Roca weight-loss companies can't punish or sue negative online reviewers

Rocaweary

Back in June, we reported on weight-loss supplement marketers Roca Labs Inc. and Roca Labs Nutraceutical USA Inc.'s legal troubles with the Federal Trade Commission (FTC).

The FTC first pursued charges in 2015 in the Middle District of Florida, claiming that advertising for Roca's "Formula" weight-loss powders and gels made a number of deceptive claims, including weight-loss results of up to 100 pounds over 7 ‒ 10 months, unbelievably high success rates, and favorable comparisons between the products and bariatric surgery.

Gag Reflex

But what really caught our eye back then were the allegations regarding Roca's alleged use of gag clauses ‒ nondisparagement provisions contained in the product purchase agreements that threatened legal action against dissatisfied customers who complained about the product in public.

One version of the gag clause allegedly gave negative reviewers "seventy-two (72) hours to retract the content in question." Should the content remain, "RL would be obliged to seek all legal remedies to protect its name, products, current customers, and future customers." The FTC claimed that another version of the gag order defined "any report of any kind on the web" as "defamation/slander," which would invoke compensation of $100,000.

The commission maintained that these provisions were illegal and deprived "prospective purchasers of ... truthful, negative information," which led to more profit than Roca would have otherwise earned.

The Takeaway

In a big win for the FTC, the Middle District granted its amended motion for summary judgment in its entirety.

The commission found that Roca's weight-loss claims were deceptive and in violation of the FTC Act, and that the companies had failed to disclose financial relationships they maintained with "testimonialists" who praised their products.

The court embraced the commission's arguments regarding gag orders, finding that the nondisparagement provisions left consumers "without any or [with] very little access to consumers' negative experiences," and that "prospective buyers ... are prohibited from making an informed choice." The commission was granted about three weeks to gather more evidence about how much the defendants will finally have to pay back to consumers.

It should be noted that this case concerns activities that slightly predate the Consumer Review Fairness Act (CRFA), which became law Dec. 14, 2016, and which specifically protects consumers' ability to provide honest consumer reviews without reprisal. For more on the CRFA, see the FTC's guidance here. This case makes clear that even without the CRFA, contractual restrictions and penalties for honest consumer reviews are a deceptive and illegal practice.

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