Weight Loss Centers Settle Charges Of False Advertising

Attorney General Spitzer today announced a settlement with a leading national weight loss chain alleged to have baited consumers with false claims of low-cost weight loss assistance.

LA Weight Loss Centers, Inc. - one of the fastest growing weight loss organizations in the country - operates 400 centers across the nation, including over 50 in New York State. For at least the past year, LA Weight Loss Centers advertised on TV and in newspapers that its weight loss program could be purchased for "only $7 per week."

In fact, the Attorney General determined that the true cost of the LA Weight Loss program, which generally required the purchase of certain food supplements, was at least three to four times the advertised cost. Further, consumers could not pay for the program on a weekly basis, but instead had to commit to a one year program and pay the yearly fee of $376.60 in advance.

Spitzer found that consumers were routinely required to purchase "LA Lites" nutrition bars during the first two phases of a three phase program at a cost of $28 per week. For example, a person seeking to lose 20 pounds would typically need to purchase LA Lites for at least 16 weeks at an additional cost of $448. Rather than the $7 per week that was advertised, the total program cost surpassed $800.

The company's sales representatives frequently failed to disclose to its customers that they had to purchase the LA Lites until after they had paid the initial $376.60 for the program, signed the membership contract, and started the program several days later -- after their three day right to cancel had expired.

"This is not a $7 per week 'pay-as-you-go' diet program where individuals can sample its effectiveness without making a significant investment," Spitzer said. "This settlement will aid consumers in comparing weight loss programs to help them make decisions that fit their goals, lifestyle and pocketbook."

Spitzer's office also determined that LA Weight Loss had not posted the bond required by New York's Health Club Services Law to protect consumers who have paid advance fees in the event of a center's closing. LA Weight Loss Centers also violated the Health Club Services Law by routinely failing to provide refunds within 15 days to consumers who cancelled their contracts within three days of signing. Instead, the company generally took at least 6-8 weeks to make refunds.

As a result of the settlement, LA Weight Loss Centers is barred from misrepresenting the essential costs of its memberships. It also has posted a $275,000 performance bond with the New York Secretary of State as required by law, and has revised its contracts to fully disclose the costs of the program and consumers' cancellation rights. The company also will provide all refunds within the time limits required by law.

LA Weight Loss Centers will make restitution to all New York State consumers who did not receive refunds as required by law. This includes $25 to each individual who cancelled his/her contract and received a late refund, and repayment for any unused "LA Lite" bars. In addition, current customers will be provided an opportunity to opt out of their commitment to purchase LA Lites for the remainder of their membership.

LA Weight Loss Centers paid civil penalties of $100,000, and $10,000 to cover the cost of the Attorney General's investigation.

Individuals with questions related to obtaining a refund from LA Weight Loss Center are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

This case was handled by Associate Attorney General Robert J. Vawter of the Consumer Frauds and Protection Bureau.