FTC Drops the Hammer on Alleged False Advertising and Unauthorized Billing Scheme 
A federal district court in California has temporarily halted a company’s advertising of three dissolvable oral film strips that the Federal Trade Commission alleges were deceptively marketed as effective smoking cessation, weight-loss and sexual-performance aids. The court has also temporarily halted the company from enrolling consumers in any auto-ship continuity plan without the consumer’s express informed consent.
The compliant can be see, here. It alleges that three individuals and seven closely related corporate entities orchestrated a scheme to deceptively market the three products.
According to the FTC, the product claims were unsubstantiated and consumers had difficulty with returns despite a “guaranteed” refund promise. The complaint also alleges abusive telemarketing practices through the delivery of prerecorded messages and misleading earnings claims for a multi-level marketing program.
The compliant states that defendants advertised TBX-FREE as a highly effective smoking-cessation product through a national infomercial campaign and on the Internet, using websites and Facebook Live videos. The complaint alleges that they deceptively claimed, among other things, that TBX-FREE has “an 88% Success Rate,” is “More effective than the Patch or Gum,” and has been “Clinically Proven” to be effective in studies published in several well-known scientific journals, including the New England Journal of Medicine.
The complaint also alleges that the defendants touted Eupepsia Thin as causing substantial weight loss without dieting or exercising, including through claims that users can “lose up to 15 pounds your first month… without diets or changing your food or lifestyle choices,” and “lose 10, 20, even 100 pounds without giving up your favorite foods or adding any exercise.” In addition, the FTC alleges, the defendants’ infomercial used actors posing as satisfied users of the product.
The defendants advertised that Prolongz strips are a “first of a kind sexual performance product” that will “increase overall performance” and are “proven to effectively increase [intimate encounters] for 97% of the Thousands of Men” who have tried them. The ads allegedly also made unsupported claims regarding preventing or treating premature ejaculation.
The FTC also alleges that the defendants enrolled consumers in a negative option continuity plan without their knowledge or consent. Defendants allegedly charged consumers monthly for more product and continued to do so unless consumers took affirmative steps to cancel, and often put up roadblocks to cancelling. The complaint also alleges that the defendants did not honor their “money-back” guarantee, made illegal robocalls to pitch their products, and launched a multi-level marketing scheme for which they have made deceptive earnings claims.
The complaint alleges that the defendants violated the FTC Act, the Restore Online Shopper’s Confidence Act, the Electronic Fund Transfer Act, and the Commission’s Telemarketing Sales Rule. In filing the complaint, the FTC is seeking a court order permanently barring the defendants from their allegedly illegal conduct, as well as money to provide refunds to defrauded consumers.
Richard B. Newman is an FTC advertising compliance lawyer at Hinch Newman LLP.
These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.
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