Supplement Maker Turning over $9 Million in Assets to Settle Deceptive Marketing Complaint
Health Formulas enrolled customers into monthly shipping plans without their knowledge or consent
To settle a complaint filed by the Federal Trade Commission (FTC), the marketers of green coffee bean supplements will turn over about $9.2 million in assets and are banned from advertising or selling weight-loss supplements and negative option sales plans, making unsupported health claims, and debiting customers' bank accounts without their consent.
According to the FTC's complaint—Health Formulas, its related companies and its operators used deceptive marketing to lure people into signing up for free trials that, without their knowledge, automatically enrolled them into reoccurring shipments that were hard to cancel.
The company has already turned over a Ferrari to settle a 2014 FTC court action.
Health Formulas sold its weight loss, virility, muscle-building, and skin cream products using telemarketing, the internet, and print, radio, and television advertisements. Customers signed up for a free trial or discount program with undisclosed costs, but where then enrolled in a negative option program in which the companies automatically charged consumers for monthly shipments without their consent, according to the complaint.
The FTC says that the company failed to provide a way for customers to stop the automatic charges, and failed to disclose facts about its refund and cancellation policy.
"The defendants made misleading claims about their products, locked people into recurring charges, and debited bank accounts without permission, said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "As a result of their outrageous behavior, they're now banned from using continuity programs or selling weight-loss products, and they've surrendered millions of dollars."
Despite green coffee bean being touted as some miracle food by talk show hosts and celebrity doctors, like Dr. Mehmet Oz, Health Formulas had no scientific evidence backing up any of the weight-loss claims it made about its products.