January 24, 2008
Attorney General Corbett announces consumer protection lawsuit over sudden closure of Pure Weight Loss chain; refunds sought for hundreds of consumers
Corbett said the lawsuit was filed against the company, as well as Mr. Karian personally, alleging deceptive marketing and sales of long-term contracts for weight loss supplements, pre-packaged food and weight loss counseling services. According to the lawsuit, Mr. Karian, as President, sole owner and sole shareholder of the company, was a co-participant in this deception and shares a responsibility for consumer losses.
Corbett said that in December 2007 Pure Weight Loss suddenly announced plans to close approximately 400 stores across the country, including 47 locations in Pennsylvania. The closure of the chain resulted in more than 850 complaints from consumers who had prepaid as much as $2,000 for food products and services that were never delivered.
"Taking money from consumers for goods that cannot be delivered is a clear violation of Pennsylvania's Consumer Protection law," Corbett said. "In this case, we believe that Pure Weight Loss continued to sell long-term contracts to consumers even after it was clear, or should have been clear, that those contracts could not be satisfied."
According to the lawsuit, Pure Weight Loss continued to aggressively market long-term contracts for weight loss services in the fall and winter of 2007, despite numerous financial difficulties, including tax liens, legal judgments and lawsuits against the company filed in several states.
Additionally, Corbett said that the company allegedly continued to sell contracts even after announcing plans to close all of their stores. According to consumer complaints received by the Health Care Section, Pure Weight Loss stores were accepting pre-payment from consumers as late as December 18, 2007, four days after the company posted a notice on their website that all of their stores would be closed.
Corbett said that consumers were allegedly encouraged to purchase long-term contracts, many lasting a year or more, and were promised the regular delivery of weight loss products as they were needed. Consumers pre-paid for these services, often paying several hundred dollars in advance.
Corbett said that following the closure announcement, consumers were instructed by Pure Weight Loss to pick up products from their stores prior to January 4, 2008, or file a claim for refunds - but the defendants failed to pay refunds to all consumers or provide all of the products or services which had been purchased.
Corbett also noted that following the closure, the Pure Weight Loss website instructed consumers to contact other weight loss companies for "discounts" or other special offers - though none of those promotional offers constituted full reimbursement for the payments made by consumers.
Additionally, the lawsuit claims that some of the "special offers" listed on the Pure Weight Loss website were misleading and deceptive. Many of these offers provided little or no actual financial benefit to former Pure Weight Loss customers, and were essentially identical to offers those companies were providing to any consumer.
Corbett said that Mr. Karian, as the owner and sole shareholder of Pure Weight Loss, was aware, or should have been aware of the financial difficulties facing the company, as well as the apparent inability of the company to fulfill the contracts it was selling. The lawsuit argues that Mr. Karian was a co-participant in this consumer fraud and shares a responsibility for consumer restitution.
To date, Corbett said the Attorney General's Health Care Section has received more than 850 claims from consumers approaching $500,000 for undelivered Pure Weight Loss products or services. The average claim by consumers is $880, though some consumers paid in excess of $2,000 for goods and services which were not delivered.
The lawsuit against Pure Weight Loss and Mr. Karian seeks full restitution for all consumer claims, along with civil penalties of up to $1,000 per violation - or $3,000 for violations involving senior citizens.
Additionally, the lawsuit also asks the court to order Mr. Karian to forfeit all profits derived from these unfair and deceptive acts and to prohibit Pure Weight Loss from operating in Pennsylvania until all restitution, costs and penalties have been paid.
Corbett encouraged consumers to call the Attorney General's Health Care Section Hotline at 1-877-888-4877 or file an online complaint using the Attorney General's website.
Corbett said the Attorney General's Health Care Section is processing complaints from consumers across the country. Consumers living outside Pennsylvania are encouraged to file online complaints with the PA Attorney General's Office as well as their own state consumer protection agency.
The lawsuit was filed in Commonwealth Court and will be handled by Chief Deputy Attorney General Thomas M. Devlin, along with Deputy Attorneys General Nicole L. VanOrder and Timothy E. Gates, from the Attorney General's Health Care Section.
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