FTC Deal Over Acai Berry Products Needs Work

CAMDEN, N.J. (CN) - A federal judge is calling for further briefing before he signs a proposed settlement between the Federal Trade Commission and a company that markets acai berry weight-loss products.

In its 2011 complaint, the FTC claimed that Circa Direct LLC and Andrew Davidson knowingly deceived consumers by marketing acai berry weight-loss products through "the use of 'fake' news reports on websites and 'comments' and 'responses' to those reports that purport to be from ordinary consumers, but are, in fact, additional advertising content; and the defendants made deceptive claims about the ability of the products to simulate weight loss."

The stipulated order, presented in February 2012, would enter an $11.5 million judgment and permanent injunction against the defendants, "in the public interest."

But U.S. District Judge Renee Bumb noted last week that the deal requires no admission of wrongdoing, "despite the FTC's allegations that defendants have violated the Federal Trade Commission Act by engaging in deceptive acts or practices."

"Rather, defendants accept the terms of the order 'without admitting the allegations [of wrongdoing] set forth in' the complaint and 'without admission or finding of liability,'" the 20-page opinion states.

Noting that another judge raised similar questions over the Securities Exchange Commission's agreement with Citigroup, Bumb said the FTC settlement might not actually serve the "public interest."

The judge said FTC chief J. Thomas Rosch wrote a letter urging the court "to consider both the FTC's likelihood of success in litigation and the public interest before approving settlement."

Under the FTC Act, "courts may order a permanent injunction only upon receipt of 'proper proof' including whether the FTC is likely to succeed on the merits and whether the injunction is in the public interest," according to Bumb's summary of the letter.

Bumb concluded the decision by noting that "this court merely recognizes that settlement without an admission of liability forecloses a determination of the truth of the FTC's allegations and leaves the public with no better appreciation of the truth of the matter than when the litigation began."

"Accordingly, because the FTC did not address this issue fully, it should address the concerns raised above in supplemental briefing. It should also address whether there are any other efforts the FTC can make, short of requiring an admission of liability, to address the court's articulated concerns."

The FTC has until July 9, 2012 to address Bumb's concerns.

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