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Posted July 15, 2010

Supplement Company Pays $5.5 Million to Settle False Advertising Claims

On July 14, 2010, the Federal Trade Commission (FTC), as part of its ongoing efforts to stop bogus health claims, announced that it is requiring a major marketer of dietary supplements to pay $5.5 million to settle charges that it falsely advertised that its supplements could help consumers lose weight and treat or prevent colds and other illnesses.

The $5.5 million will be used for refunds to consumers who purchased Accelis, nanoSLIM, and any Cold MD, Germ MD, and Allergy MD product. These supplements were sold over the Internet and were widely available at retail stores. In addition, the settlement requires the marketer to stop making deceptive health claims about the products.

The FTC charged Iovate Health Sciences U.S.A. and two affiliated Canadian companies with deceptively advertising their supplements using television ads, Internet websites, and print ads in national magazines.

Using photos of white-coated individuals depicted as medical doctors, Iovate’s ads claimed that dietary supplements Cold MD and Germ MD treat or prevent colds and flu, and that Allergy MD treats or prevents allergies and hay fever, according to the FTC complaint. Some ads also proclaimed that the products’ effectiveness was clinically proven. The FTC complaint alleges that these claims were false and unsubstantiated.

The FTC also charged that Iovate falsely advertised that one of the supplements – Allergy MD Rapid-Tabs – was homeopathic.

The Iovate companies also ran ads with deceptive claims that their weight-loss supplements Accelis and nanoSLIM caused weight loss, and were clinically proven to do so, according to the FTC complaint. The ads said consumers could “Lose 32 lbs. FAST” using nanoSLIM, or one to two pounds per week using Accelis. The ads falsely claimed that Accelis was scientifically proven to increase the body’s metabolism, and featured testimonials from users claiming they had lost significant amounts of weight, according to the FTC.

The settlement bars the Iovate companies from claiming that any drug or dietary supplement they advertise or sell is effective for diagnosing, curing, mitigating, treating, or preventing any disease unless the claim is approved by the Food and Drug Administration; claiming that Allergy MD Rapid-Tabs is homeopathic unless the claim is truthful, and unless the product is recognized under the Federal Food, Drug, and Cosmetic Act as homeopathic; representing that their products cause weight loss or rapid weight loss unless the claims are truthful and backed by at least two adequate and well-controlled human clinical studies; claiming that their products provide any other health-related benefit unless the claim is supported by competent and reliable scientific evidence; and misrepresenting the results of any test or study.

Although FDA approval of health-related claims generally is not required for compliance with the FTC Act, in this case, the FTC determined that requiring FDA pre-approval before the defendants make disease claims for dietary supplements and drugs will provide clearer guidance that will facilitate the defendants’ compliance with the FTC order and make the order easier to enforce.

The complaint against Iovate Health Sciences USA also names its Canadian parent company, Iovate Health Science Group, Inc. (now known as Kerr Investment Holding Corp.), and a Canadian subsidiary of that company, Iovate Health Sciences, Inc., as defendants in this case.