BASF and DIEM will pay total of $416,914 to provide refunds to deceived consumers
Two companies, BASF SE and DIEM Labs, will pay a total of more than $416,000 to settle Federal Trade Commission charges that they deceptively marketed two dietary fish oil supplements as clinically proven to reduce liver fat in adults and children with non-alcoholic fatty liver disease (NAFLD). The payment will enable the Commission to provide refunds to all consumers who bought either supplement.
The proposed settlement also bars the companies and related respondents from such misleading advertising and requires them to have competent scientific evidence to support any health claims they make for supplements and other products.
“BASF and DIEM couldn’t back up serious claims about how Hepaxa capsules would help adults and kids with liver disease,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “Companies can’t cherry-pick data and need to be upfront about the science behind—or not behind—their products.”
According to the FTC’s administrative complaint, BASF SE, which developed and owns the supplements Hepaxa and Hepaxa PD acted through its North American subsidiary, BASF Corp., to retain DIEM Labs to advertise and distribute both supplements in the United States. Until mid-2020, the FTC contends, the respondents deceptively advertised Hepaxa and Hepaxa PD as clinically proven to reduce liver fat in adults and children with NAFLD.
In advertisements for both supplements, which DIEM prepared and BASF reviewed and approved, the respondents allegedly made a range of false or unsubstantiated claims, in violation of the FTC Act, such as:
- CUT THE LIVER FAT… Most adult NAFLD patients will experience benefit [sic] after six months of daily supplementation with Hepaxa.
- CUT THE LIVER FAT… Most pediatric NAFLD patients will experience benefits after six months of daily supplementation with Hepaxa PD.
- NEWS RELEASE… BASF clinical trial reveals significant reduction in liver fat content in patients with non-alcoholic fatty liver disease.
In reality, a clinical trial sponsored by BASF showed that Hepaxa performed no better than a placebo at cutting liver fat in persons with NAFLD, the FTC alleged.
The orders cover Hepaxa, Hepaxa PD, and any other product containing one or more omega-3 fatty acids or promoted to benefit cardiac, metabolic or hepatic (liver) health or functions. They prohibit the respondents from claiming that these products reduce liver fat in adults or children with NAFLD or cures, treats, or mitigates any disease, unless the claim is true and can be substantiated by competent and reliable scientific evidence in the form of randomized human clinical testing.
The orders also prohibit claims about the health benefits, performance, efficacy, safety, or side effects of any covered product, unless the claims are supported by competent and reliable scientific evidence and not misleading.
The orders further prohibit the BASF and DIEM respondents from misrepresenting the results of any scientific tests or studies and requires them to preserve all underlying or supporting data and documents used to substantiate health claims made for the covered products.
Finally, the orders require the respondents to pay a total of $416,914, with the DIEM order requiring the company to provide the FTC with sufficient customer information so it can provide full refunds to consumers who bought Hepaxa and Hepaxa PD.
The Commission vote to issue the administrative complaint and to accept the proposed consent agreements was 4-0. The FTC will publish a description of the consent agreements package in the Federal Register soon. The agreements will be subject to public comment for 30 days, after which the Commission will decide whether to make the proposed consent orders final. Instructions for filing comments appear in the published notice. Once processed, comments will be posted on Regulations.gov.
The Federal Trade Commission works to promote competition and to protect and educate consumers. You can learn more about consumer topics and report scams, fraud, and bad business practices online at ReportFraud.ftc.gov. Like the FTC on Facebook, follow us on Twitter, get consumer alerts, read our blogs, and subscribe to press releases for the latest FTC news and resources.