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Direct-Selling Supplement Marketer Vows to Stop Using Deceptive Claims and Practices

The Texas Attorney General has once again proven that it will not tolerate supplement companies preying on the sick and unsuspecting. Texas Attorney General Greg Abbott announced on July 21 that his office had reached a settlement with that will force the company to stop shipping unauthorized orders to customers, refrain from making false health claims and clearly disclose its terms of service to future purchasers. In addition, the company has agreed to provide refunds for overcharged customers.

The investigation conducted by state officials found that the company was marketing its super fruit supplement, Acai Berry Maxx, as a product that would reduce the risk of heart attack, cancer and Alzheimer’s disease. Customers who clicked on the online advertisements were instructed to pay a $5.95 shipping and handling fee for a free 15-day supply. Once the purchase was made using a credit card, customers were unknowingly entered into a negative option plan where they were automatically billed $80 for a one-month supply of the supplement if they didn’t cancel within the 14-day trial period. Under the Texas Deceptive Trade Practices Act, terms providing for ongoing contractual obligations must be disclosed clearly and conspicuously on the contract, according to the Attorney General’s press release. Investigators determined that the negative option language embedded within the company’s terms and conditions violated the state law.

Companies such as knowingly put the rest of the industry at risk with its deceptive practices. Not only was the dietary supplement company taking advantage of consumers by making claims that it could treat or mitigate diseases—which is prohibited by Food and Drug Administration (FDA) guidelines—it is also garnering widespread attention from the media for its bogus free-trial program and giving industry critics more ammunition to validate their claims that the industry is unregulated.

In an April survey conducted by NBJ asking respondents to identify challenges facing direct-to-consumer sellers in the nutrition industry, one industry executive identified this as an ongoing problem. “The growing use of online ‘free’ trial offers that aren't free at all [represents a big challenge to business.] These scams will leave a gigantic black mark on the entire industry as the press will undoubtedly condemn all health marketers for the sins of a few,” the executive told NBJ. “This is a major issue.”

In March, the Texas Attorney General reached a $4 million settlement with the network-marketing company Mannatech for making false or misleading claims. “Texans will not tolerate illegal marketing schemes that prey upon the sick and unsuspecting,” Abbott said in a prepared statement upon the conclusion of the Mannatech settlement. Both cases should serve as fair warning to all supplement marketers that false claims and deceptive practices will no longer go unpunished. (Editor’s Note: Especially in Texas.)

Related Links:

Mannatech to Pay $6 Million Penalty for Deceptive Marketing Practices

McLemore: ‘There Is No Question That a New and Improved FDA is Emerging’

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

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