Rexall Sundown, Inc. (Rexall) will pay up to $12 million to resolve Federal Trade Commission charges regarding its marketing of the dietary supplement, "Cellasene," a purported cellulite treatment product. The settlement is contingent on approval by the federal district court in Miami and approval of related settlements in class action lawsuits currently pending against Rexall in California and Florida. If approved, the FTC and class action settlements together will provide up to $12 million in redress for consumers throughout the United States who purchased Cellasene.
"Hundreds of thousands of consumers were misled by the claims for this product," said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "This case should alert advertisers to the fact that their chances of getting away with making unsubstantiated claims are slim to none."
Rexall is a Florida-based subsidiary of Royal Numico, N.V. that manufactures and markets a variety of nutritional supplements and consumer health products. In 1999, Rexall launched a national public relations campaign that heralded the introduction of Cellasene as a major news event, and hired an agency to distribute widely a "video news release" that described the Cellasene clinical studies as "impressive." News stories on Cellasene appeared throughout the country. Shortly thereafter, Rexall advertised Cellasene in major newspapers including The Washington Post and USA Today. The company also advertised Cellasene in magazines, on the Internet, on television and radio, and through free-standing inserts in newspapers. Sales of Cellasene exceeded $40 million in the United States. The eight-week Cellasene regimen cost consumers almost $200.
In July 2000, the FTC sued Rexall in the U.S. District Court for the Southern District of Florida, alleging that the company violated the FTC Act by making unsubstantiated claims about the ability of Cellasene to eliminate or substantially reduce cellulite and false claims that it had clinical evidence establishing Cellasene's efficacy. In its promotional materials, Rexall had stated that "clinically researched" Cellasene was "The One That Works," and that, "Unlike massages and creams, Cellasene works from within, nutritionally, to help eliminate cellulite at its source."
In addition to its consumer redress provisions, the stipulated final order prohibits Rexall from making any unsubstantiated cellulite reduction or elimination claim for Cellasene. It also prohibits the defendant from making unsubstantiated claims regarding cellulite, body fat or weight loss for drugs or dietary supplements and from misrepresenting test or study results in connection with the sale of any dietary supplement or drug.
The settlement will become final when the class action settlements are approved in final form by the California and Florida State courts, a process that may take several months. After these approvals are obtained, the FTC will administer a redress fund of up to $12 million for consumers who were dissatisfied with Cellasene. Consumers who purchased Cellasene and want to participate in the redress program should call the Commission's settlement hotline at: 202-326-3793.
The Commission vote authorizing staff to file the stipulated final order was 5-0. It was filed in the U.S. District Court, Southern District of Florida, in Miami, on March 11, 2003.
Civil Action No. 00-7016-CIV-Martinez)
(FTC File No. X000101)