Silence may be golden, but not when it comes to contract clauses that would muzzle consumer complaints. That’s one message from an FTC settlement with the makers of NutriMost weight-loss products. Here’s another: don’t make weight-loss claims without scientific evidence to back them.
The settlement requires Raymond Wisniewski and his companies, NutriMost LLC, and NutriMost Doctors, LLC, to pay $2 million and permanently halt what the FTC alleged were unfair and deceptive practices they used to sell their diet program, both directly and through franchise and licensing agreements nationwide.
According to the FTC, the defendants claimed their “NutriMost Ultimate Fat Loss System” would help people lose 20 to 40 pounds in 40 days and treat or cure diabetes, psoriasis and more, all without a restrictive diet. They touted their “breakthrough technology” and “personalized” dietary supplements, claiming users could achieve targeted fat loss and permanent weight loss.
The FTC’s lawsuit charged the advertising claims — circulated on the defendants’ websites, social media sites, and in newspaper and radio ads — were false or not substantiated by scientific evidence. As for the claim that the program didn’t need a restrictive diet, the FTC says the truth was just the opposite: NutriMost actually required users to follow a very low-calorie diet of about 500 calories a day. The FTC says the defendants should have disclosed that — before buyers forked over $1,895 for the program.
Three other allegations in the FTC’s lawsuit merit particular attention.
First, the FTC challenged as an unfair practice the defendants’ use of a non-disparagement clause in a contract that NutriMost buyers had to sign. The provision said the buyers had to pay $35,999 in damages if they posted any negative online comments or reviews about NutriMost, its products, or employees, even if truthful and non-defamatory. The FTC has challenged consumer “gag” clauses as unfair in the past. Going forward, the recently enacted Consumer Review Fairness Act makes it illegal for companies to use them. The message is clear: gag clauses have no place in consumer contracts.
Second, the complaint alleged NutriMost deceived consumers by using testimonials and before-and-after images of people who had not used the program to achieve their results. Also, according to the complaint, the company failed to disclose that, in many cases, the people in the ads either owned NutriMost franchises or were the relatives or employees of franchise owners. The FTC’s Endorsement Guides: What People Are Asking explains that consumer endorsers must be bona fide users of the product who actually achieved the advertised results. And, if there’s a material connection between the endorser and the advertiser, it must be disclosed.
Third, the complaint alleged the defendants gave their licensees and franchisees the means to deceive consumers by giving them training, support, and marketing materials that contained the deceptive claims and contracts with the gag clause. This count is a reminder that, when appropriate, the FTC will seek to hold companies responsible not only for their deceptive practices, but also for giving others the “means and instrumentalities” to commit deceptive and unfair practices.
In addition to the monetary judgment, the settlement requires Wisniewski and his Pittsburgh-based companies to permanently halt all practices the FTC alleged were deceptive or unfair. It also requires them to disclose if their weight-loss program limits users to less than 800 calories per day.