Supplement Infomercial Marketers Ordered to Pay Nearly $70 Million in Fines

The Federal Trade Commission (FTC) made an example out of infomercial pitchman Donald W. Barrett and his associates on August 13 when they were found guilty of taking advantage of customers by making false claims about and unauthorized charges for two dietary supplement products. The U.S. District Court for the District of Massachusetts ruled in favor of the FTC and ordered the marketers of Supreme Greens and Coral Calcium to pay a total of $68.6 million in fines because of false and misleading claims. The marketers used infomercials to make illegal claims that the products could cure conditions such as cancer, Parkinson’s disease and heart disease.

Direct Marketing Concepts Inc. and ITV Direct Inc., marketers of the Supreme Greens products, were both charged with making unsubstantiated claims. In addition, the companies were punished for making unauthorized credit and debit transactions through a deceptive continuity program that would periodically bill customers’ credit cards for additional product orders without their express consent. The court froze the assets of the companies and ordered them to pay $48.2 million to the customers they ripped off. The courts also ordered King Media Inc. and Triad ML Marketing Inc., marketers of the Coral Calcium products, to pay $20.4 million in consumer refunds.

The courts also explicitly ordered the companies not to misrepresent their products in the future, though Nutrition Business Journal suspects they are sufficiently motivated not to do so by the $68 million in fines. In addition, the companies were presented with a laundry list of offenses that they are barred from participating in, including: “Misrepresenting that scientific research validated their claims; making any health, performance, or efficacy claims about any food, drug, dietary supplement, cosmetic, or device unless such claims are true, non-misleading and substantiated by competent and reliable scientific evidence; failing to disclose that promotional programming is, in fact, a paid advertisement; and billing consumers or charging their credit or debit cards on an ongoing basis without their consent.”

In April, the FTC charged a group of Delaware-based supplement suppliers with making false and deceptive claims surrounding the sale of hoodia gordonii. NBJ offers a direct-to-consumer selling web seminar in which regulatory expert Ivan Wasserman, who is an attorney with Manatt, Phelps & Phillips, discusses the ramped up enforcement efforts by the FTC and what supplement marketers can expect out of the agency over the next year.

Related NBJ Links:

FDA Increases Enforcement Efforts, Warns Internet Marketers About Swine Flu Claims

Direct-to-Consumer Advertisers Must Overcome ‘Tremendous Distrust’ on the Hill

NAD Turns in SlimForce 7 to FDA, FTC for Unsubstantiated Advertising Claims

Related Functional Ingredients Magazine Links:

Deceptive Hoodia claims rile FTC

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