NU SKIN TO PAY $1.5 MILLION PENALTY TO RESOLVE
FTC CHARGES OVER FAT-LOSS CLAIMS FOR SUPPLEMENTS
August 6, 1997
Nu Skin International, Inc., the firm behind an
international multi-level marketing system with thousands
of distributors selling skin care products and
nutritional supplements, has agreed to pay a $1.5 million
civil penalty to settle Federal Trade Commission charges
over the fat-loss, muscle-maintenance and other claims it
made for supplements containing chromium picolinate and
L-carnitine. The FTC alleged that Nu Skin could not
produce adequate substantiation for the claims, and that
Nu Skin therefore violated a 1994 FTC order requiring the
firm to have competent and reliable scientific evidence
to support benefits claims for any product they sell. The
FTC said this is the third time in three years that a
firm has paid a civil penalty exceeding $1 million to
settle charges of alleged violations of a prior
Commission order.
The claims at issue in this case were for
"Metabotrim," "OverDrive,"
"GlycoBar," "Appeal Lite," and
"Breakbar." In addition to the civil penalty
included in the settlement announced today, Nu Skin has
agreed to abide by the 1994 order in the future.
Unsubstantiated claims for products containing
chromium picolinate, one of the hottest dietary
supplements on the market, and L-carnitine have been the
subject of several recent FTC cases, including one
against the sole supplier of chromium picolinate in the
United States. Nu Skin entered into the 1994 consent
order with the FTC to resolve charges, among others, that
the firm made false and unsubstantiated claims for three
unrelated products -- a baldness treatment, a wrinkle
lotion, and a burn cream. Nu Skin's net worth exceeds
$100 million, according to public reports.
In the current case, the FTC's complaint detailing the
charges cites numerous statements regarding the five
products containing chromium picolinate and L-Carnitine,
such as:
- "This supplement contains chromium
picolinate, which has been found to help promote
the use of carbohydrates for energy, instead of
storing them as fat. Metabotrim also contains
L-Carnitine, a supplement that encourages fat
utilization for energy.";
- "GlycoBar contains both chromium picolinate
and chromium chelate, believed to be essential
for effective function of insulin, which
regulates blood glucose levels and creates a
muscle building effect by assimilating amino
acids into proteins."; and
- "The ingredients in Metabotrim have been
scientifically shown to establish and maintain
proper metabolic rates assisting the body in
burning fat while preserving lean muscle
mass!"
The FTC challenged as unsubstantiated, and therefore
violative of the 1994 consent order, the resulting
implied and direct claims about the ability of these
products to reduce fat, increase metabolism, and preserve
or build muscle. Today's settlement, if approved by the
court, would require Nu Skin to make the $1.5 million
payment within 10 days, permanently enjoin the firm from
further violating the 1994 consent order, and impose
various record keeping and reporting requirements on the
firm that are designed to assist the FTC in monitoring
compliance.
The complaint and proposed consent decree were filed
this morning by the Department of Justice at the request
of the FTC in U.S. District Court for the District of
Utah, Central Division. The Commission vote to authorize
filing was 5-0.
NOTE: A consent decree is for settlement purposes only
and does not constitute an admission by the defendant of
a law violation. Consent decrees have the force of law
when signed by the judge.
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