The FTC and Maine Office of the Attorney General recently announced a joint settlement with two Portland-based sellers of weight loss supplements. The joint complaint filed in the United States District Court for the District of Maine alleged that Anthony Dill, his wife Staci Dill, and their two companies, Direct Alternatives and Original Organics LLC, violated the FTC Act and Maine consumer protection laws regarding the sale and promotion of weight loss supplements AF Plus and Final Trim.
The complaint alleges that companies and owners falsely claimed users would quickly and easily lose significant weight and reduce their waist size by taking AF Plus and Final Trim and that the results were "proven" by scientific studies. The defendants used false radio ads – at least one of which claimed to be a public service announcement – to sell their products. The defendants purportedly offered a "risk-free trial," but consumers who agreed to the trial discovered that the only way to avoid being charged $79.90 for a minimum order of two bottles was to return one unopened bottle at their own expense prior to the end of the 30-day risk-free trial. In addition, consumers allegedly were not refunded the initial shipping charge. Furthermore, consumers often found themselves enrolled in a poorly disclosed monthly renewal plan that resulted in additional charges to credit and debit card accounts. Consumers' attempts to secure refunds were also unsuccessful. According to the complaint, consumers experienced difficulties when using the customer service telephone number and resistance to refund requests. Finally, the complaint charged the defendants with deceptive promises of $80 worth of gift cards, which were never delivered.
The companies, which sold more than $16 million of their products over the past four years, have ceased all sales of the products.
According to Jessica Rich, Director of the FTC's Bureau of Consumer Protection, "The Dills' companies told a blizzard of lies. They sold worthless weight-loss supplements, lied about their supposed 'risk-free trial' offers, took people's money with unauthorized auto-renewal plans, and made it nearly impossible to return their bogus products."
Maine Attorney General Janet T. Mills echoed these sentiments, remarking that the companies "preyed on the vulnerability of consumers who seek a legitimate weight loss program. The alleged conduct here is not limited to making false claims about their products; it also includes charging consumers hundreds of dollars in automatic monthly orders and making it very difficult for customers to cancel orders or get their money back."
The stipulated final judgment included a permanent injunction preventing the defendants from making various claims about the efficacy of their products and their return and cancellation policies, and prohibiting them from violating the Restore Online Shoppers' Confidence Act and the Electronic Fund Transfer Act.
In addition, the settlement imposed a $16.4 million judgment, a portion of which is to be paid upon liquidation of a substantial portion of the defendants' assets.
The case demonstrates the importance to businesses of complying with deceptive trade practices laws, as well as the close relationship between the FTC and state attorneys general in enforcing these laws.
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