The Connecticut district court judge ruled Bronson Partners and its officer, Martin Howard, had made “obvious and widespread” claims breaches about its products and must assist the FTC identify wronged consumers to be paid compensation in addition to the payment of $1,942,325 plus statutory interest.
Colorado-based James Prochnow, of the firm Greenberg Traurig, said the decision reinforced the FTC’s damages methodology.
“This decision will be used by the FTC as a roadmap or primer when the agency pursues both individuals and entities for violations of the FTC Act,” he said.
“There has been disagreement about the most appropriate way to calculate restitution to consumers for false or misleading advertising claims. This judge, after acknowledging the different points of view, clearly declares that consumer restitution should be measured by the amount of the defendant's unjust gain, which is to be the gross amount of funds received by the defendant seller, not by a net profit figure.”
This means that the FTC is entitled to all monies received by a company, not just the profits it has made from the sale of those products found to be in breach of the regulation.
Prochnow added: “All in all, this is a decision that will be heartily embraced by the FTC as it pursues existing investigations and institutes new ones. It is an important one that deserves much attention.”
New York-based attorney, Marc Ullman, of Ullman, Shapiro and Ullman, highlighted the restrictions on claims outlined in the ruling that can be found here.
“The Commission’s current position is that companies wishing to settle cases with it must consent to fencing in for all claims related to dietary supplements,” he said.
“It is hard to understand how the FTC could expect companies to settle on worse terms than they seem likely to get after losing at trial other than a belief that since the FTC has all of the resources of the federal government behind it, a defendant will cave in rather than spend the money taking the case to court.”
Big Fat Lies
The FTC first took action against Bronson in 2004 as part of its ‘Big Fat Lie’ crackdown on weight loss claims for Bio-Slim Patch and Diet Tea products but the case stalled in the courts due to Bronson omitting material, FTC attorney, Robin Eichen told NutraIngredients-USA.com.
Eichen said it appeared Bronson Partners and the entities it traded under were no longer active as no response had been received to the FTC request to collect the $2m payment.
Chinese Diet Tea promised six pounds weight loss in one week, while Bio-Slim Patch, containing fucus, garcinia and guarana claimed to be able to remove,“repulsive, excess ugly fatty tissue”.
Arizona-based functional beverage specialist, James Tonkin, of Healthy Brand Builders, suggested other punitive damages for weight claim abusers such as, “community service or working with the obese to better understand their plight, and use their resources to help find REAL help for them, in deference to just trying to make a fast buck.”