Injunctions, $6.6 million fine in FTC case citing misleading claims, fraudulent return policy

24-Feb-2017 - Last updated on 24-Feb-2017 at 17:19 GMT

The case involved alleged deceptive marketing practices for dietary supplements featured in radio spots. Image © iStock/jakkapan21

The Federal Trade Commission and Attorney General of Maine have announced the settlement of a case involving alleged deceptive marketing practices for dietary supplements that were featured in radio spots.

The supplements, called CogniPrin and FlexiPrin, were marketed primarily through 30-minute radio spots that the complaint alleges were formatted to sound like radio talk shows. The programs featured two alleged experts, Ronald Jahner and Brazos Minshew. In the case of Jahner, the complaint alleges that the spots did not disclose that he stood to benefit monetarily from the sale of the supplements. In Minshew’s case, he was billed as an expert on neurology and memory support, expertise he does not have, the complaint alleged.

The ads also featured a range of claims for the products which FTC said were false and misleading. Among these were claims that CogniPrin: 1) reverses mental decline by 12 years; 2) improves memory by 44%; and 3) improves memory in as little as three weeks and is clinically proven to improve memory; and that FlexiPrin: 1) reduces joint and back pain, inflammation, and stiffness in as little as two hours; 2) rebuilds damaged joints and cartilage and; 3) has been clinically proven to reduce the need for medication in 80 percent of users and to reduce morning joint stiffness in all users.

Radio seen as problem area

Radio ads tend to be a problem area for compliance, said New York-based attorney Marc Ullman, of counsel with the firm Rivkin Radler. The urge to make full use of the expensive air time for marketing messages often leaves disclosure language out in the cold.

“There is a problem on radio with making adequate disclosures. My experience is that the content is barely able to be jammed into the time allotted, and that they don’t get around to disclosing the fact that the endorsers might be paid or that the people who sound like physicians might not be,” Ullman told NutraIngredients-USA.

In addition to the problems with the way the supplements were marketed and the claims that were made for them, the complaint took the six defendants to task over the way consumers paid for them. The complaint alleged that the defendants made a false and misleading promise for a 90-day return policy, when in fact consumers had to return the products within 14 days to qualify for the offer. And the defendants did not disclose hefty return fees and burdensome requirements such as having to return empty bottles, the complaint alleged. And consumers often ended up being enrolled in ‘continuity plans’ for other services which they did not request. These potentially could have been the most grave charge, Ullman said.

“These could have been prosecuted as mail fraud, which is a criminal charge,” Ullman said.

Injunctions against defendants

The defendants were: XXL Impressions LLC, Jeffrey R. Powlowsky, J2 Response LLP, Justin Bumann, Justin Steinle, Synergixx, LLC, Charlie Fusco, Ronald Jahner, and Brazos Minshew.

According to FTC, defendants Powlowsky, XXL Impressions, J2 Response, Bumann, and Steinle have agreed in two separate proposed court orders to substantial injunctions against making unsubstantiated health efficacy claims. Both orders bar the defendants 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. They also require the defendants 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 defendants 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. The orders prohibit the defendants from violating the Restore Online Shoppers’ Confidence Act and require them to comply with the EFTA. The two orders also impose a $6.57 million judgment against defendants, with all but $556,000 suspended due to the defendants’ financial condition.

The order against Powlowsky and XXL Impressions LLC also 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.

Repeat offender

The order against the sixth settling defendant bars Minshew 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.

This is not the first FTC enforcement action Minshew has been associated with. In 2013 TriVita, a firm that marketed a cactus drink called Nopalea, agreed to a $3.5 million settlement on what were deemed false and misleading claims for the product made in infomercials. Minshew, who was the company’s chief scientific officer at the time, appeared in the infomercials and linked the drink with benefits in fighting inflammation associated with allergies, Alzheimer’s disease, heart disease and diabetes. Those spots also featured endorsers who were paid without that fact being disclosed to consumers.