The Federal Trade Commission has filed a lawsuit alleging the Salt Lake City marketers of weight-loss products are violating an earlier agreement by advertising capsules that encourage its customers to "eat all you want and still lose weight."
The FTC action is the latest round of a dispute going back at least five years. The agency charged with protecting American consumers has been disputing advertising claims for weight-loss and fat-burning products with Basic Research, affiliated companies and company officials.
Basic Research sued the FTC in September saying the agency was failing to follow an agreement the two sides reached in 2006. It said the FTC continued to reject the companies' use of scientifically valid studies to back its claims in advertisements for a weight-loss product, called Akävar, and one for reducing "stress related belly fat," named Relacore.
Now, the FTC and Department of Justice are suing Basic Research, saying it is the one violating the agreement in which the company paid a $3 million fine. Also named are affiliated companies Carter-Reed and Dynacor Pharmacal, and officials Dennis W. Gay and Mitchell Friedlander.
"The Federal Trade Commission ordered the defendants to stop making baseless and bogus advertising claims," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a news release Monday. "We wouldn't put our orders in writing if we weren't going to enforce them."
U.S. Attorney for Utah Brett Tolman also cited the companies' alleged violation of the prior agreement.
"The U.S. Attorney's Office takes a dim view of unlawful claims in the marketplace, especially when they involve companies and individuals ordered by the FTC not to make the claims," he said.
In its lawsuit, Basic Research said the company had the scientific basis for its advertising claims.
"We brought our complaint in order to address those disputes," said Jeff Gross, an attorney for the company. "This new complaint by the government is largely the flip side of that dispute."
The FTC lawsuit says the companies were making the claims for its product on packaging, the Internet and in such magazines as Redbook , Star and Family Circle .
The government said the companies claimed that Relacore reduces abdominal fat more than diet and exercise alone in people who retain fat due to the stress of dieting.
Basic Research also claimed Akävar 20/50 lets you "eat all you want and still lose weight," and that it automatically restricts the intake of calories "with no willpower required of users to limit food or caloric intake." The suit claims the companies misused scientific research in making those claims.
"These are perfectly legitimate claims that are well-within the bounds of the FTC's 2006 ruling," the company said through a spokesperson.
The FTC wants to stop the defendants from making those claims and is asking a judge to impose fines.
In addition to the FTC action, Basic Research faces a proposed class-action lawsuit in federal court in Utah that claims the companies engaged in a "pervasive pattern of fraudulent, deceptive and otherwise improper advertising, sales and marketing practices."
"Defendants have perpetrated identical or similar schemes to defraud consumers through a web of interrelated, closely held limited-liability companies that oversee the 'research,' publication, manufacturing, marketing, sales and distribution of such products in a willful effort to deceive the public as to the true identity and nature of those involved in the illegal business enterprise," the lawsuit claims.
Basic Research has denied the allegations.
Location » Salt Lake City
Affiliated companies » A.G. Waterhouse, Klein-Becker USA, Nutrasport, Sovage Demalogic, Ban, Carter-Reed, Dynakor Pharmacal, Silver Sage, Urban Biologies, Alpha Gen Biotech, Body Innoventions, Bydex
Officials » Dennis W. Gay, Daniel B. Mowrey, Mitchell K. Friedlander
Source: lawsuits and federal documents