Celluslim pill promoters to pay $256,000 in fines
9 November 2005
Celluslim pill promoters to pay $256,000 in fines and refunds
Misleading representations about "Celluslim", a purported weight loss and cellulite reduction product, have landed Dennis O'Neill and Martini Limited with $61,000 of fines and costs and a $195,000 refund bill.
"This is a great result for the Commission in its strategy to ensure consumers are not misled, particularly in the area of health and nutrition," said Commerce Commission Chair Paula Rebstock
"Anyone planning to deceive their customers should beware," Ms Rebstock said. "Misleading the public can be expensive. Not only will the Court impose heavy fines, it can also order companies to compensate those they have misled."
"The Commission is pleased with the refunds it has secured for consumers, and will continue to seek compensation for those who have been blatantly misled into buying worthless products."
Mr O'Neill was fined
$25,000 and Martini (formerly trading as Marketing Direct
Limited) was fined $34,000 in the Auckland District Court
for breaching the Fair Trading Act by making false and
misleading representations as to:
* the composition of Celluslim: * the performance of the product; * the claim that it was tested and approved by experts from Europe and America; * the origin of the product; and * the ability of dissatisfied customers to receive a full refund.
The judge has also instructed that an independent firm be instructed to disperse the refund of over $175,000 to those consumers who purchased the product.
Mr O'Neill began marketing Celluslim in 2002, distributing over 39,000 brochures throughout New Zealand. The brochures claimed Celluslim could "... melt away fat and cellulite in just three weeks: without diet or exercise." They also claimed that Celluslim had been scientifically developed and tested by "Doctor Malissi" at the "Saint Alto Research Centre, Switzerland", neither of which existed.
In July 2003 Martini and Mr O'Neill were warned by the Government's Medsafe agency that they were breaching the Medicines Act, and were told to stop promoting and distributing Celluslim. Despite this warning, there was a further mail-out of 59,000 brochures and Martini and Mr O'Neil continued to distribute Celluslim. At one stage, they ran out of Celluslim tablets, relabelling a honey, garlic and apple cider vinegar tablet as Celluslim so they could continue to fill orders.
In his sentencing, Judge Wilson QC said: "...the only evidence is that Celluslim could not reduce cellulite fat and weight and moreover made some customers feel unwell... any person who purchased Celluslim wasted their money."
Martini and Mr O'Neill have said that they will be appealing the penalties and refund orders. Judge Wilson has ordered a stay of enforcement of the refund orders pending appeal; the Commission will oppose any appeal.
Martini Limited and Mr O'Neill first became aware of Celluslim in April 2002 when they received a brochure from Singapore on the product. Mr O'Neill decided to market the product himself through Martini and employed a local company to manufacture the tablets, basing them upon the list of ingredients found in the original Singaporean brochure.
He also employed a local company to produce new brochures, based upon the original Singaporean literature. At the time of the offending, the maximum fines available under the Fair Trading Act were $30,000 per offence for an individual and $100,000 for a company.