Medifast to pay $3.7M to settle FTC charges
WASHINGTON (AP) — Federal regulators said Monday that a subsidiary of diet plan marketer Medifast Inc. will pay a $3.7 million civil penalty to settle charges that it violated a previous federal order by making unsupported claims about its weight-loss products.
The Federal Trade Commission charged that claims made by Jason Pharmaceuticals Inc. in its ads for meal replacement products violated a 1992 FTC settlement order. Under federal law, companies the violate FTC orders may be liable for civil penalties of up to $16,000 per violation per day, the FTC said.
Jason sells Medifast-brand low-calorie meal substitutes. The FTC complaint charges that it made unsupported claims dating back to at least 2009 in radio, TV, Internet, and print ads, saying that people would lose two to five pounds each week with the products. The ads featured before and after photos and claimed that consumers could lose more than 30 pounds on the program, the FTC said.
Under the new settlement order, Jason is barred from saying that consumers who use any meal replacement program can expect to achieve the same results that the people featured in its ads, or that they can lose a particular amount of weight.
Representations in the company's ads cannot mislead consumers and must be backed up with competent and reliable scientific evidence that includes at least one clinical study, the FTC said.
The company also is barred from making any other representations about the health benefits, safety, or side effects of any meal replacement program, unless it's backed up by scientific research, the FTC said.
Medifast said that while it disagrees with the FTC's allegations and maintains that its advertising claims are backed up with "extensive research data," it wanted to reach an agreement that would allow it to avoid further legal proceedings.
"We stand behind our weight loss claims and remain committed to fairly providing consumers with as much information as possible," the Owings Mills, Md., company said in its statement.
Medifast shares fell 41 cents to $27.73 in afternoon trading.