FTC Alleges Dietary Supplement Marketers Duped Consumers in Billing Scheme

WASHINGTON—A federal judge in Nevada has entered a temporary restraining order against marketers of green coffee bean extract and other dietary supplements following accusations that the companies made unsubstantiated weight-loss claims and continuously billed consumers without their authorization.

The complaint filed against Health Formulas, LLC, its related entities, and principals (Simple Pure) is the first FTC action alleging violations of the Restore Online Shoppers’ Confidence Act (ROSCA), the agency announced Monday. The law bars marketers from charging consumers in an Internet transaction unless the business has clearly revealed all material terms of the transaction, obtained the consumers’ express informed consent, and provided a way for consumers to stop the recurring charges.

On Oct. 9, U.S. District Judge Jennifer Dorsey entered a temporary restraining order against the defendants and ordered them to appear on Oct. 23 to show why the court should not enter a preliminary injunction against them. The order included a freeze on the defendants’ assets and the appointment of a temporary receiver to manage the assets.

The defendants made baseless weight-loss claims (examples: “Burn fat without diet or exercise" and “Shed pounds fast!") and duped consumers into disclosing their debit and credit card information, enrolling them in a “negative-option program" without their authorization, according to an FTC press release. FTC said consumers were continually billed for Simple Pure’s weight-loss supplements such as Pure Green Coffee Bean Plus and RKG Extreme, with bills generally ranging from $60 to $210 monthly.

According to FTC, defendants failed to provide necessary disclosures, neglected to give consumers a way to stop the automatic charges, and failed to disclose important facts about their refund and cancellation policy. The complaint alleged the defendants violated the FTC Act, the ROSCA, FTC’s Telemarketing Sales Rule (TSR), TSR’s Do Not Call provisions, and the Electronic Funds Transfer Act.

Health Formulas, LLC, a California limited liability company that also does business as Simple Pure Nutrition, is planning a defense.

“Health Formulas believes that when it is afforded an opportunity to defend its business practices in court, it will be absolved of any alleged wrong doing," said A. Jeff Ifrah, an attorney in Washington representing the company.