FTC Settles Hoodia Claims Cases

WASHINGTONFTC continues its enforcement of deceptive and misleading claims made for weight-loss products, recently settling cases against three individuals and two companies associated with a 2009 complaint involving claims made for hoodia products. The original complaint alleged the defendants made false and misleading claims about the South African plant Hoodia gordonii, including statements about its efficacy as a treatment for obesity and its identity as true hoodia. The settlements include bans on various supplement- and claims-related activities., as well as monetary penalties.

The biggest of the penalties was levied on David Romero, and the two companies he controlled,  Nutraceutical International LLC and Stella Labs LLC.  Under a settlement agreement, Romeo and both companies were fined $22.5 million, but the judgment will be suspended once Romeo hand over his Vermont vacation home and assigns FTC the rights to collect $635,000 in business loans owed to Romeo. However, the full amount of the judgment will become due if it is later found Romeo lied or misrepresented his financial information.

Under another settlement, fellow Nutraceuticals International principal Craig Payton is banned from marketing any foods, drugs, or dietary supplements. Payton's order includes no monetary forfeiture, because his assets were already seized in an unrelated federal drug case. However, teh settlement against Nutraceuticals International marketing executive Deborah B. Vickery includes a $4 million judgment, but her inability to pay resulted in a suspension of this judgment.  As with Romeo, if it is later found Vickery misrepresented her financial condition, the full judgment will become due. FTC dropped its case against one-time Nutraceuticals International officer Zoltan Klivinyi, because he is no longer living in the United States.

All five defendants are prohibited from making any false or unsupported claims about foods, drugs, or dietary supplements; they are also restricted from helping others to make such claims and from misrepresenting the results of any scientific study.

Among the specific claims made by the defendants were claims their product would help consumers lose weight and suppress appetite, and claimed these benefits were supported by scientific study,. They further said the ingredient was clinically proven to reduce caloric intake by 1,000 to 2,000 calories per day. They also provided deceptive advertising and promotional materials to trade customers, which pushed the deceptive marketing down the line to consumers.

For more information on the case, visit FTC Online.