Mannatech Settles with Texas AG

Mannatech Settles with Texas AG
Company will pay $6 million, Bench Caster Back in July of 2007 the Texas Attorney General filed a civil complaint related primarily to product claims and sales practices that took place mostly from 2002 to 2006. Under the proposed settlement, which is still pending court approval, Mannatech will pay $4 million to consumers as restitution and $2 million to cover the expenses related to the AG's investigation. The settlement does not include any fine or penalty.

Also, former CEO and founder Sam Caster did receive a civil penalty of $1 million and is prevented from serving as an officer, director, or employee of Mannatech for the next five years.

The TX AG notice can be viewed here...
http://www.oag.state.tx.us/oagNews/release.php?id=2858

Mannatech's Press Release can be viewed here...
http://finance.yahoo.com/news/Mannatech-Reaches-Settlement-bw-14482794.html

Commentary:

This action by the TX AG, which originally sought to shut the company down, was entirely due to medical claims made about Mannatech products, not their multilevel business model.

Note in the FTC's press release (not Mannatech's with the sharp edges smoothed off) it notes "the state's enforcement action also cited Mannatech for encouraging product 'testimonials' that exaggerated its products' healing effects." So once again, personal testimonials are not safe haven. It is (right or wrong) not one's "first amendment right" to make a medical claim, even if it's an honest portrayal of what you believe the product did for you.

The FTC notice goes on to state, "Mannatech agreed not to advertise or otherwise claim that its dietary supplements can cure, treat, mitigate, or prevent disease."

Until someone changes the rules, we should all agree to this!

Len Clements
Founder & CEO
MarketWave, Inc.