KEY POINTS:
A campaign to try to contact consumers entitled to a refund because they bought the sham weight-loss product Celluslim starts tomorrow.
Celluslim was a product that claimed to "melt away fat and cellulite", but was described by a judge as a waste of money.
The Commerce Commission successfully prosecuted Dennis O'Neil and Martini Ltd (formerly trading as Marketing Direct Ltd) over the pills, which were marketed and distributed in 2002 and 2003.
The judge in the initial district court case said "anyone who purchased Celluslim wasted their money".
O'Neil and his company were ordered by the court to pay 1750 people refunds totalling $175,972.
After appeals to the High Court and Court of Appeal, the original district court orders in respect to refunds to consumers who bought the product have been restored.
A system for refunding consumers has been put in place, with the court appointing an independent company to manage the process, at the cost of O'Neil and his company.
This will include advertising in major daily newspapers seeking consumers who bought the product. Consumers claiming a refund will have to provide proof of purchase.
"This is a major victory for consumers, who were taken in by blatantly misleading advertising, and deserved a refund," commission chairwoman Paula Rebstock said. "It is also significant that the wrongdoer is being required to bear the cost of distributing the refunds, rather than the taxpayer."
Ms Rebstock said misleading claims about health and nutrition products remained a target area because of the vulnerability of consumers.
"Consumers simply have no way of knowing what is in a pill they buy, other than by relying on the claims made for it in advertising and on the packet."
An advertising campaign to try to contact all consumers entitled to a refund begins tomorrow and is being managed by KordaMentha.
Apart from the fat-melting claim made for Celluslim, it was also claimed the product had been scientifically developed and tested by a fictitious doctor at the fictitious Saint Alto Research Centre in Switzerland.
At one stage, when the distributors ran out of the original Celluslim pills, they relabelled honey, garlic and apple cider vinegar pills as Celluslim.
The Auckland District Court found O'Neil and Martini Ltd guilty of breaches of the Fair Trading Act in 2005.
It imposed fines totalling $59,000 and ordered refunds to customers of $175,000, plus the costs of paying an independent company to administer the refunds.
In 2006 the fines were reduced on appeal by O'Neil and Martini Ltd to $22,500. They also successfully appealed the order to pay an independent company to administer the refunds.
The commission had this order overturned in the Court of Appeal in October. Last month, O'Neil and Martini Ltd handed over the refund money to KordaMentha.
- NZPA
