Court Allows FTC to Attempt to Collect $3.2M from Marketers

The Federal Trade Commission, as a result of a federal court ruling, may attempt to collect up to $3.2 million from marketers who lied about their finances to the FTC when they agreed to settle deceptive advertising charges in 2014.

U.S. District Court Judge Neil V. Wake lifted the suspension of the monetary judgment entered in 2014 against the defendants, HCG Diet Direct LLC and Clint Ethington. The judge ruled that HCG Diet Direct and Ethington failed to disclose material assets in 2014 when they settled FTC charges related to their deceptive advertising of a supposed weight loss supplement based on the hormone HCG.

According to the FTC's January 2014 complaint, Ethington and his company, HCG Diet Direct, marketed an unproven human hormone that has been touted by hucksters for more than half a century as a weight-loss treatment.

The FTC alleged that they marketed liquid homeopathic HCG drops on YouTube videos, through product packaging, and in statements and testimonial videos, falsely promising they would cause consumers to rapidly lose substantial weight (up to one pound a day) by placing the HCG solution under their tongues before meals and adhering to a very low calorie diet.

"There are serious consequences when defendants lie to the FTC about their finances," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. "Because Mr. Ethington misled us about his ability to pay, the FTC has triggered the avalanche clause and the judgment against him for $3.2 million."The order settling the FTC’s charges barred Ethington and his company from making false or misleading claims about their Diet Direct Drops and required them to have competent scientific evidence to back up any efficacy claims for the product. In addition, the order imposed a $3.2 million judgment against Ethington and HCG Diet Direct, which was suspended based on their claims that they could not pay any part of it.

The court order announced Thursday permanently lifts that suspension and will allow the FTC to seek all money and assets available to satisfy the full amount of the judgment.