In February 2009, Mannatech, Inc. and its founder and former chief executive officer, Samuel L. Caster, reached agreements to resolve a complaint by the Attorney General of Texas. The complaint, filed in 2007, charged Mannatech and Caster with orchestrating an unlawful marketing scheme that exaggerated their products’ health benefits [1]. It alleged:
- Marketing materials falsely claimed that Mannatech’s dietary supplements could cure and treat Down Syndrome, cystic fibrosis, cancer, and other serious illnesses.
- Mannatech encouraged their salespersons’ false statements by allowing sellers to continue utilizing various sales tools, brochures, videotapes, and personalized Web sites that exaggerate the supplements’ effectiveness.
- Mannatech encourage product user “testimonials” that tout their supplements’ alleged healing effects. The testimonials, along with misleading “before and after” photos, were displayed prominently in seminar booths, brochures, videos, sales associates’ personal Web sites, and training materials.
- Together, these marketing techniques misled consumers into believing that the supplements dramatically cure or treat serious illnesses.
Under the settlement:
- Mannatech will pay $6 million to the State of Texas. Of this, $2 million is designated as attorneys fees and investigative costs and the remainder will be placed in a fund from which Texas customers can obtain restitution [2].
- Mannatech will implement a comprehensive monitoring and compliance program that will monitor sales associates’ statements about Mannatech’s products and will not advertise or otherwise claim that its dietary supplements can cure, treat, mitigate, or prevent disease [2].
- Caster will pay a $1 million civil penalty and cannot serve as an officer, director, or employee of Mannatech for the next five years [3].
References
- Plaintiff’s original petition. State of Texas vs. Mannatech Incorporated, Manna Relief Ministries, The Fisher Institute, Samuel L. Caster, and Reginald McDaniel. District Court of Travis County, Texas Cause No. D-1-GV-07-001386. Filed July 5, 2007.
- Final judgment and agreed permanent injunction against Mannatech Incorporated. State of Texas v. Mannatech et al. District Court of Travis County, Texas, Cause No. D-1-GV-07-001386. Filed Feb 26, 2009.
- Final judgment and agreed permanent injunction against Samuel L. Caster. State of Texas v. Mannatech et al. District Court of Travis County, Texas, Cause No. D-1-GV-07-001386. Filed Feb 26, 2009.
This article was posted on December 3, 2010.
