Goddard reaches settlement with supplement company
PHOENIX (Legal Newsline) - The owners and operators of a nutritional supplement company in Tuscon, Ariz., have agreed to a settlement with Arizona Attorney General Terry Goddard to resolve a consumer lawsuit over deceptive advertising techniques.
Larby Amirouche and Robert Thomas, the owners and operators of Amir & Sanchez Nutraceuticals, agreed to pay $175,000 as part of the consumer fraud lawsuit that alleged they violated the Arizona Consumer Fraud Act.
The defendants were alleged to have advertised on the internet for "14-day risk-free" trial offers for various "nutritional supplements," for only the cost of shipping and handling. The defendants, court documents say, did not disclose adequately to consumers the material terms and conditions that, in fact, made the trial offers far from "risk-free" and resulted in significant, unauthorized charges to consumers.
If consumers did not cancel within the 14 day trial period, documents say, the full price of the product would be charged to them as well as additional shipping and handling, it is alleged. The consumer would also automatically receive subsequent monthly shipments of the ordered product, Goddard alleges.
The defendants are also alleged to have falsely represented to consumers that they could cancel simply by calling a toll-free telephone number. Consumers who called reported that they could not get through to customer service representatives or were put on hold for long periods of time and sometimes disconnected.
Consumers were also told that cancellation requests could not be processed because of technical problems or were lead to believe that their cancellation request had been processed only to be charged for more unauthorized orders, Goddard says.
Consumers, the court documents say, were also deceptively enrolled into "21-day free memberships" in diet consulting programs that required affirmative action by the consumer to avoid subsequent monthly charges.
The settlement's $175,000 settlement will be divided into $20,000 for restitution, $140,000 in civil penalties and $15,000 in costs and fees.
This is the second nutrition supplement fraud case brought by the Goddard's office recently, with a record $1,375,000 settlement reached in June 2009 against Central Coat Nutraceuticals, Inc., and its Phoenix owner over allegations of defrauding customers purchasing nutritional supplements.