The Federal Trade Commission said that an ad agency has agreed to pay $2 million to settle a complaint by the FTC and the Maine State Attorney General's Office that it was distributing allegedly deceptive radio ads for weight-loss products on behalf of a client well known to the agency.
Usually it is the advertiser that is targeted in such complaints, but the FTC has signaled that agencies and outlets also have a responsibility to police ad content.
In addition, weight loss scams have long been in the FTC's sites as a major target of investigation and action.
Agreeing to the settlement was Marketing Architects Inc. (MAI), with the ads at issue for Direct Alternatives products, which include Puranol, Pur-Hoodia Plus, PH Plus, Acai Fresh, AF Plus, and Final Trim. MAI said it disagreed with the allegations but decided it was in the company's best interests to settle.
In February 2016, the FTC settled with Direct Alternatives over unsubstantiated weight claims. Sensa, for which MAI also created weight-loss ads, was also the subject of an FTC complaint in 2014 that resulted in the company being ordered to refund $26.5 million to defrauded consumers.
The FTC said that MAI was made aware of that Sensa order and otherwise knew it needed "competent and reliable" scientific health claims in its ads.
Marketing Architects does not agree with the FTC’s characterization of the connection between Mai and the Sensa decision, according to someone familiar with the agency's thinking. Mai argues it was aware of the Sensa order, but that the case focused on fabricated studies, while the National Advertising Division of the Better Business Bureau had concluded that three studies provided a basis for weight-loss claims. The FTC also did not file a complaint against any agency over the Sensa ad order.
The complaint also alleges that MAI disguised some of the ads as news stories, and failed to disclose that consumers would be automatically enrolled in an "auto-ship" plan.
“Marketing Architects is proud of its commitment to uphold high ethical standards," the agency said in a statement. "We disagree with the allegations in the complaint but decided settlement over litigation was the best path forward for the business. One of our former clients made product claims that the FTC considered to be unfair advertising practices. We had no knowledge of these unfair practices or widespread customer dissatisfaction.
“We have made improvements to the way we do business, including hiring a general counsel with expertise in advertising law; strengthening our business practices; and no longer working with weight loss companies. These changes will better position us for long-term growth.”
(Photo via Pictures of Money's Flickr. Image taken on Aug. 2, 2014 and used per Creative Commons 2.0 license. The photo was cropped to fit 16x9 aspect ratio.)