You may recall Roca Labs, the "no surgery" weight-loss food supplement company that really hates being criticized — so much so that they entice their consumers1 to agree to a clause that prohibits them from saying anything negative about the company. Roca Labs is serious about this clause, using it as a basis to sue (or threaten to sue) a number of critics.
Well, for Roca Labs, things just went from bad to the FTC is suing us in the middle of Florida bad.
In its SEO-by-litigation campaign, Roca Labs has sought to intimidate former customers to enforce a dubious "you-can't-criticize-us" clause in their contracts, suing a consumer complaints website for daring to allow mean things to be posted about Roca Labs, suing Marc Randazza — who coincidentally represents the consumer complaints website — for (among other things) joking about someone putting Roca Labs formula in his kids' Halloween candy baskets2, suing a blogger for describing the company as a "fraud," "scam," and "snake oil," suing witnesses who offered evidence against the company, threatening an internet company for hosting a website that said something mildly negative about the company, so on and so forth. Roca Labs even earned its own Popehat signal.
So how is Roca Labs' campaign going? Not very well. Evidence has been proffered suggesting that:
- Roca Labs asked employees to wear fat suits while talking with potential customers;
- The company's "Director of Medical Team" turned out to have been barred from practicing medicine after a child porn conviction;
- Roca's "customer service" was designed to prevent customers from receiving refunds, with a former employee alleging that refunds were to be denied if made more than an hour after purchase, that she was instructed to lie to customers about her own weight loss, and that there was no "doctor" speaking to customers;
- Roca Labs fabricated (or was at least disingenuous about) celebrity endorsements from Alfonso Ribeiro (uh, Carlton from "Fresh Prince of Bel Air") and Tommy Chong;
- Roca Labs was, at one point, operated out of, and its products stored in, a household garage;
- Roca Labs threatened an expert witness with criminal charges over his hourly rates.
On top of this, Roca Labs is facing a class-action lawsuit in Los Angeles over its practices.
How could this get any worse for Roca Labs?
This "you can stomach our product just as well as we can stomach criticism!" approach has left a sour feeling in the stomach of the Federal Trade Commission, which coughed up a lawsuit against Roca Labs in Florida today.
The complaint alleges that Roca Labs' advertising was deceptive. [Update: The FTC has now moved for a temporary restraining order. The motion is an easier read than the complaint and it is pure brass knuckles: it seeks to curb Roca's use of its gag clause, prohibit the company from intimidating witnesses, and would require early discovery into the company's finances and practices. "The Court should halt [Roca Labs'] unfair campaign to whitewash their reputation by suppressing purchasers' negative reviews and stories." Ouch.]
Well, okay, that's putting it too simply.
Essentially, Roca Labs advertised, among other things, that its product was "scientifically proven to have a 90% success rate" and that it was "possible" to lose up to 21 pounds per month. These claims were backed by a letter from a "Dr. Ross F." — also known as Dr. Ross Finesmith, who had been barred from practicing medicine after pleading guilty to possession of child pornography — which cited and summarized literature that didn't review or study Roca Labs' products, but instead referenced studies of ingredients which were used in Roca Labs' products. Roca Labs bolstered the impression that its products were super effective by cloaking itself in an aura of scientific research and medical expertise: through its name ("Roca Labs"), references to its "medical team" and "research center", and usage of photos and videos of people wearing lab coats emblazoned with the caduceus symbol (which also appeared in the company's logo).
The FTC also contends that Roca Labs' gag clause — and the company's practice of offering a financial incentive for positive reviews — contributed to these deceptive practices. Customers could buy the product without a gag clause, but it would cost approximately three times as much, resulting in "99%" of consumers agreeing to the clause, which prohibited essentially any negative commentary about the product. One iteration of the clause established a $100,000 penalty and threatened consumers with revocation of the 'discount' and subsequent reports to credit bureaus.
This practice, according to the FTC, deprived consumers of "truthful, negative information" which might have deterred would-be customers from buying their products. Then, relying on this clause, Roca Labs "threatened complaining purchasers who have sought refunds by telling them that they would be subject to liability for extortion or defamation for threatening to post, or posting, truthful negative reviews about the Defendants, their products, or employees[.]" In some cases, the company disclosed confidential health information in legal filings and to "credit card processors and banks" when customers issued chargebacks.
Further, in lieu of allowing unfiltered customer feedback to inform customers, Roca Labs provided a financial incentive to customers to provide positive reviews and, when that wasn't enough, faked it. The company operated a website that advertises Roca Labs' product without mentioning that… it's Roca Labs running the site. So when the site claims that "we challenged the company's claim to a '90% success rate' by checking some of the 654,000 video results we got when searching for 'Youtube Roca Labs'", that's somewhat misleading. Although not directly stated in the complaint, this is misleading both because the site is operated by Roca Labs and because those positive videos result from Roca's financial incentive for customers to post reviews and its heavyhanded "don't criticize us" clause in its contract.
So, how screwed is Roca Labs? Probably pretty screwed. The company has spent untold sums of its money swatting at gnats — individual customers, bloggers, and websites that had the audacity to criticize it — sewing a whirlwind of controversy and media coverage that, no doubt, brought it to the attention of the FTC. Even were Roca Labs to eek out a victory in any of its myriad lawsuits against its critics, it would be Pyrrhic: the FTC's motion for a temporary restraining order relies pretty heavily on evidence derived from Marc Randazza's efforts in defending against Roca Labs' campaigns, and Roca Labs' own admissions in prosecuting them. In seeking to silence its critics, Roca Labs has likely dug its own grave.
This is also, to my knowledge, the first time that the FTC has targeted anti-consumer non-disparagement clauses, which have come under increased scrutiny in recent years. California has banned them (Civil Code section 1670.8) and there is a similar bill — the Consumer Review Freedom Act — pending before Congress that would outlaw them nationally. Roca Labs is also one of few — if not the only — companies to actually enforce such a clause, and Roca Labs does so with great (and often meritless) frequency, making it an ideal target for the FTC. That the FTC is asserting that such non-disparagement clauses run afoul of Section 5 is good news for consumer-critics.
And, oh, how sweet the taste of its own 'medicine' is.3
Update: Roca Labs has entered into a stipulated temporary restraining order with the FTC, agreeing to end enforcement of its non-disparagement clause, among other things.
Postscript by Ken: Adam kindly offered to let me add a note rather than write my own post. Two points for now:
1. Getting sued by the FTC is no joke. If I ran a company I think I'd rather have it charged criminally; the company would at least get something resembling due process. As I've said in the context of telemarketers, I've never seen federal judges defer to anyone like they defer to the FTC. If the FTC decides to seek preliminary relief here (like preliminary injunctions and asset freezes) it will kill Roca Labs dead before they've even taken discovery.
2. I may be wrong, but I think this may be the first time the FTC has sued a company on the theory that its non-disparagement strategy is illegal. I'll research that. If so, it's huge. Even if it's not the first time, the application here shows how the FTC can punish and deter dodgy companies like Roca that try to suppress criticism.
- No offense intended. ▲
- Roca Labs still maintains, against all reason on God's good green earth, that Randazza's joke was defamatory ▲
- I reached out to Roca Labs' proprietor, Don Juravin, and their phalanx of lawyers for comment. I'll be surprised if they respond — they're fond of feigning outrage over my dumb tweets in court filings — but if they do, I'll update this post. ▲
Last 5 posts by Adam Steinbaugh
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- Lawsplainer: Why Chuck C. Johnson Is About To Get MOED Down - October 17th, 2015
- FTC Sues Weight Loss Company Roca Labs Over Gagging Customers - September 24th, 2015
- How Secure Channels Attempted to Intimidate a Critic and Failed Spectacularly - September 4th, 2015
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