A spokesperson for Basic Research did not return an email and a voice message about the settlement. Jon Harper, a Salt Lake City attorney for the consumers, also said he could not comment beyond the language the parties had agreed to, which was that the litigation had been resolved "on terms satisfactory to the parties."
In 2006, the FTC fined Basic Research $3 million and entered into an settlement in which the company agreed not to market its weight-loss products unless its claims were backed by "competent and reliable scientific evidence."
Within a year, it had developed Akävar and launched a nationwide sales campaign, selling the pills in retail outlets like Walgreens, Target, CVS, Rite-Aid, Costco, WalMart and K-Mart, as well as directly over the web, according to court records.
Akävar was touted as a "European Weight Loss Breakthrough" even though it was developed in Utah, lawsuits said. It was marketed by the Basic Research company called Dynakor — one of a nearly a dozen companies created by Basic Research — through a multi-million dollar ad campaign as a wonder pill in which the consumer could "Eat All You Want & Still Lose Weight. … (And we couldn't say it in print if it wasn't true!)." Akävar "literally causes excess fat to be pulled from bulging parts of your body," the campaign said, according to court records.
It sold 60 capsules for $39.99 and two bottles for $79.98 with a third one for free, and sales brought in millions of dollars, documents say. Total company annual revenues were around $50 million in 2007 and 2008.
In November of 2007, a proposed class action lawsuit was filed in U.S. District Court for Utah against Basic Research on behalf of consumers who had purchased Akävar based on the company's advertising. Also named were four related companies and company principals Dennis Gay and Daniel B. Mowrey, as well as Mitchell K. Friedlander, who is described in documents as a marketing consultant who receives royalties for the sale of company products.
A second proposed class action lawsuit was filed in state court in California in late 2008.
Both actions alleged that Basic Research was deceiving consumers. One complaint said it sought to "redress a pervasive pattern of fraudulent, deceptive and improper advertising, sales and marketing practices."
Both said the company lacked a scientific basis for the weight-loss claims. The two cases were eventually consolidated into one action in Utah.
U.S. District Judge Ted Stewart granted class-action status to the consolidated suits in 2010, meaning the plaintiffs could be expanded to include all consumers who had purchased Akävar after hearing or seeing the "Eat All You Want" advertising campaign.
The two sides reached a settlement in 2012, but Basic Research then tried to back out, claiming agreement had not been reached on substantial terms. Stewart refused to let the company scuttle the agreement and Basic Research was unsuccessful in trying to appeal his decision.
Meanwhile, the Federal Trade Commission and Basic Research had sued each other in 2009 in federal court in Salt Lake City over whether the company was violating the 2006 agreement in which it was required to have a scientific basis for the claims of its products.
But then late last year, U.S. District Judge Clark Waddoups sided with Basic Research. Waddoups cited four case studies done in 2001, two of which suggested that the herbal compounds in Akävar helped users to lose weight because it caused food and liquids to stay longer in the stomach, making consumers feel full longer and prompting them to eat less.
The FTC has filed a notice of appeal.
Waddoups' decision is cited in the proposed settlement of the class-action lawsuit. Basic Research is denying any wrongdoing or liability for Akävar and said it was settling "solely to avoid the expense, inconvenience and inherent risk of litigation" as well as disruption to its operations if the lawsuit continued.
But the company agreed to pay a $25 refund to consumer for each box of Akävar they purchased, or more if the they can show they paid more than $25 for a box.
In addition, Basic Research will pay $2.45 million in attorney fees, expenses of $950,000 and $5,000 to each of the four consumers named as plaintiffs in the lawsuits.
Basic Research can continue to use the "Eat All You Want & Still Lose Weight" slogan in its advertising under the settlement.