FTC alleges slick fake talk show pushed false product claims
Talking Heads
Slick, well-produced fake talk shows promoted dubious products and undisclosed payment plans. The Federal Trade Commission and the Maine attorney general accused XXL Impressions, ad agency Synergixx, marketing company J2 Response and an expert that endorsed the products in ads of unfair and deceptive acts and practices in the advertising, marketing, distribution and sale of health supplements FlexiPrin and CogniPrin in February 2017.
The FTC claimed a violation of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also claimed a violation of Section 12 of the FTC Act, which prohibits false advertisements for food, drugs, devices, services or cosmetics in or affecting commerce; violations of the Telemarketing Sales Rule (TSR), which prohibits deceptive and abusive telemarketing acts or practices; and violations of the Electronic Funds Transfer Act (EFTA), which regulates the rights, liabilities and responsibilities of participants in electronic fund transfer systems.
According to the Commission's complaint, the defendants made false, unsubstantiated claims about the health benefits of diet supplements CogniPrin and FlexiPrin, which were praised for improving memory and brain function and strengthening damaged joints and cartilage "in under two hours," among other virtues.
Synergixx and J2 Response, the complaint alleged, produced sophisticated, 30-minute radio ads that co-opted the format of an educational talk show to promote the supplements. These advertisements were augmented by in-call scripts that deceptively told potential customers that the products could be tried risk-free for 90 days with a money-back guarantee, while failing to disclose onerous requirements and timelines for making returns such as consumers being required to return empty bottles and pay hefty shipping charges.
But That's Not All!
The complaint also alleges that Ronald Jahner appeared on the shows as a national board-certified naturopathic physician to offer his objective assessment and endorsement of the products. In reality, the FTC alleged, he hadn't examined the supplements at all, and hid the fact that he was being paid a percentage of the sales of the product he was endorsing.
In addition, for some savings plans that were offered for sale, a 14-day trial period was offered and customers' credit cards would automatically be billed a monthly payment after the initial trial period. The complaint alleged that those negative option terms were not clearly disclosed.
The defendants agreed to a $6.5 million monetary judgment, suspended based on inability to pay. Moreover, three separate court orders bar the marketing agencies from making false medical claims, require them to reveal any financial connection between the advertisers and endorsers, and impose consent requirements for the sellers' poorly disclosed negative option offers.
The Takeaway
This action illustrates that individuals and ad agencies that an advertiser utilizes to facilitate false and deceptive advertising can be held accountable along with the advertiser itself.
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