Two Maine-based dietary supplement marketers and their principals have agreed to settle Federal Trade Commission charges that they made deceptive advertising claims about their dietary supplement products, in violation of federal law. In separate actions, the FTC alleged that Pinnacle Marketing, LLC and its principals, and VisionTel Communications, LLC and its principals, falsely advertised that certain dietary supplements caused substantial weight loss without diet or exercise, and made other false and unsubstantiated weight loss claims. The FTC also alleged that the VisionTel defendants made unsubstantiated claims that dietary supplements marketed for male and female sexual dysfunction were safe and effective. The proposed settlements, which require court approval, would permanently bar both companies and their principals from making the challenged false weight loss claims and from making efficacy and safety claims for weight loss and other health-related products, services, and programs without scientific evidence. The Pinnacle defendants have agreed to pay $219,000 and the VisionTel defendants have agreed to pay $750,000 to settle these matters. These amounts are based on the defendants' ability to pay.
Pinnacle Marketing, LLC, based in Biddeford, Maine, marketed a purported weight loss system called "Ultra Carb" consisting of two tablets: a "carb blocker" with white kidney bean extract, chromium picolinate, and other ingredients; and a "fat blocker" with chitosan. Pinnacle's advertisements claimed that Ultra Carb would block the absorption of carbohydrates and fat in the body, enabling users to lose a substantial amount of weight - as much as 20 pounds and two to three dress or pant sizes in one month - without diet or exercise. Pinnacle advertised Ultra Carb in radio ads broadcast in metropolitan areas including Los Angeles, Chicago, and Boston; through ads in newspapers such as The Washington Post and the Detroit Free Press; in panel advertisements on television Interactive Programming Guides; and with an Internet coupon. Pinnacle sold a two-month supply of Ultra Carb directly to consumers for $99.95, plus shipping and handling.
The FTC's complaint names Pinnacle Marketing, LLC (also doing business as Health Remedies, Acadia Skin Care, Atlantic Skin Care, Atlantic Skin Care Products, and Pinnacle Marketing Group, LLC), and its principals, Todd Flaherty, Matthew Tasker, and Kevin Curty. The complaint alleges that the defendants made false and unsubstantiated weight loss claims for Ultra Carb, including false claims that Ultra Carb causes substantial weight loss by blocking the absorption of fat, and causes quick and substantial weight loss without diet or exercise.
The proposed stipulated final order prohibits the defendants from:
The order requires the defendants to pay $219,000 in consumer redress or disgorgement. The order also contains an "avalanche clause," which provides that $22.5 million will become due immediately if the court finds that the defendants misrepresented their financial condition.
The proposed order further includes various recordkeeping and reporting requirements to assist the FTC in monitoring the defendants' compliance.
The VisionTel defendants have sold various dietary supplements and other products directly to consumers through print, radio, and television ads; TV infomercials; and on the Internet. The FTC's complaint names VisionTel Communications, LLC, also doing business as Vision Laboratories, and its officers, Michael McNaboe, Robert Dall and David Amato, all based in Eliot, Maine; MJ Management, based in Scarborough, Maine; and MAD Marketing, Inc. and LLAD Management, Inc., both based in Cape Elizabeth, Maine. The complaint targets claims for four products:
To settle the FTC's charges, the proposed stipulated final order prohibits the defendants from claiming that Chito-Trim, TurboTone, or any other weight loss product containing similar ingredients causes substantial weight loss without diet or exercise, or causes substantial weight loss by blocking the absorption of fat or calories. The order requires the defendants to have competent and reliable scientific substantiation for future efficacy, safety, and "no side effects" claims for the four challenged products, as well as any other weight loss, sexual dysfunction, or health-related product, program, or service. The order further prohibits the defendants from misrepresenting any test, study, or research for any health-related product, service, or program.
The order requires the defendants to pay $750,000 in consumer redress or disgorgement. The order also contains a $35 million "avalanche clause" that would make this amount due immediately if a court finds that the defendants misrepresented their financial condition.
Finally, the proposed order contains various recordkeeping and reporting requirements to assist the FTC in monitoring the defendants' compliance.
The FTC received assistance from the Attorney General's Office for the State of Maine in connection with these matters.
The Commission vote authorizing staff to file the complaint and proposed stipulated final order against Pinnacle Marketing was 5-0. They were filed in the U.S. District Court for the District of Maine on August 26, 2004. The order requires the court's approval.
The Commission vote authorizing staff to file the complaint and proposed stipulated final order against VisionTel was 5-0. They were filed in the U.S. District Court for the District of Columbia on August 19, 2004. The order requires the court's approval.
NOTE: The stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.
Copies of the stipulated final order against the Pinnacle Marketing defendants and the stipulated final order against the VisionTel defendants 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.
Joni Lupovitz or Laureen Kapin
Bureau of Consumer Protection
202-326-3743 or 202-326-3237
Joni Lupovitz or Laura Koss
Bureau of Consumer Protection
202-326-3743 or 202-326-2890
(Pinnacle Marketing: FTC File No. 032 3151; Civil Action No. 04-cv-185-P-C)
(VisionTel: FTC File No. 022-3009; Civil Action No. 1:04CV01412)