FTC Nets $3M Settlement from Basic Research

WASHINGTON--A settlement has been reached between the Federal Trade Commission (FTC) and six companies and three individuals charged with unsubstantiated advertising claims for six weight-loss products--three gels and three dietary supplements. Under terms of deal, the primary company, Basic Research, will pay $3 million on behalf of the all the defendants, including A.G. Waterhouse LLC, Klein Becker USA LLC, NutraSport LLC, Sovage Dermalogic Laboratories LLC, BAN LLC, Dennis Gay, Daniel B. Mowrey (dba American Phytotherapy Research Laboratory) and Mitchell K. Friedlander. The settlement also prohibits the defendants from making unsubstantiated claims in the future and from misrepresenting studies or endorsements.

According to the FTC complaint, ads for three skin gels--Tummy Flattening Gel, Cutting Gel and Dermalin APg--claimed they could melt away fat wherever applied, including the thighs, tummy and even a double chin. Ads for supplement products Leptoprin and Anorex, both based on ephedrine, claimed they could lead to weight loss of more than 20 pounds. And, ads for PediaLean fiber pills claimed the pills caused substantial weight loss in overweight children. FTC alleged the marketers lacked a reasonable basis in support of the claims, noting the sellers falsely stated clinical testing proved those claims for four of the challenged products and misrepresented their spokesperson as a medical doctor. The ads appeared on television, and in magazines (Cosmopolitan, Redbook and Muscle and Fitness) and tabloids (National Enquirer), in addition to some special infomercial and internet marketing.

In conjunction with the settlement, Basic Research agreed to release any claims it may have against FTC and related employees, agents, or representatives arising from the underlying administrative action.

Richard Burbidge of the law firm Burbidge & Mitchell, lead attorney for Basic Research, said there were two key components of the settlement. "First, the acknowledgement that the agreement is for settlement purposes only and did not constitute an admission by any of the respondents that the law has been violated," he said. "Second, and most importantly, we now have a clearer understanding with the FTC regarding its competent and reliable scientific evidence standard for advertising claims, thus hopefully obviating any future disagreements over the reasonable basis test.

"Were glad the FTC matter is now behind us," said Dennis Gay, chief executive officer (CEO) of Basic Research. "We look forward to working with the FTC in the future. To my great surprise, the FTC turned out to be not an enemy of business, but rather dedicated professionals who truly have both consumer and business interests at heart. So often people complain about government not working, but in this case, government did work."