MLM PRESS ROOM
|July 19, 1999
FTC Wins Case Against Deceptive Advertising of "Super-Formula"
FTC Release: July 19, 1999 FTC Wins Case Against Defendants Engaged in Deceptive Advertising of "Super-Formula" Diet Product
SlimAmerica ordered to pay more than $8.3 million in consumer redress; post bonds before engaging in future weight-loss or other marketing activities
The Federal Trade Commission today announced that a federal district court has found that SlimAmerica, Inc. and its principals, Frank J. Sarcone and Robert Wyman, violated federal consumer protection laws by making false advertising claims about the efficacy of their "Super-Formula" diet product. The U.S. District Court for the Southern District of Florida, ruling after a trial that occurred in December 1997, found that the defendants violated the FTC Act by making deceptive claims in their ads for "Super-Formula," which ran in magazines such as Ladies Home Journal, Cosmopolitan, and McCall's Magazine. Because of these violations, the court ruled that the defendants should be permanently prohibited from such practices and pay more than $8.3 million in redress to consumers who purchased "Super-Formula." The court also ordered the individual defendants Sarcone and Wyman to post multi-million dollar performance bonds before engaging in any business related to weight-loss products or services, or before engaging in the marketing of any product or services.
"SlimAmerica used full-page ads to claim that their "Super Formula" diet products would "blast," "zap," and "obliterate" pounds and inches," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "The reality for consumers is very different: there's no easy way to lose weight. This ruling tells consumers that the court will not tolerate deceptive advertising and that they can, indeed, have confidence in the ads they see, hear and read."
The FTC sued SlimAmerica, Inc., based in Deerfield Beach, Florida, Sarcone, and Wyman in December 1997. The defendants' ads and product literature featured Super-Formula as a "New Triple Medical Breakthrough" consisting of three different "weight loss weapons." The FTC alleged that the defendants' ads falsely stated that Super-Formula would "blast" up to 49 pounds off in only 29 days, "obliterate" five inches from waistlines, and "zap" three inches from thighs -- all without the need to diet or exercise. The ads also asserted that all of these claims had been validated by scientific studies, and that Super-Formula was endorsed by a medical doctor with credentials from a well-known nutrition organization."Super-Formula" consisted of three different pills: "Slim Again" -- a pill containing the ingredients chromium picolinate and hydroxycitrate (HCA); "Absorbit-ALL" - a pill containing the ingredient chitin; and "Absorbit-ALL PLUS" -- a pill containing the ingredient konjac glucomannan. The defendants placed full-page ads for "Super-Formula" in several hundred newspapers and magazines throughout the country, and on the Internet. Consumers were told to call an "800" number where they could order a 30, 60, or 90 day supply of Super-Formula products at prices ranging from $49.95 to $129.95.
Shortly after the FTC filed the case, U.S. District Court Judge Wilkie D. Ferguson, Jr. issued an ex parte temporary restraining order against the defendants that halted their business practices, froze their assets, and appointed a receiver over SlimAmerica, Inc. In February 1997, after an evidentiary hearing, the court issued a preliminary injunction that continued this relief. The preliminary injunction had been in effect pending the court's final ruling.
In its 26-page final ruling, the court found that the defendants' claims about "Super-Formula" were false, and that the defendants misrepresented the credentials of the doctor, Howard Retzer, M.D., who purportedly endorsed Super-Formula. Among other findings, the court found that defendants' weight-loss claims were impossible based on the Commission's expert testimony; that defendants' consumer testimony about purported actual weight-loss did not constitute meaningful proof of defendants' weight-loss claims; and that the vast majority of the materials purportedly relied on by the defendants in support of their product efficacy claims contained serious methodological and technical flaws and could not be characterized as serious scientific research.
The court ordered defendant Frank Sarcone, the president of SlimAmerica, to post a $5 million performance bond, and Robert Wyman, who was described as the vice-president of SlimAmerica, to post a $1 million performance bond, before engaging "in any business related to weight-loss products or services specifically, or in marketing of any product or services generally. . . ." The court also ordered the defendants to pay $8,374,586 in consumer redress, which represents the total amount of the defendants' sales of Super-Formula less previously-issued refunds. Although the defendants dissipated most of the funds they took in, the court-appointed receiver for SlimAmerica filed an action in the Bahamas to recover about $800,000 transferred there by defendant Sarcone. A Bahamian court has frozen these funds, and the court directed the receiver for SlimAmerica to "proceed with all necessary legal and diplomatic measures necessary to effectuate a repatriation of [the transferred] assets." The court added that "[a]ny conduct of the individual defendants undertaken to frustrate this provision or any provision of the judgment shall be treated as acts of contempt."