Texas-based Applied Food Science is asked by the FTC to pay $3.5 million to settle misleading weight-loss claims complaint
Just because a company touts a “clinical study” that it says proves its product works doesn’t mean you should believe it. Especially when it comes to weight loss. Make that especially when it comes to weight loss and green coffee extract.
On Monday, the US Federal Trade Commission (FTC) settled allegations with Texas-based Applied Food Service Inc that it used a “hopelessly flawed” study to promote weight loss claims for its green coffee extract product. The study was also touted on The Dr. Oz Show.
(More on Oz and his miracle products here.) The company agreed to pay $3.5 million and have at least two adequate and well-controlled human clinical tests to support any future weight loss claims it makes.
The FTC said in its complaint that the company paid researchers in India to conduct a clinical trial but that the trial’s lead investigator repeatedly altered weights and other key measurements of the subjects, changed the trial length and misstated which subjects were taking placebos and which were taking the dietary supplement, Green Coffee Antioxidant, that contained the green coffee extract. The company used the study to claim that the product caused consumers to lose 17 pounds in 22 weeks, and these results were repeated by retailers marketing the products to consumers.
“Applied Food Sciences knew or should have known that this botched study didn’t prove anything,’’ said Jessica Rich, the FTC’s director of the bureau of consumer protection. “In publicizing the results it helped fuel the green coffee phenomenon.”
An updated tally by ProPublica shows that tobacco bondholders in the US are due $2.6 billion of the $6 billion in this year’s payouts to state and local governments from Big Tobacco
Each April, cigarette manufacturers pay states billions of dollars to reimburse them for the health-care costs of smoking. About $100 billion has been paid so far, all under a landmark 1998 legal settlement with Big Tobacco. The payments are to go on forever as long as people smoke.
Much of the money, however, doesn't go to government coffers anymore. As ProPublica reported last month, a large chunk now flows to investors – the result of deals that politicians and Wall Street bankers arranged to get cash up-front by trading away the tobacco income decades into the future.
How much are investors getting? About 44 percent, or nearly one in every two dollars the tobacco companies pay out each year, an updated analysis by ProPublica shows.
The figure incorporates new data from California and New York counties and cities that also share tobacco settlement money. It updates our earlier estimate that at least one in three dollars goes to investors who bought bonds used to "securitize" the money coming in. See "How Tobacco Bonds Work."
Until now, it has been unclear how much money has been tied up in securitizations. The deals aren't tracked by the National Association of Attorneys General, which monitors the payments. State and local officials aren't required to report how they spend the money.
This year, investors were pledged $2.6 billion of the $6 billion paid out by tobacco companies. Forty-six states, five territories and the District of Columbia get a share under the terms of the 1998 settlement, which grew out of a multi-jurisdictional lawsuit over the cost of illnesses caused by smoking.
California and New York are unique in that, unlike the other states party to the settlement, they share their settlement proceeds with county governments and some cities.
All told, 35 New York counties, plus New York City, and 24 California counties and the City of San Diego have securitized all or a portion of their settlement dollars as of 2014, according to bond documents reviewed by ProPublica and interviews with dozens of county officials.
Anti-smoking groups have criticized securitization. That's because attorneys general who negotiated the legal settlement had hoped part of the money would be spent on smoking prevention.
Language in the settlement says the intent was to achieve "significant funding for the advancement of public health" and "the implementation of important tobacco-related public health measures."
"It's incredibly disappointing," said Cathy Callaway, associate director of state and local campaigns for the American Cancer Society Cancer Action Network.
Securitization, she said, "just continues to dwindle the pot of revenue that could be used for tobacco control programs and should be used for tobacco control programs."
Nationally, states are spending only about 15 percent of the $3.3 billion the Centers for Disease Control recommends they should for tobacco control, according to the Campaign for Tobacco-Free Kids, an anti-smoking group. Anti-smoking groups estimate that during their 2014 fiscal years, states brought in $25 billion from tobacco taxes and the 1998 settlement.
Nothing in the settlement directs how governments should spend the tobacco money. And some states that have securitized, like Alaska, still fund significant tobacco control programs. But more often, the money from issuing tobacco bonds went to other uses.
In New Jersey, for instance, lawmakers used proceeds from their tobacco bond sales to plug budget holes. Across the New York counties, ProPublica found that the most common use of the money from securitizing was to repay old debts to save on interest payments.
Those savings came at a cost: Because the tobacco bonds are payable only from the 1998 settlement proceeds, investors demanded higher interest rates than for less-risky general obligation debts backed by taxpayers. That means investors discounted the future cash from the settlement at higher rates and governments got less money up front – sometimes as little as two cents on the dollar, ProPublica found.
As of this year there are approximately $36 billion in tobacco bonds outstanding.
Proponents of securitization say it allows governments to avoid the risk of nonpayment.
By cashing in early, the money was immediately available for projects to benefit taxpayers. Because only tobacco settlement income could be used to repay the bonds, investors and not the governments would take a hit if one of the cigarette manufacturers went belly-up or the annual payments shrank.
The payments are based largely on cigarette sales and have been dropping as smoking bans and prevention efforts bear fruit. But the settlement also requires an annual inflation adjustment of at least 3 percent, which slows the decline.
More importantly, tobacco companies remain profitable and able to pay. Overall U.S. tobacco industry sales are declining but still are estimated to top $41 billion this year, according to IBISWorld, a market research firm. Profit margins are expected to grow.
As such, the money is likely to keep benefitting residents in place like Southern California's San Bernardino County, which never securitized. The county receives $17 million to $22 million each year and uses it to pay off debt from a medical center and to fund public health programs that include smoking cessation.
Said Gary McBride, the county's chief financial officer: "We're still happily collecting our money."
Nifty may head towards 8,000
After two days of opening in the negative, the Indian stock market opened higher on Thursday. However the indices witnessed a pull downward within a few minutes of trading. We had mentioned on Wednesday that the market is in a correction mode. This has turned out to be correct. Although the benchmark managed to stay mostly in the green (almost till the 10.50 am), the indices fell into the red thereafter, and stayed there for most of the remaining session.
The S&P BSE Sensex opened at 27,143 while NSE's CNX Nifty opened at 8,115. The indices hit their respective highs at the beginning of the session at 27,151 and 8,128. Sensex hit a seven-day low (including today) at 26,905 while Nifty hit a four-day low (including today) at 8,057. Sensex closed at 26,996 (down 62 points or 0.23%), while Nifty closed at 8,086 (down 8 points or 0.10%). NSE recorded a higher volume of 112.70 crore shares. India VIX fell 3.19% to close at 12.5175.
Among the other indices on the NSE, top five gainers were PSU Bank (2.13%), Auto (0.63%), FMCG (0.49%), Infra (0.40%) and Finance (0.36%) while the top five losers were Pharma (1.90%), Media (1.42%), Metal (0.73%), CPSE (0.62%) and Commodities (0.58%).
Of the 50 stocks on the Nifty, 25 ended in the green. The top five gainers were IDFC (3.52%), State Bank of India (2.20%), Bank of Baroda (1.93%), Bhel (1.44%) and PNB (1.36%). The top five losers were Sun Pharma (4.59%), ONGC (3.50%), Coal India (3.25%), NMDC (2.32%) and Lupin (1.84%).
Of the 1,612 companies on the NSE, 1,063 companies closed in the green, 503 companies closed in the red while 46 companies closed flat.
Finance Minister Arun Jaitley was discharged from hospital on Wednesday, after planned surgery to manage a long-standing diabetic condition, and will miss a meeting of finance ministers from the Group of 20 nations in Australia next week.
Two PSUs, State Bank of India (1.90%) and BHEL (1.53%) were among the top two gainers in the Sensex 30 pack. Tata Power (1.11%) was among the top four gainers in the ‘A’ group on the BSE. The company had bought a 30% stake in two major Indonesian thermal coal producers, KPC and Arutmin, and the related trading company owned by Bumi in early 2007. The main objective was to import coal from Indonesia when global prices were around $40/ tonne in 2006. But with the prices were crossing the level of $100/tonne in 2011. The Indonesian government was also banning exports. These have gone against Tata Power's plans. Tata Power had sold 5% stake in these mines along with a 30% stake in related power infrastructure companies in July and plans to soon sell the remaining stake soon.
Sun Pharma (4.29%) was the top loser in the Sensex 30 stock and among the top three losers in ‘A’ group on the BSE. Its Halol manufacturing plant in Gujarat has been subjected to surprise inspection by the American drug regulator United States Food and Drug Administration (USFDA). Recently, three important medicines from the US market were recalled and all of which were produced from Halol.
Motherson Sumi (9.30%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week high today. The chairman of the company sees 15%-20% topline growth along with a 40% return on capital employed in this fiscal. The stock was also recently added in the future and options segment.
Cabinet Committee on Economic Affairs on Wednesday approved stake sales in three PSUs namely ONGC (5% stake), Coal India (10% stake) and NHPC (11.36% stake). The government plans to raise about Rs46,000 crore from the divestment in these three PSUs, based the closing price of the shares on Wednesday. These three stocks were among the top six losers in the ‘A’ group on the BSE.
US indices closed in the positive on Wednesday. US President Barack Obama in a speech late on Wednesday said that he had authorised US air strikes for the first time in Syria and more attacks in Iraq in a broad escalation of a campaign against the Islamic State militant group. He said he would hunt down Islamic State militants "wherever they are," reports added.
Except for Nikkei 225 (0.76%), NZSE 50 (0.49%) and Straits Times (0.26%) all the other Asian indices closed in the red. Seoul Composite (0.74%) was the top loser.
China's consumer price index rose 2% last month from a year earlier, according to data released by the National Bureau of Statistics today. Factory-gate prices extended their decline to 30 months, adding room for government stimulus to support the economy amid a property slump. European indices were trading in the red. US Futures too were trading lower.