SensaSlim and Peter Foster Fined Heavily for Weight Loss Scam
Friday 13 May 2016 @ 11.43 a.m. | Trade & Commerce
Notorious career conman, Peter Foster, has been handed a $660,000 fine by the Federal Court of Australia. Mr. Foster, the puppeteer behind weight loss scam SensaSlim, was also banned from being a company director or having any further business in the diet or health industry. The Court also ordered a $3.55 million penalty against SensaSlim Australia Pty Ltd (in liquidation) for engaging in misleading and deceptive conduct and also for making false representations.
Background
The Australian Competition and Consumer Commission conducted an investigation on the company in 2011. SensaSlim was engaged in the sale of a diet nasal spray to the unsuspecting franchisees and to the general public. The ACCC’s investigation found that the company was using a non-existent Swiss research institute to back up claims of its product’s efficacy in weight loss without any change in diet or exercise. The SensaSlim Solution was distributed through franchisees to be on-sold to consumers through retail outlets. Around 110 areas were sold to franchisees (area managers) for the cost of $59,950 each. SensaSlim earned approximately $6.4 million from the sale of these franchises.
In April 2014, the Federal Court ruled that SensaSlim engaged in false and misleading conduct by:
- Failure to disclose Mr. Foster’s involvement as an officer of the company;
- Representing that two other men were directing and actively involved in the company when this was not the case;
- Falsely representing that the nasal spray was the subject of a worldwide clinical trial;
- Falsely representing that franchisees already existed and were making a profit when this was not the case.
Mr. Foster’s Penalty
The Court found that Mr. Foster was behind the invention of the fake Swiss research institute, Institute de Recherche Intercontinental. Justice Yates of the Federal Court banned Mr Foster for life from being involved with businesses promoting or supplying weight loss products or services, or being involved in any franchising business where his identity and involvement has not been disclosed in writing to prospective franchisees. He also permanently disqualified Mr Foster from managing corporations.
In handing down his decision, Justice Yates described Mr. Foster as being ‘beyond redemption.’ He went on to say “"He preys on the right-mindedness of others to cheat and deceive. In the present case, he lurked behind SensaSlim precisely for that purpose."
ACCC Deputy Chair Dr. Michael Schaper said:
“Mr Foster went to great lengths to hide his involvement in SensaSlim from franchisees and others – his conduct was unacceptable and extremely deceitful, and the Court imposed penalties reflect this…People who decide to buy into a franchise business typically put much of their own savings on the line. They must be able to make informed business decisions on the basis of full and accurate disclosure by the franchisor.”
Mr. Foster has served prison sentences in the past in the United States, Great Britain, Vanuatu and Australia.
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