FTC v. Health Formulas, LLC & Others

$9.8 million in fines


Health Formulas was held liable for fraudulent "free trials" luring consumers into enrolling for a membership program.

Our analysis

Health Formulas LLC, along with its owners and associated entities such as Simple Pure Nutrition, engaged in deceptive practices by advertising their products through fraudulent "free trials."
-They lured consumers into revealing their credit and debit card details and subsequently enrolled them, without their consent, in a costly negative-option membership program, resulting in monthly charges for unsolicited product shipments.
-Furthermore, the defendants were found to have made misleading claims about the efficacy of their weight loss products. The defendants violated several laws, including Sections 5(a) and 12 of the FTC Act (15 U.S.C. §§ 45(a) & 52), Section 907(a) of the Electronic Fund Transfer Act (15 U.S.C. § 1693e(a)), Section 4 of the Restore Online Shoppers' Confidence Act (15 U.S.C. § 8403), Section 205.10(b) of Regulation E (12 C.F.R. § 205.10(b)), and the FTC's Trade Regulation Rule known as the Telemarketing Sales Rule (TSR) (16 C.F.R. Part 310).
-The deceptive design employed by Health Formulas and its associates included the hidden subscription model, where consumers were initially enticed with purported "free trials" but were ultimately enrolled in ongoing, costly membership programs without their explicit consent.


In response to the FTC's charges, a court order was issued, resulting in a permanent ban on Health Formulas, its owners Jason and Danelle Miller, and the 41 affiliated corporations they controlled from advertising or selling weight-loss supplements and negative option sales plans. The order also prohibited them from making unsubstantiated health claims for other products, unauthorized debits from consumers' bank accounts, and contacting consumers who had requested not to be called. Furthermore, the defendants were compelled to forfeit approximately $10 million in assets.


Federal Trade Commission, Health Formulas LLC, Chapnick, Smukler & Chapnick, Inc., Brandon Chapnick, and Keith Smukler

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