General Nutrition Penalized Over Ad Claims

General Nutrition Inc. agreed Thursday to pay $2.4 million in civil penalties to settle charges by the Federal Trade Commission that the vitamin and food supplement retailer violated terms of two previous agreements with the agency.

“This is the largest civil penalty for violating an advertising order in the commission’s history,” said Christian White, acting director of the FTC’s Bureau of Consumer Protection. “We charged that GNC made a wide variety of deceptive claims, running across the spectrum of products commonly found in health food stores.”

The company, the retail division of General Nutrition Cos. of Pittsburgh, failed to prove claims it made for more than 40 products covering disease treatment, weight loss, muscle building, increased endurance and hair loss, the FTC said. The claims were made in advertising, promotions and catalogue sales, the FTC said.

“The FTC is dead serious about attacking deceptive advertising for dietary supplements and purported health remedies,” White said. However, consumers must also be

responsible, he said.

“If a claim seems too good to be true, don’t believe it,” White said.

The company denied the charges but agreed to settle the case to avoid litigation costs, said William Watts, president and chief executive of General Nutrition Cos. The entire settlement is covered by reserves taken during the year ended Feb. 6, 1993, he said.

“While GNI believes that, at all times, it operated in material compliance with the orders, GNI entered into the settlement to avoid protracted litigation,” Watts wrote in a letter to shareholders. General Nutrition intends to ask the FTC to clarify the 1970 agreement and modify the 1989 agreement, he said.

The FTC originally wanted $6 million to resolve the dispute, according to a filing General Nutrition made with the Securities and Exchange Commission last July. At the time, the company contended that amount was excessive.

General Nutrition’s stock added 12.5 cents to close at $24.25 Thursday on Nasdaq.

The FTC said it was particularly concerned by misrepresentations about the benefits of vitamin supplements in losing weight or building muscle.