Diet Pill Firm Uses Shady Sales Tactics, FTC Lawsuit Says

The Federal Trade Commission has accused dietary supplement marketer JAB Ventures of hoodwinking customers with misleading ads that promise "free" products but do not explain that the offer is linked to a $300 "subscription" plan.

The agency also says some of the Utah firm's ads for products like LeanLife PM, Burn Fat 2, Hoodia 66 and Hoodia Gordonii contain unsubstantiated claims that the pills provide "effective weight loss while you sleep."

In a complaint filed in the U.S. District Court for the Central District of California, the FTC says JAB Ventures and company director Jason Breslow used Internet ads and spam e-mails that emphasize the "free" products offered but put the details of the arrangement in fine print on a subsequent "terms and conditions" page.

An ad for LeanLife PM, for example, allegedly offers a free one-week supply of the product with the payment of $1.99 for shipping and handling.

However, the less emphasized details of the offer include that the consumer's credit card will be billed almost $100 for a 60-day LeanLife PM supply and that two more shipments will be made in 60-day increments, each at the same rate, according to the complaint.

"These 'summary terms and conditions' were inconspicuous and failed to provide consumers with adequate notice that they would receive and be charged for additional product shipments, especially in light of the more prominent representations that the consumers would receive a 'free' sample," the complaint says.

The shady tactics violate FTC regulations because they misrepresent the facts, causing unauthorized billing, and make unsubstantiated weight-loss claims.

The defendants also allegedly violated the Electronic Fund Transfer Act.

The FTC's complaint identifies five Web sites JAB Ventures used to sell the products, but none of them was still in operation as of Aug. 1.

The agency asks the court to enjoin the defendants from further use of the infringing practices and an order forcing the disgorgement of the resulting "ill-gotten gains."

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Representing the FTC are General Counsel William Blumenthal and FTC attorneys Mark Morelli and Gregory Ashe in Washington and Raymond E. McKown of the agency's Los Angeles office.