Bogus pill business busted for Fair Trading breach
Bogus pill business busted for breach of Fair Trading Act
Erdic Limited and its manager Allan Mitchell were fined a total of $100,000 in the Auckland District Court today.
Erdic made claims in a brochure and on two websites that a pill called Erdic was a natural alternative to breast implants and could significantly and permanently increase the size, shape and firmness of women's breasts. The websites have since been shut down.
The Commission's investigation found that taking the tablets at the recommended dose would have no significant hormonal or other relevant effect in adult women of reproductive age that would lead to permanent alteration in breast shape and/or enlargement of breast size. The Commission's experts also told the court that the clinical trials referred to in Erdic's marketing material were not satisfactory and could not be relied upon to substantiate the product's effectiveness.
In sentencing Judge Kerr noted that marketing an herbal alternative to plastic surgery would have its appeal to the target market who were gullible, naive and wanting to increase their bust size. He said the defendants were very culpable and profit was their main motive.
Allan Mitchell and Erdic Limited also pleaded guilty to breaching the Fair Trading Act in relation to the use of a reference number in advertising which suggested the advertising placed in TV Guide and other Fairfax magazines had been approved by TAPS (Therapeutic Advertising Pre-vetting Service.) After a complaint about Erdic's advertising was received by the Advertising Standards Authority, TAPS approval was withdrawn on 28 October 2003. Despite this, between 29 October of that year and 10 February 2005, three advertising bookings were made through Fairfax magazines using the withdrawn TAPS reference.
"Consumers rely on information provided by businesses to make decisions about the products they purchase. Those marketing natural or alternative therapies have the same obligations as other businesses under the Fair Trading Act, and that is to ensure that claims made about benefits gained are accurate," said Commerce Commission Director of Fair Trading, Adrian Sparrow.
"Women were misled by the marketing claims into purchasing a product that could not deliver the promised benefits. In some cases women were paying up to $3,000 to purchase the recommended course of pills. Products such as these prey on the vulnerability of consumers," said Mr Sparrow.
Mr Sparrow said, "Consumers should be rightly sceptical of any products that make claims that seem unlikely. There is always someone willing to sell snake oil to the unwary, so the Commission strongly advises consumers exercise common sense before purchasing 'miracle' pills and potions that make improbable claims."
Breakdown of sentencing
Erdic Limited was given a $80,000 fine. The judge also ordered Erdic to pay court costs of $130, solicitor costs of $6,479 and video link costs of $2,626. Allan Mitchell was given a $20,000 fine and ordered to pay court costs of $130.
The Therapeutic Advertising Pre-Vetting Service (TAPS) is a subsidiary of the Advertising Standards Authority Incorporated. It is a self-regulatory body whose clientele comprises mainly advertising agencies and the media. TAPS advises advertisers on how to comply with the Medicines Act and the Advertising Standards Authority's Therapeutic Products Advertising Code.
Ingredients of Erdic were listed on the side of the package, and on the website. They were represented as being comprised of hop, buckwheat, fennel, rye, malt, barley and anti-caking agents. No indication of the quantity of each ingredient or dose strength was provided.
In July 2005 Ecoworld NZ Ltd was fined $60,000 in the Hamilton District Court for breaching the Fair Trading Act by misleading people about the benefits of a water 'treatment' system that did nothing to change the water it treated. Ecoworld sold the "Grander Living Water Units" for between $1,500 and $12,000. The units contain no mechanism or filter to treat water. Rather, in a sealed section they contain 'living water', which the vendors said came from glacial melts in Austria's Tyrolean mountains. Ecoworld claimed that any water brought into contact or close proximity with this 'living water' would gain special properties, ranging from an improved PH level to becoming hostile to pathogens. Tests showed that there were no measurable differences between 'treated' water that had passed through the system, and untreated water. In the judgement Judge Merilena Burnett said promotional material for the Living Water units "contained inconsistencies, quackery and pseudo-science."
In July 2006 Zenith Corporation which sold and promoted the discredited 'weight loss' product Body Enhancer was found guilty of breaching the Fair Trading Act and ordered to pay $524,500 in fines and costs and ordered to publish corrective advertising by Auckland High Court. 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. In the judgement 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."
The Fair Trading Act Section 10 of the Fair Trading Act relates to misleading conduct in relation to goods. If the Commission decides that the labelling or representations made are likely to have breached the Act, it can take a range of enforcement actions including issuing a warning, entering into a settlement on the basis of undertakings or taking court action either through the criminal or civil jurisdictions. Court penalties for breaching the Fair Trading Act can include fines of up to $200,000 for a company and $60,000 for an individual. Only the courts can decide if a representation has breached the Fair Trading Act.