$792,000 payout for false claims
Issued 13 July 2006/007
$792,000 payout for false claims about Body Enhancer "potion"
Zenith Corporation, which sold and promoted the discredited "weight loss" product Body Enhancer will pay $792,000 in fines, costs and corrective advertising. The company was sentenced in the Auckland District Court today for offences under the Fair Trading Act.
Zenith will pay $632,500 in fines and $130,000 in costs, and has also been ordered to undertake a nationwide campaign of corrective advertising that is likely to cost $30,000. The company must take advertisements in newspapers and on Radio Pacific, where the product was heavily promoted in infomercials.
Commerce Commission Chair Paula Rebstock said the Commission was very pleased with the sentence.
"Zenith Corporation is paying the price for misleading the public," Ms Rebstock said.
"The size of the fine reflects the serious, persistent wrongdoing of Zenith, and the widespread harm to New Zealand consumers," Ms Rebstock said.
Extensive corrective advertising would be vital, Ms Rebstock said.
"The false claims about Body Enhancer were advertised very widely, and much was made of the so-called scientific testing of the product.
"The Court's finding is black and white: Body Enhancer does not help people lose weight, or improve their health, and the so-called scientific testing was intended purely to mislead."
While some users did experience weight loss when using Body Enhancer, the Court found that this was due to other lifestyle changes they had made, and was not in any way caused by the product.
"Now Zenith needs to tell New Zealanders the truth - that Body Enhancer doesn't work."
The case had been an important one for the New Zealand consumer, Ms Rebstock said.
"One of the expert witnesses in this case noted that 'the consumers of weight loss products are particularly vulnerable to 'magic bullet' claims.
"This sentence sends a clear message to those making claims about weight loss: whatever you promise the consumer you must be able to support with credible, scientifically rigorous evidence."
Body Enhancer was a liquid sold by mail order. It cost $80 - $90 for a 480ml bottle. Zenith claimed it would help reduce fat, control appetite and improve health, and said it was scientifically tested.
Judge L.H. Moore found that "Body Enhancer has been proved beyond reasonable doubt not to be suitable for any of the purposes claimed and not to confer upon its users any of the benefits alleged."
Of Winston and Sylvia Gallot, the directors of Zenith Corporation, Judge Moore said: "The Court is in no doubt that belief in the efficacy of the product was never their focus; their focus was the profitable exploitation of a marketing opportunity."
The previous highest payout for misleading weight loss claims was $195,000 ordered to be repaid by Marketing Direct (Celluslim) in November 2005.
Body Enhancer is a liquid that claims to assist with weight loss and improve health. The product was sold in New Zealand by Zenith Corporation. On the label and accompanying pamphlet, users are advised to drink fifteen millilitres of Body Enhancer before going to sleep. They are also told to eat no food after dinner, drink eight glasses of water a day, and exercise regularly while taking Body Enhancer.
Zenith claimed that Body Enhancer would: "help control appetite... help break down fat," and assist with "weight loss... liver detoxification... healing of cartilage and strengthening of joints, tendons and heart muscles."
Zenith also claimed that Body Enhancer had been scientifically tested. Testing was carried out by Raukura Hauora O Tainui, a Maori health care organisation, but it did not follow normal clinical practice. This was not "blind" or "double blind" testing and the judge found that the testing did not prove that Body Enhancer worked.
The misleading claims about Body Enhancer appeared on the product labels and pamphlets, on the Zenith website, in magazine advertisements, and in advertisements and "lifestyle interviews" (infomercials) on Radio Pacific.
"Far from being relative innocents they [Winston and Sylvia Gallot] were considerably shrewder, tougher and more determined than those with whom they dealt. They saw, seized on and exploited an opportunity to make very large profits. From that they were not going to be deterred. If charm seemed likely to work, they used charm; if lies seemed likely to work, they used lies; if aggression seemed likely to work, then there was no shortage of that." Para 287, Reserved Judgement of Judge L.H. Moore, 2 June 2005.