A Florida federal court has ordered Roca Labs to pay more than $25 million in an action filed by the Federal Trade Commission (FTC) over the weight loss marketer’s efforts to prevent consumers from writing bad reviews, among other violations of Section 5 of the FTC Act.
The agency filed suit in 2015 against Roca Labs, its related corporate entities and two individuals, alleging that the defendants made false and unsubstantiated weight loss claims, misrepresented that one of their promotional websites was an objective information site, failed to disclose financial ties to individuals who posted positive reviews about their products, and threatened to sue or actually sued consumers who complained or shared negative experiences online.
Roca Labs argued that prior to the passage of the Consumer Review Fairness Act it wasn’t illegal to suppress bad reviews, but the court disagreed, granting summary judgment in favor of the FTC last year.
“Because defendants admittedly suppressed negative information about the products and because … the absence of negative information could make a consumer more inclined to purchase Roca Labs products, the court finds that defendants’ practices have caused or were likely to cause substantial injury to consumers,” U.S. District Judge Mary Scriven wrote.
The court found the defendants (with the exception of one individual defendant) jointly and severally liable and has ordered them to pay $25,246,000, “a sum that the Court found to be a reasonable approximation of the Defendants’ unjust gains from their unlawful practices.”
In addition, the order prohibits several representations related to weight loss and efficacy claims, as well as other health-related claims and tests, studies or other research. The defendants are also permanently banned from using gag or nondisparagement clauses and from retaliating or threatening to take adverse action against consumers who speak or publish negative comments.
To read the order in Federal Trade Commission v. Roca Labs, Inc., click here.
Why it matters: The FTC managed to score a victory during the federal government shutdown, when the court entered an order including a money penalty of more than $25 million, a “reasonable approximation” of the defendants’ gains.