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5 Weight-Loss Companies Are Probed : FTC Discloses It Is Investigating Ad Claims of Industry Leaders

March 26, 1993|DENISE GELLENE | TIMES STAFF WRITER

The Federal Trade Commission disclosed Thursday that it is investigating weight-loss claims made by five of the nation's best-known diet companies, including Weight Watchers International, Nutri/System Inc. and Jenny Craig Inc.

Barry Cutler, chief of the FTC's consumer protection bureau, said the agency is looking into various success claims made by the diet companies. However, the agency would not discuss specific claims under scrutiny.

The FTC's announcement is the most significant development in the agency's continuing probe of the weight-loss industry, which annually racks up between $2 billion and $5 billion in sales. The FTC said the five companies identified Thursday account for at least half of all weight-loss sales.

The investigation of the five diet firms is apparently in the advanced stages. In documents released Thursday, the FTC said the agency had presented the diet firms with drafts of legal complaints and proposed settlements. Details were not available.

Commenting on the FTC's action, Cutler said, "I think this shows the commission means business."

Representatives of Weight Watchers, Nutri/System and Diet Centers, which was also named Thursday, said the companies are cooperating with the FTC. The representatives said their diet claims are not misleading.

Representatives of Jenny Craig and Physicians Weight Loss Centers, the fifth company identified by the FTC, could not be reached for comment.

The FTC investigation got underway after congressional hearings in 1990 focused attention on weight-loss claims. In 1991, the FTC fired its first shot against the industry, taking action against three liquid-diet makers, who agreed to drop certain claims about the safety and effectiveness of their products.

Separately, the FTC said Thursday that three more liquid-diet firms--Health Management Resources, United Weight Control Corp. and Abbott Laboratories--agreed to drop claims about the safety and effectiveness of their diet programs to settle false-advertising charges. The liquid-diet programs are designed for rapid weight loss, supplying 800 calories or fewer a day, usually under medical supervision.

Among misleading claims cited by the FTC against the liquid-diet firms:

* "Over 60% of weight loss is kept off long-term," for Health Management's Fasting Program.

* "Finally, the weight-loss program that works even if you go off it," for United Weight Control's Permanence Program and Risk Reduction Program.

* "Lose weight quickly, safely, permanently," for Abbott's New Directions.

While the FTC objected to claims about safety, it did not allege that the diets are unsafe. Rather, the agency maintained that the liquid-diet makers misled consumers by not telling them that medical supervision is required to minimize potential health risks, such as gallstones.

Representatives of Health Management and United Weight Control could not be reached. A representative of Abbott Laboratories confirmed that the company had agreed to change its advertising.

Cutler said that with Thursday's settlements, the agency has reached agreements with the major firms in the liquid-diet industry.

The FTC's revelation regarding Weight Watchers, Nutri/System and the other large commercial weight-loss firms was unusual. The agency rarely discloses the targets of its investigations.

The disclosure came as the FTC turned down a petition from the five weight-loss companies asking the agency to come up with advertising regulations for the entire industry. The companies argued that the FTC's company-by-company investigatory approach would result in different rules for each firm.

David Biery, marketing director for Pittsburgh-based Diet Centers, said the FTC's piecemeal approach means that "the rules we are subject to are based on our ability to negotiate with the FTC."

However, some observers view the industry's call for regulation as an attempt to derail the investigations, since it can take between three to five years to develop new rules.

In denying the petition, the FTC did not rule out the possibility of later moving to issue regulations.

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