United States: Sensa To Refund Consumers In FTC Deceptive Marketing Settlement

Deceptive Marketing Claims Associated with Sensa

In January of 2014, Sensa Products, LLC, its parent company, Sensa, Inc., and certain of its principals (collectively, "Sensa"), entered into a settlement with the Federal Trade Commission ("FTC") concerning what the FTC alleged were deceptive marketing practices and improper endorsements associated with Sensa's food additive product.

According to the FTC complaint, the parties in question made unverifiable claims that the Sensa additive "enhances food's smell and taste, making users feel full faster, so they eat less and lose weight, without dieting, and without changing their exercise regime."  The FTC alleged that the defendants did not have reliable scientific evidence to support these weight-loss claims and, thus, the FTC charged the defendants with violating the FTC Act, which prohibits deceptive trade practices.

In addition, the FTC alleged that Sensa used numerous consumer endorsements/testimonials without disclosing that certain of the consumers providing those endorsements/testimonials were compensated in some way – again a violation of the FTC Act, as well as the FTC's Guidelines Concerning the Use of Endorsements and Testimonials in Advertising.

Sensa Settles Deceptive Marketing Action with the FTC, Checks Sent to Consumers

In order to settle the FTC action, Sensa agreed to pay the FTC the sum of $26.5 million, which will be collected by the FTC and distributed in the form of refunds to consumers that had purchased the Sensa food additive product.  The refund checks will be mailed out this week, and will remain valid for sixty days from the date of issuance.

In addition to the cash settlement, the Sensa defendants:

... [A]re barred from making weight-loss claims about dietary supplements, foods, or drugs, unless they have two adequate and well-controlled human clinical studies supporting the claims; making any other health-related claim unless it is supported by competent and reliable scientific tests, analyses, research, or studies; and misrepresenting any scientific evidence.

They also must disclose any material connections with the endorsers of a product or program, as well as with anyone conducting or participating in a study of the product or program.

Keeping Your Marketing Practices in the Clear

As this settlement illustrates, those that fail to comply with state and federal deceptive marketing statutes may find themselves facing regulatory action brought by the FTC and/or state attorneys general, as well as consumer class action litigation.  In particular, businesses that market a product through use of health benefit claims must ensure that there is sufficient valid, scientific evidence to support the advertising claims associated with the product.  Further, when using consumer endorsements, businesses must make clear and prominent disclosures where the consumer providing the endorsement receives any compensation, or potential compensation, for providing her/his endorsement.

If you are interested in learning more about this topic or need to review your marketing practices and/or use of consumer endorsements, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.