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In July 1999, General Nutrition Companies, Inc. (GNCI) announced that it would merge with Royal Numico NV, a Dutch dietary supplement company with extensive research and manufacturing facilities. The combined entity is expected to have annual worldwide sales of about $3 billion. The announcement stated that GNC's products were sold through a network of 4,203 retail stores operating under the General Nutrition Centers, Health & Diet Center and GNC Live Well names, of which 2,726 were company-owned and 1,477 were franchised. For the fiscal year ended February 6, 1999, GNC had net revenue of $1.42 billion, and net earnings of approximately $91.0 million. Numico had net sales of US$1.6 billion, and operating income of US$238 million for the year ended December 31, 1998 .
General Nutrition has a long history of marketing products with false and misleading claims. The regulatory actions regulatory actions against the company and its predecessors since 1969 include:
1-2. FTC (1969): False advertising charges were brought regarding claims for Geri-Gen ("therapeutic tonic") and Hemotrex. Settled by consent decree.
3. FDA (1974): A supply of vitamin C tablets was seized and destroyed under a consent agreement. The FDA had charged that the labeling of the tablets, which contained bioflavonoids, made false and misleading nutritional claims.
4. FDA (1980): A seizure was made of powdered milk touted as cure for arthritis. The company agreed to relabel product.
5. USPS (1980): A consent agreement stopped allegedly false representations for Model-Etts, an alleged reducing aid.
6. FDA (1981): GNC agreed to drop claims that lysine cured genital herpes. However, the company continued to circulate literature suggesting it would.
7. USPS (1982): A complaint charged that advertising for Advantage Starch Block contained false representations that the product blocked the absorption of calories from starch-containing foods. A false representation order was issued in 1983. The California Dept. of Health issued an embargo.
8-20. USPS (1984): GNC was charged with making false representations for 13 products: Risk Modifier (a nutrient mixture claimed to decrease cancer risk); Life Expander Choline Chloride (claimed to improve memory); Mental Acuity Formula (supposedly able to prevent or retard memory loss due to aging); Life Expander Fat Fighter (containing DHEA, claimed to cause weight loss without dietary modification); Challenge Maximum Body Builder (claimed to have special muscle-building properties); L-Glutamine tablets (claimed to "keep you mentally and emotionally in balance"); Lipotropic Fat Fighter Tablets (a nutrient mixture that supposedly could reduce body fat); Spirulina (which supposedly will "turn off your brain's appetite control center"); the 24-Hour Diet Plan and the Practical Diet Plan (both "guaranteed" to produce weight loss of "up to 10 pounds in two weeks"); Life Expander Growth Hormone Releaser (claimed to cause weight loss without dieting); Herbal Diet Formula (supposedly capable, by itself, of causing weight loss); and Inches BeGone (a body-wrapping cream claimed to reduce any area where you want to lose inches). The complaints were settled with a consent agreement.
21. FTC (1984): An administrative complaint charged GNC with making deceptive claims that its Healthy Greens might help people prevent cancer. In 1986 an Administrative Law Judge concluded that "GNC's unconscionable, false and misleading advertising found in this case is not an isolated incident but in fact is a part of a continuing pattern. . . . GNC's false and deceptive advertising in this case may be seen as an indication of GNC's propensity to employ false and misleading advertisements." The case was settled in 1988 by a consent agreement in which the company agreed to donate $200,000 each to the American Heart Association, American Cancer Society, and American Diabetes Association for nutrition research .
22. FDA (1984): A criminal complaint charged that GNC, three of its officers, and two retail store managers had violated the Federal Food, Drug, and Cosmetic Act by conspiring to promote and sell an evening primrose oil product with claims that it is effective against high blood pressure, arthritis, multiple sclerosis and other diseases. In 1986, the company pled guilty to four counts of misbranding a drug, and former president Gary Daum pled guilty to one misbranding count.
23. FDA (1985): Appetite Control Factor with CCK was recalled after the FDA informed the company that claims made for the product made it an unapproved new drug.
24. FDA (1985): Life Expander Fat Fighter was recalled after the FDA informed the company that claims made for the product made it an unapproved new drug.
25. Pa. Dept. of Health (1989): A consent agreement stopped allegedly false representations for a Helsinki formula hair treatment. The product had been marketed with false claims that it was a proven treatment for thinning hair and that the vitamin supplement contained "those special nutrients that have been proven helpful in an overall hair-care regimen."
26. FTC (1993). GNC agreed to pay a penalty of $2.4 million to settle FTC charges that it had made unsubstantiated claims for 41 more products . These included 15 alleged weight-control products, 18 alleged "ergogenic aids," five bogus hair-loss preventers, two alleged antifatigue products, and two purported disease-related products.
The 1993 case appears to have persuaded GNC to stop making blatantly false claims in its ads in health-food magazines. However, misleading claims still appear in other manufacturers' ads in which GNC's logo appears. This strategy began in 1994 in Let's Live magazine, which was then distributed free to customers enrolled in the "GNC Health Club" discount program. GNC's current "Gold Card" program proivdes a free subscription and discounts on other health-related magazines in which similar ads appear. It would be interesting to know whether GNC has directly or indirectly subsidized the cost of these ads. Misleading claims also appear in Let's Live articles. GNC stores still convey misleading messages about the need to take supplements, and several observers have noted unsubstantiated (and illegal) claims made by clerks to prospective customers. GNC Web site contains many misleading claims about the company's products. The site also includes The Natural Pharmacy, a huge database from HealthNotes Inc. that contain claims that are not brand-specific.