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Many people believe that advertising claims for health products must be true or somehow would not be "allowed." Many assume that media outlets screen such ads carefully, and some even think that the Postal Service licenses mail-order advertisers. Each of these beliefs is wrong.
The total amount of money Americans waste on bogus mail-order health products is not known but probably ranges from $100 to $300 million a year. Most mail-order health schemes attempt to exploit people's fear of being unattractive. Smaller numbers involve products claimed to increase fitness or solve health problems. Misleading claims for mail-order products are made in magazine and newspaper ads, direct mail solicitations, network marketing, television commercials, telemarketing schemes, and email solicitations.
During the summer of 1977, I headed a Pennsylvania Medical Society Committee on Quackery project that screened more than 500 nationally circulated magazines. About 25% carried display ads for products marketed through the mail with claims that they were effective against disease or could affect the structure or function of the body. Classified advertising was not considered. Nor were ads for nonprescription drug products sold through pharmacies and supermarkets.
The products fell into two general groups: sex aids, and youth and beauty aids—with about 150 such products offered by 50 sellers. Products sold over-the-counter through drugstores and supermarkets were not included in the tabulations. Nor were cosmetics, pamphlets or books. "Health food," fitness and bodybuilding publications were not included in this survey. (We define "health-food magazines" as those whose articles promote vitamins and other supplement products with claims regarded as dubious by the scientific community.)
The sex-aid products included supposed aphrodisiacs, pleasure-enhancers, penis enlargers, and erection aids. The youth and beauty aids included supposed weight-reduction products, breast developers, blemish removers, hair-loss remedies, "spot-reducers," and products claimed to increase longevity. The weight-reduction schemes included promises that you would "melt off fat" while you sleep, "lose five pounds overnight," and lose more than a pound a day without hunger. The "spot-reducers," which included various sorts of belts and wraps, were claimed to trim arms, legs and abdomen without dieting. The medical society committee concluded that not a single product could live up to its advertised claims.
During the spring and summer of 1990, I obtained one copy each of 463 nationally circulated magazines, either from a local distributor or through direct subscription. The project was funded by a grant from the Dick Goldensohn Fund, a New York City-based foundation interested in promoting economic justice. This time, "health food," fitness and bodybuilding publications were included, but automobile and computer magazines, which never carry health ads, were not. Mail-order ads for dubious health products appeared in 56 out of 423 (13%) of the general audience magazines and 23 out of 40 (58%) of the health and fitness magazines. In the general magazines, about 50 companies advertised about 70 dubious products. In the health food publications, 15 companies advertised 24 dubious products. In the fitness/bodybuilding category, 26 companies advertised more than 60 products .
Fitness and bodybuilding magazines are loaded with ads for "ergogenic aids"-supplement concoctions that contain vitamins, minerals, amino acids and/or various other substances. These products are primarily sold through stores and fitness centers rather than by mail. They are claimed to increase stamina, endurance, muscle bulk and/or athletic performance. About a hundred companies are marketing them. Some ads make explicit claims, while others contain none but feature pictures and endorsements of bodybuilding champions and other athletes. All such products should be considered fakes.
Newspaper ads for health products are similar to those in general magazines in both scope and illegitimacy. In 1979, a reporter for the El Paso Times recruited volunteers to test 46 mail-order products whose ads-in newspapers and magazines-looked suspicious. Most were alleged health and beauty aids, and the rest were household aids.
Some bogus ads are submitted to hundreds of newspapers simultaneously with a request that they be accepted without payment in advance. Newspapers that grant credit in this manner often don't get paid. The American Newspaper Publishers Association credit bureau investigates prospective advertisers when asked to do so by its members.
The tabloid newspapers (Globe, National Examiner, Sun, National Enquirer, and Weekly World News) usually run several misleading health-related ads per issue. Macfadden Holdings, the parent company of the National Enquirer, Weekly World News, and 13 monthly romance magazines, appears to publish more dubious ads than any other company in the United States. Six of its magazines, True Story, True Confessions, Modern Romances, True Experience, True Romance, and True Love, accounted for 23% of the dubious ads in the 1990 magazine survey.
Some entrepreneurs advertise health products by direct mail, using subscriber lists from publications and other sources. Most of these ads are for weight-reduction schemes, anti-aging products, and beauty aids. The Iowa Attorney General has seen evidence that people who buy one bogus diet product often receive ads for others. One list broker sells names from a database of 280,000 "arthritis/rheumatism sufferers" who have purchased such items as a "sacred Aztec talisman" or a "Chinese miracle weight-loss program."
Some direct mail solicitations look like reproductions of newspaper articles or ads, although they probably have not been published. They are accompanied by a handwritten endorsement in the margin or on a Post-it, addressed to the recipient by name or first initial. "Dear Bill," the note might read, "This really works! Try it. J." One promoter of this type of mailing once told a journal editor that he employed a staff that sent out 200,000 mailings per week . In addition to their fraudulent content, these types of messages have considerable potential for harm. People who think the note has been sent by someone they know may feel hurt that someone thinks they are too fat or may even fear that someone is stalking them!
Most dietary supplement ads appearing in health-food and health-related general-circulation magazines are designed to stimulate the sale of these products through health food stores. Such ads tend to contain few explicit claims that the products are effective against health problems. If they did, the products would be considered "drugs" and be subject to federal regulation. Instead, most manufacturers rely on magazines and books to boost the ingredients of the products. The manufacturers hope that readers will be stimulated to visit stores where retailers can talk to them privately with little or no risk of triggering government regulatory action.
Dietary supplement products also are sold through mail-order catalogs. Some companies market their own lines of products in this manner. Others include a few pages of supplement products in general merchandise catalogs. A few compete with health food stores by carrying the products of many manufacturers at discount prices.
The three largest discounters appear to be Swanson's Health Products, of Fargo, North Dakota, L&H Vitamins, of Long Island City, New York, and The Vitamin Shoppe, of West Bergen, New Jersey. All three offer the products of many manufacturers at discounts of 20% or more. Each has issued newspaper-style catalogs containing unsubstantiated claims for many products.
The largest company selling its own product line by mail is probably Nature's Bounty, of Bohemia, New York, doing business as Puritan's Pride. In 1989 the company purchased the mail-order division of General Nutrition Corporation (GNC and the right to use the GNC trademark for two years. In 1985, GNC had signed consent agreements with the Postal Service to stop making unsubstantiated claims for 14 products sold through the mail. In 1986, a Federal Trade Commission administrative law judge ruled that GNC ads for an alleged cancer preventive were deliberately misleading and concluded that the "unconscionable, false, and misleading advertising found in this case is not an isolated incident but part of a continuing pattern." Also in 1986, to settle criminal charges initiated by the FDA, the company pled guilty to four counts of misbranding a drug, and its former president and another officer pled guilty to one count. In 1988, the FTC complaint was settled by a consent agreement in which GNC agreed to donate $600,000 for nutrition research and was prohibited from making any claim for any company-produced product that cannot be substantiated by scientific evidence.
After acquiring GNC's mail-order division, Puritan's Pride gradually phased out the GNC label but continued to make illegal claims for some GNC products as well as many others under its own label. Its February 1990 catalog, for example, contained at least 42 product representations that were false, misleading, or unproven. In November 1990, postal officials filed a false representation complaint against Nature's Bounty, charging that at least 19 of its products were falsely advertised. The products included Cholesto-Flush, Fatbuster Diet Tea, Kidney Flush, Memory Booster, Prostex, and Stress B with 500 mg Vitamin C. In May 1991, the case was settled with a consent agreement under which Nature's Bounty admitted no wrongdoing but agreed to stop making the challenged claims.
Millions of Americans have signed up as distributors for multilevel companies that market vitamins, herbs, homeopathic remedies, weight-loss powders, or other health-related products. Often they have tried the products, concluded that they work, and become suppliers to support their habit. Products and distributorships most often are sold by direct contact in person or by telephone. However, some prospecting takes place by mail. The products tend to be overpriced, and many of them are promoted with illegal therapeutic claims.
The Federal Trade Commission warns consumers to be aware that some television programs that look like talk shows are actually program-length commercials. Some programs of this type have promoted dubious weight-loss plans [A, B], cellulite removers [C], exercise devices, hair-loss remedies [D], dietary supplements [E], and alleged memory-enhancement [D], and reading-improvement systems [D], One tipoff, says the FTC, is that the product promoted during "commercial breaks" is related to the program's content.
Telemarketing schemes are a serious problem. Typically, they involve notification by mail or phone that the recipient has won a "valuable" prize. To collect, the recipient must order a large supply of vitamins, a water purifier, or something else that costs hundreds of dollars. If delivery is made, the prize almost always is worthless, the product overpriced, and the "money-back guarantee" not honored. When the product has been ordered by credit card, the buyer can usually prevent loss by asking the credit card company to reverse the payment. But many buyers don't realize this or waste so much time trying to get a refund that the deadline for action through the credit card issuer expires. The National Alliance for Fraud in Telemarketing has predicted that telephone scams involving arthritis remedies, weight-loss plans, sexual aids, baldness cures, and other health and nutrition products will increase. The American Association of Retired Persons is seeking passage of laws that would require telemarketers to be registered and bonded. Telemarketing schemes use a wide variety of influence techniques, ranging from friendly conversation to outright demands or even threats, to persuade victims to part with their money. The United States Department of Justice and Crimes-of-Persuasion.com have posted extensive information about telemarketing frauds.
Many products are advertised through bulk e-mail solicitations. The health-related products are invariably marketed with false or exaggerated claims. Sometimes the solicitations include stories of people (including the sender) whom the product supposedly has helped. Internet Scambusters states that there is a high probability that products ordered from bulk e-mailers will not be delivered. The FTC and the U.S. Postal Service have notified more than 1,000 junk e-mailers that the agencies are monitoring unsolicited e-mail for fraudulent schemes and are keeping track of schemers. Junk e-mail solicitations should be forwarded for review to the FTC's e-mailbox. Chain-letter schemes urge e-mail recipients to send a small amount of money to a list of several people, remove one name, add their own and forward the e-mail in bulk to others. Supposedly, the participants will start to receive money as other, "downstream" recipients receive the e-mail and participate. However, most who participate will lose money. Some chain letters masquerade as legitimate businesses, in which participants receive "reports" or other worthless items in exchange for their money. These schemes are still illegal, and almost all participants lose money. Never answer a junk e-mail solicitation because, if you do, the spammer can tell that your e-mail address is "live" and either re-use it or sell it to others.
The Postal Service has jurisdiction over situations where money is sent through the mail for products or services. Title 39, Section 3005, of the United States Code can be used to block promoters of misleading schemes from receiving money through the mail. If sufficient health hazard or economic detriment exists, an immediate court order to impound mail may be sought under Section 3007 of the Code. However, the Postal Service cannot proceed unless the Justice Department approves such action or takes the case itself.
Title 18, Section 1341, provides for criminal prosecution but requires proof of intent to deceive. The maximum penalties are 5 years in prison and a fine for each instance proved. The 1984 Criminal Fines Enhancement Act allows fines of up to $100,000 (or $250,000 if death results) per offense for up to two offenses. However, criminal prosecution is rarely used in cases involving claims made for mail-order health products because: (1) administrative procedures are simpler and quicker; and (2) intent to deceive is difficult to prove when a perpetrator pretends to believe that the product works.
The Postal Inspection Service maintains 180 field offices in the United States and its territories, with about 2,200 inspectors available to investigate all types of violations. However, in recent years, mail fraud involving consumer products appears to have had a very low priority. Attorneys in the Postal Service's law department and postal inspectors with law degrees are available to prosecute cases. The case-selection process is decentralized, so that different types of cases are emphasized in different regions of the country.
Postal inspectors look for misleading advertisements in magazines and newspapers and on radio or television. They also receive complaints from the public and from other government agencies. When a mail fraud is detected, postal attorneys can file a complaint or seek an agreement with the perpetrator. When a complaint is contested, a hearing is held by an administrative law judge assigned to the Postal Service. If the evidence is sufficient, this judge will recommend that the Postal Service issue a False Representation Order (FRO) blocking money sent through the mail in response to the misleading ads. Although the order can be appealed to the courts, very few companies do this. Each voluntary agreement and FRO is accompanied by a cease-and-desist order that forbids both the challenged acts and similar acts. Under the Mail Order Consumer Protection Amendments of 1983, if this order is violated, the agency can seek a civil penalty in federal court of up to $10,000 per day for each violation.
The Postal Service does not have jurisdiction when companies solicit credit card orders by telephone and deliver through private carriers such as United Parcel Service. However, the Justice Department may seek an injunction under Section 1345, which allows federal district courts to enjoin acts of mail and wire fraud.
Criminal cases, consent agreements and false representation orders are noted in the Law Enforcement Report, which is issued four times a year, free of charge, to interested media and consumer protection agencies. The agency probably handles between 25 and 40 health-related cases per year, but exact figures are not available.
In most cases where health-related products are falsely advertised, the FDA and FTC also have jurisdiction. The FDA can regulate any product intended for use in the cure, mitigation, treatment or prevention of any ailment, while the FTC has jurisdiction over advertising of all health-related products except prescription drugs. However, the FDA rarely becomes involved with mail-order sales, and the FTC handles relatively few.
In June 1989, a full-page ad for Cho Low Tea was published in the Washington Post, Los Angeles Times, Forth Worth Star Telegram, Newark Star Ledger, Pittsburgh Press and 100 other newspapers. The ad claimed that this tea would reduce blood cholesterol levels while still allowing you to eat whatever you please. The tea was also claimed to add years to your life, make you look and feel better, aid digestion of fatty foods, reduce water retention, and have none of the possible side effects of cholesterol-lowering drugs. The ad contained testimonials from a prominent young television actor, endorsements from seven medical sources, and the logo of the Better Business Bureau.
Fortunately for consumers, James Ralph, vice president of the American Newspaper Publishers Association Credit Bureau, had received inquiries about the advertisers before the ad was published. Ralph, who conducts seminars on how to detect fraudulent ads, is probably the industry leader in trying to persuade newspapers not to publish such ads. On the first day the ad was published, he obtained a copy, concluded the promotion was a scam, and contacted the Council of Better Business Bureaus as well as state and federal law enforcement agencies.
It turned out that the endorsements were fabrications and the marketers did not belong to the Better Business Bureau. They were two Australians who had entered the United States in February, 1989. One of them had fled England while awaiting trial for a scheme involving the sale of almost $7 million worth of a Chinese tea that was falsely claimed to cause weight loss. It also turned out that no Cho Low Tea existed. The con men had planned to repackage another company's tea but had not yet done so! Three weeks after their ad appeared here, both were arrested and jailed in lieu of bail. Early in July, they pleaded "no contest" and received short sentences that will be followed by a three-year period of probation. Orders for the tea exceeded $250,000, but the authorities acted so swiftly that all of the money was returned to its senders.
For several years, Cal-Ban 3000 was falsely claimed to provide automatic weight loss without dieting or exercise. Cal-Ban contained guar gum-claimed by its marketers to decrease appetite and block the absorption of fat. When taken by mouth, guar gum forms a gel within the stomach that may contribute to a feeling of fullness and may block some nutrients so they are not absorbed. However, there is no proof that either of these things is enough to produce weight loss automatically or consistently. For one thing, many overweight people keep eating even when their stomach signals that it is full. For another, if food absorption is decreased, the individual may eat more to compensate. No long-term controlled test of guar gum as a weight-control agent has been reported in the scientific literature.
In 1987, after conducting an investigation, the Postal Service acted quickly to block the sale of Cal-Ban through the mail. However, its Florida-based manufacturer continued to solicit orders through a toll-free number, with payment by credit card or COD, and delivery by United Parcel Service. Cal-Ban was also marketed through pharmacies and health food stores. These channels are outside the Postal Service's jurisdiction.
In February 1990, Cal-Ban's marketers signed a consent agreement promising to stop selling it in Iowa and to pay $20,000 to cover the state's cost of taking action against them. The company did not admit wrongdoing, but agreed to notify its 1989 customers that the Iowa Attorney General believed its ads were misleading and that a refund would be sent if requested. The company also agreed to pay restitution for 1987 and 1988, using a formula based on the response to the refund offer. Up to $50,000 would be earmarked for the state's Consumer Education Fund, while any excess would be given to an appropriate nonprofit organization. Subsequently, 80% of the 1989 customers asked for a refund, triggering total restitution of $320,000. Iowa officials estimated that total U.S. sales of Cal-Ban had exceeded $20 million in 1989.
A few months later, spurred by evidence of danger, more regulatory actions were taken. Early in July, postal authorities, working with the U.S. Attorney in Tampa, Florida, obtained a temporary injunction prohibiting sales through the mail and by telephone and directing telephone companies to disconnect the company's toll-free lines. During the same week, the Hillsborough County (Florida) Sheriff filed charges of fraud against three company officials. In mid-July, the Florida Department of Health and Rehabilitative Services ordered Florida retailers to remove Cal-Ban from their shelves and to stop selling it immediately. The department said it had acted after reviewing complaints involving more than 100 people, at least 50 of whom needed some type of medical intervention. The complaints included esophageal obstruction, gastric obstruction, upper and lower intestinal obstruction, nausea and vomiting.
One week later, the FDA sent the company a regulatory letter stating that Cal-Ban was an unapproved new drug and was misbranded and asking that it be recalled immediately. The FDA also announced that it had collected reports of at least 17 cases of esophageal obstruction. Hospital stays were required by ten of these people, one of whom died. Shortly afterward, the California Department of Health Services warned consumers not to use Cal-Ban and warned retailers not to sell it. California authorities also embargoed more than 20 million tablets and capsules at a warehouse and manufacturing plant in Anaheim, California.
In August the Florida civil case was settled with payment of a $1.3 million penalty, and the criminal case was settled with a plea bargain in which the company pled guilty to one count of organized scheme to defraud, paid a $5,000 fine, and pledged never to sell guar gum or Cal-Ban again in the United States. The federal case was settled with a similar consent agreement plus a penalty of $25,000. In addition, if the three company officials ever promote another weight-loss aid, the promotional material must make it clear that any weight loss will result from increasing exercise and/or consuming fewer calories.
Since the weight-reduction claims made for Cal-Ban made it a drug under federal law, the FDA could have ordered the manufacturer to stop making these claims. A simple regulatory letter might well have stopped the company dead in its tracks during its first year of operation.
The Postal Service has a very active program to detect and stop the sale of bogus health products through the mails. Even so, many mail-order thieves operate long enough to make a profit-as do media outlets that collect money for running the ads. Each year buyers of these products lose small amounts of money individually but tens of millions of dollars collectively. At the same time, taxpayers have to pay for government enforcement actions that would be unnecessary if media outlets had uniformly higher standards.
When questioned about standards, advertising managers typically respond that it is impossible, too difficult, or even legally risky to check every ad that comes their way. Some also respond that it should not be their responsibility to judge health claims. At the same time, they feel entitled to complete freedom to decide for themselves which ones to print. The net result is that they profit from helping the public be cheated.
During 1984, the FDA and the Council of Better Business Bureaus sent information packets to the advertising managers of 9,500 newspapers and magazines as well as to 10,000 television and radio stations. The mailing included tips on checking ad copy as well as the marketer's credentials. Armed with this information, advertising departments could weed out the vast majority of fraudulent health ads with little effort-if they wanted to do so.
A few periodicals—most notably The New York Times, the St. Petersburg Times and Good Housekeeping—have published standards and do an effective job of following them. Many others rarely run ads for bogus mail-order health products but occasionally slip up. The major television networks screen ads fairly carefully, but rarely publicize the procedures they use. No large study has tabulated how media outlets screen their ads. James Ralph believes that almost all of them make an effort to detect frauds and do reject many that are submitted. But it is clear from the Cho Low Tea incident alone that something is radically wrong.
Stronger Laws are Needed
Protection against mail-order quackery would be substantially increased if the following ideas were implemented.
Portions of this report were developed with the help of Attorneys Geoffrey Drucker and Jennifer Angelo of the United States Postal Service Law Department and Michael Botts, former chief counsel for the National Council Against Health Fraud.