FTC Bans Enforma Entities From the Weight Loss Market

WASHINGTON--A settlement of a contempt complaint filed by the Federal Trade Commission (FTC) permanently bans Enforma, company executives Andrew Grey and Michael Ehrman, related company Twenty-Four Seven (24/7), and 24/7 cofounder Donna DiFerdinando from marketing weight loss products, except exercise equipment. Under terms of the Jan. 18 settlement, the defendants must pay $300,000 to FTC for distribution as consumer redress and are subject to an additional $4 million fine if the court finds any misrepresentations in financial disclosures the defendants made to the court.

Filed in U.S. District Court of Central California, the settlement resolves two successive complaints filed by FTC in 2002, alleging the Enforma entities violated an original 2000 court order by making unsubstantiated claims for the products Fat Trapper, Fat Trapper Plus, Exercise in a Bottle, Acceleron and Chitozyme. FTCs complaints also accused the defendants of misrepresenting scientific studies of the products and their ingredients.

The deal puts the defendants under a microscope for the next five years, whereby they cannot make unsubstantiated claims, misrepresent studies or fail to identify paid advertisements for any dietary supplement, food, drug or device. During this period, the defendants must keep FTC informed of all their business activities, including financial information and certain corporate and personal records.

FTC first filed a contempt complaint in federal court in January 2002 against Enforma, Grey, president, and Ehrman, vice president, charging the company continued to use unsubstantiated and misleading marketing claims for Fat Trapper Plus and Exercise in a Bottle, despite a 2000 settlement prohibiting such marketing and levying a $10 million fine. In this first contempt complaint, FTC sought to excise the companys product names--including the recall of such labeled products--and asked for an accounting and disgorgement of all profits generated by such products. FTC claimed the company had failed to provide sufficient evidence that the offending products performed as presented by advertisements.

While Enforma settled the original 2000 case, Grey claimed innocence on the first 2002 complaint. We are absolutely not going to settle this time, he said. We need to be vindicated. Grey noted the company had ample scientific research, and FTC had unfairly targeted Enforma.

Then in July 2002, FTC went after Grey and Enforma, as well as its entity 24/7 and co-founder DiFerdinando, alleging contempt for continued unsubstantiated marketing claims for Acceleron and Chitozyme. The agency sought an injunction to prohibit the use of the marketing claims, a recall of all product packaging and labeling, and a forfeiture of all revenues from the sale of the products. Again, Enforma vowed to go to trial in lieu of settlement.

As was the case in the previous settlement, the new agreement does not constitute an admission of guilt by Enforma. Other terms of the settlement include provisions prohibiting the defendants from misrepresenting the results of any scientific test or study; using, leasing or licensing the offending trade names or trademarks; and selling, renting or disclosing any lists containing consumers personal and financial information.