Magic diet powder didn’t work? Tell anyone and we’ll sue you
By Jenna Greene, From The Litigation Daily
It sounds great: Mix a powder in your drink and lose up to 21 pounds a month. Eat chocolate cake and ice cream and all the foods you love! The success rate is 90 percent!
Or so claimed Roca Labs Inc., which was sued by the Federal Trade Commission last week in the U.S. District Court for the Middle District of Florida for deceptive advertising.
Bogus weight loss claims are standard fare for the consumer protection agency—the FTC sues marketers all the time for lying about their diet products.
But this case has a twist.
Because if you’re peddling something that doesn’t do what you claim, the jig is often up when would-be customers see a torrent of negative online reviews and complaints.
That’s where Roca Labs came up with an audacious solution.
Buried in the terms and conditions of Roca’s online purchase agreement is a section that prohibits consumers from publishing even truthful disparaging comments about the company or its products, with severe consequences for failing to comply.
“You will not speak, publish, cause to be published, print, review, blog or otherwise write negatively about [Roca Labs], or its products or employees in any way. This encompasses all forms of media, including and especially the Internet,” the agreement states.
The company justifies this by saying that it charges customers a reduced price of $480 for a three-to-four- month supply of its weight loss supplement, which is targeted as an alternative to gastric bypass surgery for people who want to lose at least 50 pounds.
“You were given a discount off the unsubsidized price of $1,580 in exchange for your agreement to promote our products and when possible share your weight loss success with us (keep the YouTube videos coming). As part of this endorsement you also agree not to write any negative reviews about [Roca] or our products,” according to a two-page, large-print summary of the terms, provided to customers for the first time after purchase with their orders.
If customers violate the gag order, Roca says it may go after them for the full price of $1,580 and would also be “obliged to seek all legal remedies to protect its name.”
According to the FTC, these “are not empty threats: [Roca] has actually sued parties based on negative comments. The FTC is aware of at least four customers defendants have sued for violating the gag clause, among other causes of action. Although these lawsuits were voluntarily dismissed, the reasons for the dismissals are not clear from the record and give no indication that defendants have stopped enforcing the gag clause.”
But is the provision actually illegal? The FTC doesn’t cite much in the way of cases, but stresses that the policy violates the unfairness prong of Section 5 of the FTC Act.
“Research on consumer-generated online reviews supports the conclusion that restricting consumers’ ability to share truthful, negative information in the marketplace, as defendants’ gag clause practices do, is likely to cause substantial injury,” wrote FTC lawyers Carl Settlemyer and Paul Spelman in a motion seeking a temporary restraining order.
Around 2009, some doctors and dentists tried a similar tactic, asking patients to agree to assign them the copyright of any online reviews as a way to control negative publicity. It resulted in a class action lawsuit by Public Citizen and hasty retreat by the company that provided the forms, Medical Justice.
But the facts here are a bit different.
Roca counsel Suzette Marteny, a partner at Shumaker, Loop & Kendrick in Tampa, did not respond to a request for comment. But one can imagine that the company could argue it’s a perfectly legitimate arrangement: Each party benefits, and consumers agreed on the terms when they purchased the product. f they don’t like it, they can pay the full price. It’s not unconscionable, Roca could say, plus there’s no right to free speech between private parties.
If it actually passes muster with the court, the approach could be a silver bullet for companies plagued by negative online reviews—to the great detriment of consumers on the Internet.
The case is pending before U.S. District Judge Mary Scriven, but it’s not likely to turn on this question alone.
According to the FTC’s complaint, the agency has plenty of ammunition to go after Roca for making claims about the efficacy of its products without the scientific proof to back them up.
“Unfortunately for consumers, defendants are simply selling common dietary fibers with exaggerated claims at a grossly inflated cost,” according to the FTC. “Their weight loss claims lack any scientific basis, and are often flat-out false.”
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