INSIDER Law
Marketer of Green Coffee Extract Must Forfeit $29 Million

Marketer of Green Coffee Extract Must Forfeit $29 Million

<p>In support of weight loss claims that drew FTC&#8217;s attention, Nicholas Scott Congleton predominantly relied on a small study that was highlighted in a 2012 episode of The Dr. Oz Show.</p>

A judge this month ordered the co-founder of a green coffee extract business to surrender US$29.1 million after finding the businessman’s companies made unsupported weight loss claims, operated fake news websites, and failed to reveal women touting the product were paid for their testimonials.

In Tampa, Florida, U.S. District Judge Steven D. Merryday issued a summary judgment decision in favor of FTC and entered a permanent injunction against Nicholas Scott Congleton, the pitchman behind “Pure Green Coffee" who co-founded such companies as Nationwide Ventures (Nationwide) and NPB Advertising.

Shyamie Dixit, a lawyer in Florida representing Congleton, did not respond Monday to an emailed request for comment.

In support of weight loss claims that drew FTC’s attention, Congleton predominantly relied on a small study that was highlighted in a 2012 episode of The Dr. Oz Show.

Dr. Oz proclaimed the study subjects “lost an astounding amount of fat and weight—17 pounds in 22 weeks—by doing absolutely nothing extra in their day," according to FTC’s amended complaint filed in 2015 against Congleton and several other defendants. The so-called Vinson study described a trial in Bangalore, India, that involved 16 overweight subjects. Participants lost, on average, 17.7 pounds, 10.5 percent of their body weight, and 16 percent of their body fat, the study reportedly declared.

However, the government said participants lost most of their weight—on average 10.5 pounds—while they were not taking any green coffee antioxidant capsules. And an expert in weight loss for the government—David Levitsky, a professor of nutrition and psychology at Cornell University—highlighted several additional flaws with the study.

The Vinson study was eventually retracted, or withdrawn.

The judge wasn’t persuaded that the Vinson study and other evidence upon which Congleton relied—namely additional studies, blog entries, news articles and manufacturers’ brochures—were sufficient to substantiate the weight loss, or so-called efficacy, claims. Levitsky, the government’s expert, found most of the defendant’s efficacy claims “biologically implausible," the judge noted.

“Because Dr. Levitsky discredits the evidence produced by Congleton and because Congleton fails to rebut Dr. Levitsky’s testimony, the FTC shows that no competent and reliable scientific evidence substantiates the efficacy claims," the judge declared, “rendering those claims likely to mislead a reasonable consumer."

Merryday also agreed with the government that Congleton had published, or caused the publication of, false deceptive testimonials and fake news websites, as well as false “establishment" claims, which the judge described as a claim asserting “scientific proof supports the product’s efficacy."

“The Pure Green Coffee website and advertisements impart on a viewer the ‘overall impression’ that scientific evidence establishes Pure Green Coffee’s efficacy," Merryday wrote. The judge said the defendant failed to refute Levitsky’s declaration that the establishment claims weren’t substantiated by competent and reliable scientific evidence.

Commenting on the testimonials, Merryday noted a video production company hired by Nationwide paid four women to praise the efficacy of the product. While the women were given the product for free and compensated to give the testimonials, Nationwide’s advertising failed to reveal such facts.

The judge also called out a “fake news website" that contained a masthead for Women’s Health Journal, and more specifically, an article on green coffee bean extract. Congleton admitted he and a co-defendant copied the article from another website, and he conceded he didn’t know if the purported author of the column, Helen Hasman, existed, the judge noted.

Congleton launched the green coffee business in 2012 after receiving an email from a dietary supplement manufacturer and researching the product on the internet. The email linked to a three-minute clip from The Dr. Oz Show, which described the Vinson study.

“You may think magic is make believe, but this little bean has scientists saying they found a magic weight loss cure for every body type," The Washington Post quoted Dr. Oz as saying in the episode discussing green coffee extract. “This miracle pill can burn fat fast for anyone who wants to lose weight."

In spring 2012, Pure Green Coffee began advertising on the internet under a campaign that Congleton supervised. Collectively, the corporations founded by Congleton and his co-defendants spent $9.4 million on online advertisements, which produced nearly $33.8 million in gross receipts, the judge observed.

In finding Congleton individually liable, Merryday said the FTC established he was aware of the “material misrepresentations." Congleton acknowledged there was no scientific basis for certain weight loss claims, the judge observed.

“At the minimum, Congleton’s conduct evinces a reckless indifference to the truth or falsity of the claims," wrote Merryday, who noted the efficacy claims were based on the Dr. Oz segment and the Vinson study.

Congleton raised defenses—including a First Amendment argument—that did not persuade the court. While an advertiser may use “puffery" or statements that reflect an opinion, “an advertiser’s publication of a knowingly false statement of fact subjects the speaker to civil liability," Merryday wrote.

“The statements of fact for which the FTC sues Congleton convey specific (rather than vague), objective (rather than subjective) representations about the efficacy of Pure Green Coffee," the judge noted. Merryday found the defendant “knowingly misrepresented Pure Green Coffee’s efficacy," and therefore, he was not protected from civil liability by the First Amendment.

Finally, the judge rejected Congleton’s argument that the government needed to prove the defendant misled consumers. He indicated such proof was only required when examining implied claims.

“Because Nationwide’s claims were both express and facially false, the FTC need not introduce a consumer affidavit or market study," Merryday said in his Nov. 2 order.

Merryday ordered another man who did not directly participate in the scheme to relinquish $549,000 in partial satisfaction of the judgment, FTC revealed.

The case against Congleton is rooted in a lawsuit FTC filed against NBP Advertising, its principles and related companies. Most of the defendants settled the agency’s charges in November 2015, FTC noted.

“As this case shows, the FTC is willing to go the distance [to] make sure that defendants like these are held accountable," said Jessica Rich, the agency’s bureau of consumer protection director, in a press release.

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