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Jury Hits Rexall Sundown for
Deceptive Marketing of Calcium Supplements

Stephen Barrett, M.D.

In March, 2002, after a week-long class-action trial, a Camden County jury returned a verdict in favor of New Jersey consumers who alleged that Rexall Sundown Inc had marketed and labeled two calcium products in violation of the New Jersey Consumer Fraud Act. The largest amount of calcium that can fit into a pill eithout making it too large is about 600 mg. Most calcium supplements range from 300 to 600 mg per pill. Evidence in the case showed that Rexall marketed softgel capsules called Calcium '900' and Calcium 1200 to attract the attention of consumers who wanted to supplement with 900 or 1200 mg in line with medical recommendations.

During the many years I have monitored the dietary supplement industry's marketing practices, I have observed thousands of advertisements, product brochures, and product labels. When the number in a product's name is related to the amount of an ingredient (or ingredients) in a product, that number nearly always reflects the amount per unit. But Calcium '900' contained 300 mg per pill, and Calcium 1200 contained 600 mg per pill.

The lead plaintiff (class representative) in the lawsuit is Ilene Folbaum, a Cherry Hill resident who began supplementing when advised by her doctor and chose Calcium '900' with the belief that two pills would provide 1,800 mg of calcium per day. The suit was instituted in November 1998, and the class was certified in July 1999 [1]. The key question in the suit was whether Rexall had used deception and unconscionable practices in the marketing and labeling of the two products. The jury answered YES.

Company History

Rexall Sundown Inc, headquartered in Boca Raton, Florida, manufacturers and markets hundreds of nutritional supplements and other consumer health products. The company traces its origin to 1976 ,when an entrepreneur named Carl DiSantis created a suntan lotion called "Sundown." Recognizing the increasing consumer interest in health and nutrition products, DiSantis then launched a vitamin mail-order business from his home and began selling vitamins, minerals and nutritional supplements directly to retailers under the name Sundown Vitamins. During the 1980s, the company gained access to drug stores, food stores, and mass merchandisers. The company acquired the Rexall trademark in 1985, launched a multilevel subsidiary called Rexall Showcase International in 1990, and began trading on the NASDAQ National Market as Rexall Sundown, Inc. (RXSD) in 1993. In 1998, Rexall Sundown acquired Richardson Labs (a diet and weight-management supplement marketer) and in 2000, it bought two companies in the sports nutrition category: MET-Rx and Worldwide Sport Nutrition. In June 2000, Rexall Sundown was acquired by the Dutch conglomerate Royal Numico N.V. Rexall Showcase International is now part of Unicity Network, another Royal Numico company [2].

Two recent books discuss the marketing skills that enabled DiSantis to become a billionaire. His autobiography Vitamin Enriched: A Mega-Prescription for Health & Wealth describes how, early in his career, he used his stores as laboratories to determine what pricing and other factors induced customers to spend more money. On page 95, he boasts that, "Although I never finished college, I knew how to research." On page 96, he states: "I cared more about what I or the company could do to induce customers to purchase from us and not our customers." On pages 169 and 170, he states: "Most consumers are trusting. They believe that if it says 500 mg of vitamin C on the label, then there is 500 mg of vitamin C in the tablet." [3] Prescription for Success by James W. Robinson with a foreword by DiSantis's son Damon, tells the story of Rexall Showcase International. On page 22, the author states:

Carl DiSantis . . . hasn't lost his laser-like focus on the individual customer rushing down the aisle in a store anywhere in America ready to make a buying decision. He knows from years of front-line experience that you can't get too big-headed about yourself or your product. Sometimes it's nothing more complicated than making sure the consumer can read your name on the bottle as he or she walks down the aisle [4].

Although DiSantis may not have been directly involved in the marketing of Calcium '900' and Calcium 1200, it is reasonable to assume that Rexall's marketing strategies reflect his interest in customer reponses to product labels.

What the Evidence Showed

There certainly were reasons why prospective buyers might conclude each Calcium '900' and Calcium 1200 pill contained a number of milligrams of calcium equal to the number in the product name. Labels can be divided into two components: the principal display panel, which contains the product name, and the information panel, which describes the product's characteristics. Evidence presented in the case showed that the product labels were modified several times. During the early 1990s, they had no milligram amount on the principal display panel. In fact, although the numbers 900 or 1200 appeared two, three, or four times on their respective labels, the amount of calcium per pill was not actually stated on these labels. And in the information panels of some labels, "900 mg" or "1200 mg" were the only text printed in boldface type.

Common sense indicates consumers might be influenced by -- and, in many cases would base their decision entirely on-- the product name. The labels specified a correct "Suggested Adult Dosage." But to learn that three pills were needed to reach the 900 mg amount -- or that two Calcium 1200 pills would be needed to reach the 1200 mg amount -- prospective purchasers would have to do a calculation based on small-print text in the information panel. Such calculation is simple, but it is safe to assume people with poor eyesight, inability to comprehend basic math, or lack of reading skills would not have been able to understand the information panel.

Complaints made to Rexall Sundown show that many buyers of Calcium '900' and Calcium 1200 were misled. Documents gathered through the discovery process included about a hundred complaints from buyers who had thought the product name indicated the amount of calcium per pill. Several said that the labels had caught their eye because they had the number of milligrams suggested by their doctor and/or that they appeared to have the largest dose they could find. Some accused the company of "cheating" them. Some expressed great resentment and some indicated that they had complained (or would complain) to the FDA or Consumer Reports magazine. One woman said that she took the product for four years without realizing that she was not getting the dosage she thought. Another said she took it for five years. Some indicated that they didn't realize what the label said until they returned home and put on their glasses. One stated that she showed a bottle of Calcium '900' at her bridge group and found that ten out of the eleven members assumed that the product contained 900 mg of calcium per softgel. Despite these complaints, Rexall conducted no study to determine the extent to which confusion existed.

It seems to me that if Rexall were interested in running its business honestly, complaints like these should have aroused great concern. It is common knowledge that for every complaint a company receives, there are many more dissatisfied customers who do not complain. It is also common knowledge that some people who are dissatisfied broadcast their dissatisfaction widely. Criticism by Consumer Reports -- which certainly could have happened -- might have injured Rexall severely. And so could an enforcement action by the federal government. But the greatest threats of all were letters from women whose bones might have been weakened by years of use in which they took too little calcium to protect themselves from osteoporosis. And other women -- as one complainant actually pointed out -- may still have been taking inadequate amounts without knowing it. An honest company might regard these users "as lawsuits waiting to happen." At the very least, Rexall Sundown should have conducted a scientific study to form an accurate estimate of the percentage of customers who were misled. But it did not do so.

Other documents in the case indicated that consumers were not the only people confused by the product labeling. Indeed, price lists, cash register receipt, advertisements, and other documents collected by the plainitff's attorneys showed that merchandisers, retailers, and even some Rexall employees had described the amount of calcium as 900 mg or 1200 mg per pill. Yet even though Rexall modified its label several times during the period relevant to the lawsuit, it did not state the amount per softgel on its information panel until 1998.

The Bottom Line

Like the jury, I believe that the labels for Calcium '900' and Calcium 1200 products had the capacity to mislead consumers about the amount of calcium per pill. The product names were obviously created to attract consumers who wanted a convenient way to achieve high daily intake. Although many purchasers complained that the labels had misled them, Rexall failed to correct the problem until pending FDA regulations demanded more clarity.

The jury determined that each purchaser lost $4.99 per bottle of Calcium '900' and $5.99 per bottle of Calcium 1200, which means that the total potential award could be about $400,000. The winning attorneys are David Speziali, of Speziali, Greenwald & Hawkins; David Jacoby, of Tomar, O'Brien, Kaplan, Jacoby & Graziano; and Donna Siegel Moffa, of Trujillo, Rodriguez & Richards, LLC. Rexall is expected to appeal the verdict. A similar suit is pending in Florida.

References

  1. Ilene Folbaum v. Rexall Sundown, Inc., et al. Superior Court of New Jersey - Camden County, Docket No. L-8625-98,
  2. A heritage of health. Rexall Sundown Inc. Web site, accessed April 20, 2002.
  3. DiSantis C. Vitamin Enriched: A Mega-Prescription for Wealth & Health. Boca Raton, FL: Transmedia Publishing, 1999.
  4. Robinson, JW: Prescription for Success: The Rexall Showcase Internaitonal Story and What It Means to You. Rocklin, CA: Prima Publishing, 1999.
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This article was posted on April 23, 2002.