Appeals Court Points To Marketing Deflections, Upholds $48.2 Million Judgment

The U.S. Court of Appeals has upheld a lower court's judgment of $48.2 million in favor of consumers in a false-advertising case involving marketers' claims that products cured diseases ranging from cancer to multiple sclerosis.

It is worth reading the entire decision because the appeals court pointed to specific deflections and ambiguities of the sort often practiced by MLM or direct-sales hucksters.

The case involved claims about "Coral Calcium" and "Supreme Greens." Infomercial pitchman Kevin Trudeau is referenced in the appeal decision, although he is not a party to the appeal. Trudeau hawked coral calcium and "interviewed" Robert Barefoot, a purported "expert."

The appeals panel ripped the deflections and ambiguities to shreds.

"Indeed, Barefoot’s deposition testimony primarily relies on appeals to generic authority; his standard rhetorical practice is to assert that there are myriad studies that support a given claim, without identifying any specifically,” the appeals panel noted in its decision.

In my view, the line about the "standard rhetorical practice" of making unsubstantiated claims and appealing to "generic authority" is a classic.

Such approaches are made daily in marketing scheme after marketing scheme, and the four judges involved in the Coral Calcium/Supreme Greens case just laid them bare.

Trudeau and Barefoot are not parties in the appeal; they settled allegations against them earlier. Still, the appeal docs reference them.

What the appeal means, in effect, is that the judges insisted that marketers who make specific claims had better be prepared to point to specific, scientifically valid authorities to substantiate the claims. Hot air, marketing spin and ambiguous statements do not feed the bulldog.

This was a dramatic win for the FTC. The total amount of the judgments against the various defendants, including those who did not appeal, is about $70 million.

Here is the decision on the appeal:

http://ftc.gov/os/caselist/0233138/101021dmcappeal.pdf

Patrick

Patrick,

Thanks for the awesome update. Nothing better than seeing scumbags get their butts kicked in court. We should be seeing more cases like this....

Soapboxmom

Let's hope this is the first of many succesful prosecutions of the purveyors of lotions and potions who make deceptive claims and prey, for profit, on the hopes and fears of people suffering from illnesses all over the world.

It is also noted that their disclaimers (ToS) didnt do them much good either.

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Originally Posted by Soapboxmom

Patrick,

Thanks for the awesome update.

Soapboxmom

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You're welcome, SBM.

There is a separate false-advertising case in California (Wellness Support Network Inc.) filed last month in which the FTC created a 25-page evidence exhibit that consisted of 22 screen shots to show a federal judge.

Among the claims on the Wellness site was that “Nobel Prize winning technology validates WSN Diabetic Pack ingredients!”

Federal Trade Commission, Plaintiff v. Wellness Support Network, Inc., a corporation; Robert Held, individually and as an officer of Wellness Support Network, Inc.; and Robyn Held, individually and as an officer of Wellness Support Network, Inc., Def

Patrick

Another example of the FTC is interfering in peoples' "choice" ????

The FTC is picking on the health, wellness and MLM businesses again ???

Just good 'ol American free enterprise at work ?????

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Data from the 2007 National Diabetes Fact Sheet (the most recent year for which data is available)
Total: 23.6 million children and adults in the United States—7.8% of the population—have diabetes.
Diagnosed: 17.9 million people
Undiagnosed: 5.7 million people
Pre-diabetes: 57 million people
New Cases: 1.6 million new cases of diabetes are diagnosed in people aged 20 years and older each year.
Total prevalence of diabetes

Under 20 years of age

• 186,300, or 0.22% of all people in this age group have diabetes
• About 1 in every 400 to 600 children and adolescents has type 1 diabetes
• About 2 million adolescents aged 12-19 have pre-diabetes

Age 20 years or older

• 23.5 million, or 10.7% of all people in this age group have diabetes

Age 60 years or older

• 12.2 million, or 23.1% of all people in this age group have diabetes

Men

• 12.0 million, or 11.2% of all men aged 20 years or older have diabetes

Women

• 11.5 million, or 10.2% of all women aged 20 years or older have diabetes

Race and ethnic differences in prevalence of diagnosed diabetes
After adjusting for population age differences, 2004-2006 national survey data for people diagnosed with diabetes, aged 20 years or older include the following prevalence by race/ethnicity:

• 6.6% of non-Hispanic whites
• 7.5% of Asian Americans
• 11.8% of non-Hispanic blacks
• 10.4% of Hispanics

Among Hispanics rates were:

• 8.2% for Cubans
• 11.9% for Mexican Americans
• 12.6% for Puerto Ricans.

Morbidity and Mortality
Deaths
Diabetes was the seventh leading cause of death listed on U.S. death certificates in 2006. This ranking is based on the 72,507 death certificates in 2006 in which diabetes was listed as the underlying cause of death. According to death certificate reports, diabetes contributed to a total of 233,619 deaths in 2005, the latest year for which data on contributing causes of death are available.
Complications
Heart disease and stroke
• In 2004, heart disease was noted on 68% of diabetes-related death certificates among people aged 65 years or older.
• In 2004, stroke was noted on 16% of diabetes-related death certificates among people aged 65 years or older.
• Adults with diabetes have heart disease death rates about 2 to 4 times higher than adults without diabetes.
• The risk for stroke is 2 to 4 times higher among people with diabetes.
High blood pressure
• In 2003–2004, 75% of adults with self-reported diabetes had blood pressure greater than or equal to 130/80 mmHg, or used prescription medications for hypertension.
Blindness
• Diabetes is the leading cause of new cases of blindness among adults aged 20–74 years.
• Diabetic retinopathy causes 12,000 to 24,000 new cases of blindness each year.
Kidney disease
• Diabetes is the leading cause of kidney failure, accounting for 44% of new cases in 2005.
• In 2005, 46,739 people with diabetes began treatment for end-stage kidney disease in the United States and Puerto Rico.
• In 2005, a total of 178,689 people with end-stage kidney disease due to diabetes were living on chronic dialysis or with a kidney transplant in the United States and Puerto Rico.
Nervous system disease (Neuropathy)
• About 60% to 70% of people with diabetes have mild to severe forms of nervous system damage.
Amputation
• More than 60% of nontraumatic lower-limb amputations occur in people with diabetes.
• In 2004, about 71,000 nontraumatic lower-limb amputations were performed in people with diabetes.
Cost of Diabetes
$174 billion: Total costs of diagnosed diabetes in the United States in 2007

• $116 billion for direct medical costs
• $58 billion for indirect costs (disability, work loss, premature mortality)

After adjusting for population age and sex differences, average medical expenditures among people with diagnosed diabetes were 2.3 times higher than what expenditures would be in the absence of diabetes.


Factoring in the additional costs of undiagnosed diabetes, pre-diabetes, and gestational diabetes brings the total cost of diabetes in the United States in 2007 to $218 billion.
• $18 billion for the 6.3 million people with undiagnosed diabetes
• $25 billion for the 57 million American adults with pre-diabetes
• $623 million for the 180,000 pregnancies where gestational diabetes is diagnosed

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