Markets Wired

A subsidiary of diet plan marketer Medifast Inc. will pay a $3.7 million civil penalty to settle Federal Trade Commission charges that it violated a previous agency order by making unsupported claims about its weight-loss program.

Medifast unit Jason Pharmaceuticals, Inc. has agreed to settle FTC charges that weight-loss claims in the company’s advertisements for meal replacement products violated a 1992 FTC settlement order, which barred it from making any unsupported claims about users’ success in achieving or maintaining weight loss or weight control.   This enforcement action is part of the FTC’s ongoing effort to make sure that companies comply with FTC orders, and the agency’s crackdown on deceptive and misleading health claims. Under the FTC Act, companies may be liable for civil penalties of up to $16,000 per violation of an FTC order per day.

Jason Pharmaceuticals sells Medifast-brand low-calorie meal substitutes.  Its most advertised plan is the Medifast “5 and 1” plan that consists of 800-1,000 calories per day.  Filed on the FTC’s behalf by the Department of Justice, the complaint against Jason Pharmaceuticals alleges that the company made unsupported representations since at least November 2009 in radio, television, Internet, and print advertisements that consumers using Medifast programs and products would lose two to five pounds each week. 

The company also represented that the experiences of consumer endorsers featured in the advertisements were typical, and that consumers would lose more than 30 pounds, according to the complaint.

One such ad stated:
“Why Medifast?  Three great reasons.
Cynthia Lujan lost 73 lbs on Medifast! Cindy Daniels lost 43 lbs on Medifast!
Jennifer Lilley lost 70 lbs on Medifast!
You can lose up to 2 to 5 pounds per week on Medifast.”

Under the new settlement order announced today, Jason Pharmaceuticals is prohibited from misrepresenting that consumers who use any low-calorie meal replacement program, including the Medifast “5 and 1” plan, can expect to achieve the same results that an endorser does, or can lose a particular amount of weight or maintain the weight loss.  Such representations must be non-misleading and backed by competent and reliable scientific evidence that consists of at least one adequate and well-controlled human clinical study of the low-calorie meal replacement program, or a study that follows a protocol detailed in the settlement order.

Under the settlement order, the company also is prohibited from making any other representation about the health benefits, safety, or side effects of any low-calorie meal replacement program, unless the representation is non-misleading and backed by competent and reliable scientific evidence that is generally accepted in the profession to yield accurate results.

The company also is prohibited from misrepresenting that any doctor, health professional, or endorser recommends a weight-loss product, program, service, drug, or dietary supplement.

Consumers should carefully evaluate advertising claims for weight loss.  For more information, see the FTC’s consumer education piece:  Who Cares:  Weight Loss Promises.  

The Commission vote to authorize the staff to refer the complaint to the Department of Justice, and to approve the proposed consent decree, was 5-0.  The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the District of Columbia on September 7, 2012.  The proposed consent decree is subject to court approval. 

NOTE:  The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  The complaint is not a finding or ruling that the defendant has actually violated the law.  This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation.  Consent decrees have the force of law when signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.