Under FTC Order for False and Unsubstantiated Claims About Dietary Supplements
An operation that hid assets from the Federal Trade Commission when settling false advertising charges will pay $1.9 million to be used for refunds. Last year, the defendants agreed to pay $375,000 to settle FTC charges. The $1.6 million balance of the judgment was suspended based on sworn financial disclosure documents showing inability to pay. Shortly after that settlement, the FTC discovered that defendants kept at least $1.8 million in an undisclosed PayPal account. The FTC immediately obtained a temporary restraining order to freeze the funds, which was granted on December 8, 2006. The defendants have been ordered to pay the entire $1.9 million.
On November 22, 2006, the FTC charged the defendants, Sunny Health Nutrition Technology & Products, Inc., and Sunny Sia, with making false and unsubstantiated claims for three dietary supplements, including HeightMax, advertised to make kids and young adults taller. On November 30, 2006 the Honorable Susan C. Bucklew, Federal District Court Judge, signed a Stipulated Judgment requiring defendants to pay $375,000 based on the accuracy of sworn financial statements. The Judgment included an avalanche clause, requiring payment of full redress for $1.9 million if the financial statements were not accurate.
Judge Bucklew’s new order, signed on February 22, 2007, and agreed to by the defendants, requires them to pay the entire $1.9 million, using the funds in the account at PayPal and other sources if necessary. The conduct prohibitions from the previously entered order remain unchanged. The FTC will set up a refund program for HeightMax purchasers, using the money collected. For further information, consumers can call the refund hotline at 1-888-764-4439.
The Commission vote to authorize staff to file the stipulated final order was 5-0. The stipulated final order for permanent injunction was filed in the U.S. District Court for the Middle District of Florida.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.
Copies of the documents 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 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 more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.