$2 million judgment is among largest-ever obtained by the FTC against an ad agency
Marketing Architects, Inc. (MAI), an advertising agency that created and disseminated allegedly deceptive radio ads for weight-loss products marketed by its client, Direct Alternatives, has agreed to pay $2 million to the Federal Trade Commission and State of Maine Attorney General’s Office to settle their complaint. The complaint cites a history of creating similar claims for other weight-loss marketers.
Minneapolis-based MAI created advertising for a number of Direct Alternatives’ products, including Puranol, Pur-Hoodia Plus, PH Plus, Acai Fresh, AF Plus, and Final Trim, between 2006 through February 2015. In 2016, the FTC and Maine settled allegations against Direct Alternatives that the company made false or unsubstantiated weight-loss claims and that it deceptively marketed risk-free offers for AF Plus and Final Trim.
In the action announced today, the joint complaint alleges that MAI created and disseminated radio ads with false or unsubstantiated weight-loss claims for AF Plus and Final Trim. MAI previously created weight-loss ads for Sensa Products, LLC between March 2009 and May 2011 similar to the ads challenged in the Direct Alternatives complaint. Sensa was the subject of an FTC complaint filed in 2014 and agreed to refund $26.5 million to defrauded consumers.
Today’s complaint alleges that, in addition to receiving FTC’s Sensa order, MAI was previously made aware of the need to have competent and reliable scientific evidence to back up health claims. Among other things, the complaint alleges that Direct Alternatives provided MAI with documents indicating that some of the weight-loss claims later challenged by the FTC needed to be supported by scientific evidence.
The complaint further charges that MAI developed and disseminated fictitious weight-loss testimonials and created radio ads for weight-loss products falsely disguised as news stories. Finally, the complaint charges MAI with creating inbound call scripts that failed to adequately disclose that consumers would be automatically enrolled in negative-option (auto-ship) continuity plans.
The proposed court order bans MAI from making any of the seven “gut check” weight-loss claims that the FTC has publicly advised are always false with respect to any dietary supplement, over-the-counter drug, or any product rubbed into or worn on the skin. The order also requires MAI to have competent and reliable scientific evidence to support any other claims about the health benefits or efficacy of weight-loss products, and prohibits it from misrepresenting the existence or outcome of tests or studies. In addition, the order prohibits MAI from misrepresenting the experience of consumer testimonialists or that paid commercial advertising is independent programming.
The order further prohibits MAI from misrepresenting other facts material to the sale of a product related to return and cancellation policies, “free trials,” and auto-billing subscriptions. MAI must tell consumers about any negative-option feature, must obtain consumers’ express informed consent before obtaining billing information, and must not misrepresent return and cancellation policies.
Finally, the order imposes a $2 million judgment against MAI, which will be paid to the FTC and the State of Maine, and may be used to provide refunds to consumers harmed by MAI’s allegedly deceptive conduct.
The Commission vote authorizing the filing of the complaint and approving the proposed stipulated final order was 2-0. The complaint and proposed stipulated final order were filed in the U.S. District Court for the District of Maine.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.
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Mitchell J. Katz
Office of Public Affairs