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$26 Million Cost of Doing Business? FTC Comes Down on Sensa

The marketers of the weight loss additive Sensa will have to pony up $26 million in redress to consumers to settle charges that the company used deceptive advertising that claimed people could lose weight just by sprinkling the powder on regular food. The FTC said that the company used bogus clinical studies and paid endorsements, generating a whopping $364 million in sales between 2008 and 2012.

The FTC will also collect $7.3 million from LeanSpa, which promotes colon cleanse weight loss supplements via fake news websites.

The agency also announced charges against the marketers of two other products that made unfounded promises:

  • L'Occitane, which claimed that its skin cream would slim users’ bodies but had no science to back up that claim, and
  • HCG Diet Direct, which marketed an unproven human hormone that has been touted by hucksters for more than half a century as a weight-loss treatment.

The FTC charged that California-based Sensa Products, LLC, its parent, and two individuals deceptively advertised that the powdered food additive Sensa enhances food’s smell and taste, making users feel full faster, so they eat less and lose weight, without dieting, and without changing their exercise regime.  The defendants did not have competent and reliable scientific evidence to support these claims, according to the FTC’s complaint.

The defendants typically charge $59 plus shipping and handling for a one-month supply of Sensa.  They provide the powder in twelve flavors, and have marketed it through radio and print ads, retail chains such as Costco and GNC, a promotional book, TV ads and infomercials, Home Shopping Network, ShopNBC, telemarketing, and the Internet.

The  FTC’s complaint names parent company Sensa, Inc., Sensa Inc. CEO Adam Goldenberg, and Sensa creator and endorser and Sensa Products part-owner Dr. Alan Hirsch.

The Arizona-based company HCG Diet Direct, and its director Clint Ethington, marketed liquid homeopathic hCG drops by falsely promising they would cause consumers to rapidly lose substantial weight.  The defendants have agreed to enter into a settlement with the FTC that would bar such deceptive claims in the future. The defendants sold HCG Diet Direct Drops, a diluted liquid form of human chorionic gonadotropin.

Marketdata Commentary

Let's see...$374 million over 5 years equals an average of about $73 million a year. Subtract production, packaging and advertising costs, plus the cost of what the FTC alleges are "bogus studies", and that still leaves a tidy profit. Would you be willing to spend $26+ million to make $364 million? The $26 million is just another "cost of doing business."  About five years ago the FTC slapped a $10 million fine on the makers of Enforma, another bogus weight loss supplement, which was estimated to take in $70 million a year.

Fact is, by the time the FTC builds a case against you in 2-3 years and levies a fine (maybe longer, since the agency is understaffed), you've made a tidy profit. Who cares if you go out of business?!  Unfortunately, that's the business model that any bogus weight loss supplement maker knows well and profits by. According to Nutrition Business Journal's annual "Sports Nutrition & Weight Loss" report, there are usually a half dozen weight loss supplements that generate $50+ million per year in sales. The situation has not changed in the past decade and is not likely to unless the FTC moves faster. America's gullible dieters will always try something new if the price is right and the marketing is clever enough.

The complete FTC press release can be found here

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