered in excess of $6.5 million in gross sales from January 1, 2012 through April 30, 2015. The complaint specifically alleges that the defendants:

  • made false claims about the efficacy and testing of their products;
  • deceptively enrolled consumers in continuity plans, or automatic monthly shipments for which consumers’ credit and debit cards were automatically charged;
  • when consumers attempted to halt shipments or obtain a refund, they were then told of additional, undisclosed requirements they could almost never abide by;
  • would use stage names and claim medical credentials to promote the products and claim clinical testing that never actually occurred; and
  • deceptively induced consumers to purchase other services such as discount buying clubs or health savings plans which were also difficult to cancel.

Proposed stipulated orders

Marketers Powlowsky, XXL Impressions, J2Response, Bumann, and Steinle have agreed in two proposed court orders to substantial injunctions against making unsubstantiated health efficacy claims. A stipulated order against J2Response, Bumann, and Steinle and a second stipulated order against Powlowsky and XXL Impressions LLC both bar these marketers from making the false or unsubstantiated heath claims challenged in the complaint and require them to have competent and reliable scientific evidence when making health-related claims. The orders also requires these marketers to preserve all scientific evidence supporting claims they make, and bar them from failing to disclose a material connection to a paid endorser. The orders further bar these marketers from misrepresenting the terms of any negative-option, continuity plans, or free trial offers, and require them to get consumers’ express consent before charging them.

In addition, the stipulated order against Powlowsky and XXL Impressions LLC bans them from direct response marketing of foods, dietary supplements, or drugs for 20 years, while allowing the former to continue his manufacturing brokering business.

The stipulated order against Minshew bars him from acting as an “expert endorser” unless he has the expertise he claims to have, and requires him to have scientific evidence to support the product claims he makes.

The stipulated orders impose a $6.57 million judgment against the marketers, with all but $556,000 suspended due to their inability to pay. The stipulated final orders will have the force of law if and when approved and signed by a district court judge upon deciding the case.

The litigation continues as to Fusco, Synergixx, LLC, and Jahner.