Diabetes Supplement Sellers to Pay $2.2M
SAN FRANCISCO (CN) - Wellness Support Network Inc. and its owners must pay nearly $2.2 million in restitution for falsely advertising diabetes supplements, a federal judge ruled in an action filed by the Federal Trade Commission.
The agency sued the Wellness Support Network (WSN) in October 2010 after the Food and Drug Administration sent two letters warning that it considered one of WSN's "dietary supplements" to be a drug and that its product claims violated the Food, Drug and Cosmetic Act and FDA regulations.
The FTC launched an investigation in 2007 that led to its 2010 federal lawsuit in San Francisco. It filed a motion for summary judgment late last year.
The agency claims WSN and father-daughter co-owners Robert and Robyn Held sold dietary supplements called the "Diabetic Pack" and the "Insulin Resistance Pack" since 2004. Each pack contains the same three products: a glucose support formula, a calcium-magnesium formula, and a vitamin and mineral formula.
Through an online pay-per-click advertising campaign, the Helds claimed that the packs could lower blood sugar levels by an average of 31.9 percent and could reduce dependency on medications, and that scientific studies supported these claims.
A website for the insulin resistance pack touted the supplements' ability to "lower your blood sugar, safely and effectively with absolutely NO SIDE EFFECTS!! GUARANTEED!!"
But the FTC says no scientific studies were performed on WSN's products, just on the individual ingredients.
"The representations ... are false or were not substantiated at the time they were made," according to the FTC's complaint.
The agency sought an injunction, claiming the misrepresentations substantially injured consumers and had unjustly enriched the Helds. It also demanded an order requiring the Helds to pay back the nearly $2.2 million in sales revenue they raked in between 2004 and 2012.
WSN also moved for summary judgment, challenging the testimony of the FTC's expert witness, Dr. W. Timothy Garvey, who found the nine claims in WSN's advertising to be misleading.
U.S. Magistrate Judge Joseph Spero refused to exclude Garvey's testimony.
"Dr. Garvey is an expert in the science and treatment of insulin resistance and diabetes," Spero wrote. "His opinions about whether the scientific studies support the claims attributed to defendants by the FTC are based on that expertise."
Because Garvey had relied "on actual scientific studies of the ingredients in defendants' products," Spero added, "his opinions are supported by sufficient facts to be reliable."
The judge also rejected the defendants' claims that the allegations violate WSN's free-speech rights and are barred by the Administrative Procedures Act, and that their product claims were not misleading.
"Defendants offer no admissible evidence sufficient to show a dispute of fact as to the actual falsity of the establishment claims or lack of a reasonable basis as to all of the claims," Spero wrote. "Further, the court rejects defendants assertion that the claims are adequately substantial because their products are medical foods."
Spero held Robert and Robyn Held personally liable for the company's violations of the FTC Act.