Pair fined $800,000 over bogus diet claims

The marketers of a bogus weight-loss product, the popular protein drink Body Enhancer, have been fined nearly $800,000 for false claims it helped people lose weight.

Zenith Corporation was sentenced in the Auckland District Court yesterday after being convicted on 23 charges under the Fair Trading Act, and ordered to pay $632,500 in fines, $130,000 in costs and an estimated $30,000 in corrective advertising in newspapers and on Radio Pacific, where Body Enhancer infomercials were aired.

The charges related to claims about Body Enhancer's weight-loss and health properties made in widespread advertising between March 22, 2000, and December 18, 2002.

Zenith was charged after a Commerce Commission investigation, and the Auckland District Court found there was no evidence that Body Enhancer was scientifically proven to be effective, putting any weight loss down to its accompanying regime of diet and exercise.

Throughout the case and following the conviction Zenith's directors, Winston and Sylvia Gallot, denied it was a quack remedy and claimed to have acted with good intent.

They defended the effectiveness of the product - which sold for $78 for a 480ml bottle and was used by tens of thousands of New Zealanders.

In June 2005, they told the Herald they stood by the product "100 per cent", said it was scientifically tested and that its ongoing success over a 6 1/2- year period proved it worked.

When the Herald visited their North Shore home yesterday seeking comment on the fine, a neighbour said they were away on holiday. Their lawyer John Katz QC said he did not speak to the media and told the Herald to speak to his clients directly.

Asked if they intended to appeal, he said: "I wouldn't know. That's their decision."

In his sentencing, Judge Lindsay Moore also criticised Zenith's ongoing selling of a product called Neo Nutrients Body Enhancer, which the company claimed was a completely different formulation.

He said Zenith had not given the court scientific proof the new product was any more effective than the old.

"In all the circumstances there is no avoiding the conclusion that any change to the formulation of Body Enhancer or its successor Neo Nutrients Body Enhancer is purely cosmetic. All are merely successive forms of a product designed to be advertised, not a product that works."

The Commerce Commission has welcomed the fines, which are the highest given for misleading weight-loss claims.

Commission chair Paula Rebstock said it was a warning to others selling unproven tonics.

"This sentence sends a clear message to those making claims about weight loss: whatever you promise the consumer you must be able to support with credible, scientifically rigorous evidence."

Zenith now needed to come clean and admit it did not work.

"The size of the fine reflects the serious, persistent wrongdoing of Zenith and the widespread harm to New Zealand consumers."

In his substantive judgment on the case, Judge Moore said the Gallots were shrewd and used charm, lies and aggression to make profits.

In yesterday's sentencing, he said Zenith's actions were a "cynical pursuit of profit" by owners Sylvia and Winston Gallot, who were "intelligent, scientifically literate people" and well aware of the need for it to be properly trialled before such claims could be made.

Judge Moore said the Zenith case was an important test case at a time when high concern over obesity in society could lead the public to believe the claims made about weight loss products.

"Products alleged to assist in weight loss are a notable source of fraud on consumers. The Courts have long recognised that."

Enhanced claims

* Zenith began marketing the protein drink Body Enhancer in 1998, advertising it on radio as "an easy way to lose weight."

* In June 2005, Zenith was convicted on 23 charges under the Fair Trading Act for false representations made in its advertising of Body Enhancer between 22 March 2000 and 18 December 2002.

* Claims included the product would help prevent collagen depletion, help increase muscle mass and reduce body fat, as well as increase vitality and overall body strength.

* Judge Lindsay Moore found the product "has been proved beyond reasonable doubt not to be suitable for any of the purposes claimed and not to confer upon its users any of the benefits alleged".