Supplement Marketer Settles with FTC for $2.2 Million 40382

Supplement Marketer Settles with FTC for $2.2 Million

WASHINGTON--A direct mail marketer selling dietary supplements willpay $2.2 million in consumer redress for having made false and unsubstantiatedweight-loss and arthritis cure claims for its dietary supplements in salesbrochures 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 PublishersData Services Inc. and Nutritional Life Inc., both based in Beverly Hills,Calif.

In June 2003, the Department of Justice filed a federal court complaintagainst the defendants on behalf of FTC for making false and unsubstantiatedclaims that three weight-loss supplements--Zymax and MillinesES (both containingephedra), and Serotril (containing St. Johns wort)--caused rapid andsubstantial weight loss without diet or exercise. The complaint further allegedthe defendants made unsubstantiated claims about curing arthritis and rebuildingcartilage within days for the companys CartazyneDS product, whichcontained glucosamine, The complaint also charged that the defendants used adswith fictitious expert and consumer endorsements, in addition to deceptive beforeand after pictures.

The complaint also charged Levey and the three companies with violating a1993 FTC order that had prohibited Levey from making unsubstantiated advertisingclaims and from using deceptive endorsements and demonstrations. The 1993 orderwas based on Leveys allegedly deceptive television infomercials for theEuroTrym Diet Patch, Foliplexx hair-loss product, Y-Bron impotence treatment andMagic Wand kitchen mixer.

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

The Commissions vote to refer the amended complaint and the proposedconsent decree to the Department of Justice for filing was 4-1, withCommissioner Orson Swindle dissenting. In his dissenting statement, CommissionerSwindle explained he thought the amount of monetary relief was woefullyinadequate. Although $2.2 million is a sizeable amount of money, thispayment is minuscule in comparison to the amount of the defendants grosssales and consumer harm, he said. In addition, the Levey family and GaryBallen are both left with substantial assets. Although anyone can feelcompassion for the Levey family given Michael Leveys death, this should notjustify allowing the family to keep money that rightfully belongs to consumerswho were deceived by the defendants false health claims. Any settlement thatleaves defendants or their families with substantial ill-gotten wealth not onlysets a bad precedent but also shows, in a manner of speaking, that crime doespay.

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