FTC Nets $3M Settlement from Basic Research 27797

FTC Nets $3M Settlement from Basic Research

WASHINGTONA settlement has been reached between the Federal TradeCommission (FTC) and six companies and three individuals charged withunsubstantiated advertising claims for six weight-loss productsthree gels andthree dietary supplements. Under terms of deal, the primary company, Basic Research, will pay $3 millionon behalf of the all the defendants, including A.G. Waterhouse LLC, Klein Becker USA LLC, NutraSport LLC, Sovage DermalogicLaboratories LLC, BAN LLC, Dennis Gay, Daniel B. Mowrey (dba American Phytotherapy Research Laboratory) and Mitchell K.Friedlander. The settlement also prohibits the defendants from makingunsubstantiated claims in the future and from misrepresenting studies orendorsements.

According to the FTC complaint, ads for three skin gelsTummy FlatteningGel, Cutting Gel and Dermalin APgclaimed they could melt away fat whereverapplied, including the thighs, tummy and even a double chin. Ads for supplementproducts Leptoprin and Anorex, both based on ephedrine, claimed they could leadto weight loss of more than 20 pounds. And, ads for PediaLean fiber pillsclaimed the pills caused substantial weight loss in overweight children. FTCalleged the marketers lacked a reasonable basis in support of the claims, notingthe sellers falsely stated clinical testing proved those claims for four of thechallenged products and misrepresented their spokesperson as a medical doctor.The ads appeared on television, and in magazines (Cosmopolitan, Redbook andMuscle and Fitness) and tabloids (National Enquirer), in additionto some special infomercial and Internet marketing.

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

Richard Burbidge of the law firm Burbidge & Mitchell, lead attorney forBasic Research, said there were two key components of the settlement. First,the acknowledgement that the agreement is for settlement purposes only and didnot constitute an admission by any of the respondents that the law has beenviolated, he said. Second, and most importantly, we now have a clearerunderstanding with the FTC regarding its competent and reliable scientificevidence standard for advertising claims, thus hopefully obviating any futuredisagreements over the reasonable basis test.

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