FTC refunds consumers who bought health products marketed for diseases targeting elderly

FTC on Thursday announced that it is mailing nearly 16,600 checks to consumers who purchased dietary supplements that were deceptively marketed, including a product that claimed it could protect the brain against Alzheimer’s disease and dementia.

Collectively, consumers are expected to receive more than US$750,000 by the end of December, with the average refund totaling $44.34.

The refunds are the result of a complaint brought last year in federal court by FTC and the State of Maine against Health Research Laboratories LLC and its principal, Kramer Duhon.

The lawsuits related to the allegedly deceptive marketing of two health products, BioTherapex and NeuroPlus, which both sold for around $40 per bottle and seemingly targeted the elderly population.

Marketing for the latter product claimed NeuroPlus could protect the brain against Alzheimer’s disease and dementia, reverse memory loss, and improve cognitive performance and memory, according to FTC’s Nov. 29 news release. The government claimed BioTherapex was falsely advertised to treat arthritis, relieve back and joint pain and cause substantial weight loss.

The health and efficacy claims for both products, the lawsuit alleged, are false or unsubstantiated.

Ivan Wasserman, a partner in Washington with the law firm Amin Talati Upadhye LLP, said he is not aware of any suggestion that “FTC’s priorities have veered away from targeting vulnerable populations, which includes the elderly, children and people with various diseases.”

This isn’t the first case in which the agency has focused on a supplement product’s advertising claims related to memory. For instance, in a case now pending before a federal appeals court, FTC and Quincy Bioscience are fighting over whether the company had adequate substantiation for its brain health supplement known as Prevagen. (A lower court dismissed the lawsuit against the company, prompting FTC and former New York Attorney General Eric Schneiderman to file an appeal).

An order settling the charges against Health Research Laboratories and Duhon barred the conduct targeted in FTC’s complaint and required the defendants to pay $800,000 to compensate injured consumers.

“We are putting supplement sellers on notice,” Maine Attorney General Janet Mills said in a Nov. 30, 2017 press release when the settlement was announced. “False advertising, fake experts and unauthorized charges to consumers are unlawful, and we will hold those engaging in these activities accountable. The fact that they are also targeting vulnerable people with serious health concerns is particularly alarming.”

FTC on Thursday said consumers who bought NeuroPlus will receive a full refund for their expenditures on the product. Those who purchased BioTherapex will receive a refund of nearly 15 percent of the purchase price.

An FTC spokesman did not immediately respond to a request for comment on the discrepancy between the refund amounts. The order imposed a judgment of $3.7 million, but it was suspended upon the payment of $800,000 restitution.

While the agency has equitable authority to obtain ill-gotten gains and make consumers whole for purchases of products deceptively advertised, it becomes “tricky” when the target of a complaint doesn’t have funds to fully reimburse consumers, Wasserman said, who advocates for businesses subject to FTC’s jurisdiction.

“It may have been the case here,” he observed in a phone interview. “The FTC will undertake an analysis to try and make sure the restitution is as fair as possible.”

FTC’s new leadership, Wasserman added, is focused on obtaining these types of awards to compensate consumers, as opposed to just securing injunctive relief aimed at prohibiting a company from making future deceptive claims.

Andrew Lustigman, an attorney in New York who represented Health Research Laboratories and Duhon, did not immediately respond to a request for comment on FTC’s refund announcement.