Supplement Marketer Settles with FTC for $2.2 Million

WASHINGTON--A direct mail marketer selling dietary supplements will pay $2.2 million in consumer redress for having made false and unsubstantiated weight-loss and arthritis cure claims for its dietary supplements in sales brochures mailed throughout the United States. The Federal Trade Commission (FTC) settlement involves California residents Michael S. Levey and Gary Ballen; Bentley Myers International Co., based in Vancouver, Canada; and Publishers Data Services Inc. and Nutritional Life Inc., both based in Beverly Hills, Calif.

In June 2003, the Department of Justice filed a federal court complaint against the defendants on behalf of FTC for making false and unsubstantiated claims that three weight-loss supplements--Zymax and MillinesES (both containing ephedra), and Serotril (containing St. Johns wort)--caused rapid and substantial weight loss without diet or exercise. The complaint further alleged the defendants made unsubstantiated claims about curing arthritis and rebuilding cartilage within days for the companys CartazyneDS product, which contained glucosamine, The complaint also charged that the defendants used ads with fictitious expert and consumer endorsements, in addition to deceptive before and after pictures.

The complaint also charged Levey and the three companies with violating a 1993 FTC order that had prohibited Levey from making unsubstantiated advertising claims and from using deceptive endorsements and demonstrations. The 1993 order was based on Leveys allegedly deceptive television infomercials for the EuroTrym Diet Patch, Foliplexx hair-loss product, Y-Bron impotence treatment and Magic Wand kitchen mixer.

Although Levey died in August 2003, FTC announced an amended complaint that substitutes his wife Lisa, in her capacity as personal representative of the Levey estate, for Leveys role in the settlement.

The Commissions vote to refer the amended complaint and the proposed consent decree to the Department of Justice for filing was 4-1, with Commissioner Orson Swindle dissenting. In his dissenting statement, Commissioner Swindle explained he thought the amount of monetary relief was woefully inadequate. Although $2.2 million is a sizeable amount of money, this payment is minuscule in comparison to the amount of the defendants gross sales and consumer harm, he said. In addition, the Levey family and Gary Ballen are both left with substantial assets. Although anyone can feel compassion for the Levey family given Michael Leveys death, this should not justify allowing the family to keep money that rightfully belongs to consumers who were deceived by the defendants false health claims. Any settlement that leaves defendants or their families with substantial ill-gotten wealth not only sets a bad precedent but also shows, in a manner of speaking, that crime does pay.

For more on the settlement, visit www.ftc.gov/opa/2004/03/levey.htm.