Scarborough, Maine-based defendants are barred from making false or unsubstantiated claims about any weight-loss product or program, dietary supplement, food, or drug, and have agreed to pay $100,000 in consumer redress to settle Federal Trade Commission charges that they made bogus claims about two weight-loss products: gel thin, a topical gel, and Ultra LipoLean, a dietary supplement tablet that purports to block fat. The FTC alleged that the defendants used one or more of the seven bogus “Red Flag” weight-loss claims. The FTC’s ongoing “Red Flag” education campaign provides guidance to assist media outlets and others on spotting false claims in weight-loss ads.
In November 2004, the FTC filed its complaint against Selfworx.com LLC, Iworx, and Jeffrey V. Kral as part of “Operation Big Fat Lie” – an initiative targeting bogus weight-loss claims. The FTC amended its complaint to include Bernard Willimann, an owner and active participant in the operation of the corporate defendants, and Shawn P. Lyden as a relief defendant. The complaint alleged that the defendants claimed that gel thin, when rubbed into the skin, caused substantial weight loss; dissolved fat deposits in days; and dissolved and removed cellulite from the body. The complaint further alleged that the defendants falsely claimed that clinical studies showed that gel thin reduced fat and cellulite deposits on contact. In addition, the complaint alleged that the defendants made false and unsubstantiated claims that Ultra LipoLean caused rapid and substantial weight loss, as much as four pounds per week, without the need to diet, and that only two tablets absorb 20 to 30 grams of fat from a meal. The challenged ads ran in nationally-known publications such as Cosmopolitan and Complete Woman, and Sunday newspaper supplements, including Cleveland, Ohio, Sun Newspapers.
The stipulated final judgment announced today bars the defendants from making claims that any weight-loss product: (1) causes rapid or substantial weight loss without the need for diet or exercise, or (2) causes substantial weight loss or eliminates fat or cellulite when rubbed into the skin. The settlement further bars the defendants from making false or unsubstantiated claims about any weight-loss product or program, dietary supplement, food, or drug. In addition, the settlement prohibits the defendants from misrepresenting the existence, validity, or results of any tests or studies.
The settlement requires the defendants to pay $100,000 in consumer redress. The settlement contains a $20 million avalanche clause for the defendants and a $400,000 avalanche clause for the relief defendant Shawn Lyden, if it is found that they misrepresented their financial status. Finally, the settlement contains various record keeping requirements to assist the FTC in monitoring the defendants’ compliance.
The Commission vote authorizing staff to file the amended complaint and the stipulated final judgment was 5-0. The amended complaint and the stipulated final judgment were filed in the U.S. District Court, District of Maine, on May 19, 2005, and the judge has signed the stipulated final judgment.
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated final judgment have the force of law when signed by the judge.
Copies of the amended complaint and the stipulated final judgment are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.