Ad Agency Pays FTC $2M in Record Deal

Advertising Law

In the largest payment ever made by an advertising agency in a Federal Trade Commission (FTC) action, Marketing Architects agreed to pay $2 million over allegedly deceptive radio ads for weight loss products.

Between 2006 and February 2015, the Minnesota-based ad agency promoted numerous products for client Direct Alternatives, including Puranol, Pur-Hoodia Plus, Acai Fresh, AF Plus and Final Trim. In 2016, Direct Alternatives settled with the FTC and the Office of the Maine Attorney General (AG) over allegations the company made false or unsubstantiated claims about some of the products.

The regulators then turned their sights on Marketing Architects. The ad agency created and disseminated radio ads with false or unsubstantiated claims for Direct Alternatives’ products, the FTC and the Maine AG alleged, even though it was aware of the need to have competent and reliable scientific evidence to back up health claims.

Dramatic results were promised in the ads, with statements such as “So powerful, it even works while you sleep!” and “This product is proven and can cause dramatic weight loss.”

The ad agency further ran afoul of the FTC Act by developing and disseminating phony consumer testimonials for the weight loss products, the FTC and the AG said, including “In six months of taking Puranol, I’ve already lost 30 pounds,” “I went from a 14 to a size 10 … without feeling hungry!” and “I’ve lost a ton of weight with AF Plus, and now you can too.” Other violations included trying to pass off its radio ads as news stories and failing to adequately disclose in its telemarketing scripts for inbound calls that consumers would be automatically enrolled in a negative option program.

Marketing Architects has a history of creating similar claims for other weight loss marketers, according to the complaint, having worked on ads for Sensa between March 2009 and May 2011. As a result of a 2014 FTC action, Sensa refunded more than $26 million to consumers for false advertising that occurred during that time period.

To settle the charges, the ad agency will pay $2 million to the FTC and Maine, which may be used to provide refunds to consumers. In addition, the company is prohibited from using phony consumer testimonials and banned from making certain weight loss claims identified by the FTC as always false.

These seven “gut check” claims include that a product causes substantial weight loss no matter what or how much the consumer eats and that a product safely enables consumers to lose more than three pounds per week for more than four weeks.

Going forward, Marketing Architects must have competent and reliable scientific evidence to support any other claims about the health benefits or efficacy of weight loss products and must obtain consumers’ express informed consent for enrollment in a negative option program before obtaining billing information.

To read the complaint and stipulated order in FTC v. Marketing Architects, Inc., click here.

Why it matters: The sizable judgment provides an important reminder to ad agencies that even though they don’t manufacture a product, they can still be liable for its advertising. Companies that participate in creating advertising in a manner similar to Marketing Architects have a duty to ask about the scientific basis for health claims, the FTC said, particularly those on the agency’s weight loss “gut check” list.



pursuant to New York DR 2-101(f)

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