Controversy
 |
| Amberen 30-Day Menopause Relief Tablets |
Amberen is a dietary
supplement developed and tested by scientists at the Russian Academy of
Sciences in 2001. The Amberen product was marketed to be a remedy for menopausal
symptoms for women over age 40. Some symptoms include weight gain, fat gain,
and decrease in metabolism. Lunada Biomedical, Inc. acquired the rights to
market Amberen in 2006, and within the next year began advertising Amberen
nationwide through the use of television and radio commercials, websites,
email, and other promotional resources (FTC v. Lunada Biomedical, Inc. (2)). Amberen
became popular from their advertisements that claimed to cause substantial
weight loss, loss of belly fat, and increase in metabolism in women over age 40
(FTC v. Lunada Biomedical, Inc. (2)). According to the Federal Trade Commission
(FTC), Lunada sold about $65 million worth of Amberen products nationwide
between 2010 and 2013 (FTC v. Lunada Biomedical, Inc. (2)).
After a series of
customer complaints and a product investigation, Lunada became involved in a
lawsuit where defendant Laura Nunez contested that Amberen “was being marketed
falsely and misleadingly as a ‘natural remedy for Menopausal symptom relief,’
in violation of the Consumer Legal Remedies Act” (Lunada Biomedical v. Laura
Nunez). It turns out that the 2001 Russian Study did not actually examine
weight loss, loss of belly fat, or metabolism rates. In an attempt to measure
these factors, Lunada called to conduct another study on Amberen completed in
2012 called the Medicus Study. This study was done with 64 menopausal women
over a twelve-week period. According to the report, there was no statistically
significant change regarding either of the factors listed, meaning Lunada and
its executive officers were responsible for falsely advertising Amberen over
the course of eight years.
In 2015, the FTC sued
Lunada Biomedical for a total of $40 million in the attempt to “prevent future
violations of the FTC Act by Lunada Biomedical” and “redress injury to
consumers resulting from Lunada Biomedical’s violations of the FTC Act” (FTC v.
Lunada Biomedical, Inc. (2)). On the 25th of May 2016, monetary judgments
against Lunada were finalized by the U.S. District Court Central District of
California (USDC). Lunada was entitled to pay the $40 million and restrained
from any representation that their product, amongst other things, causes weight
loss, loss of belly fat, or boosts metabolism unless their claims are supported
by reliable scientific evidence.
Stakeholders
There are a few
stakeholders to consider for this controversy. A stakeholder can be defined as any
entity or individual that is affected by business activities (DesJardins). For
this case, Lunada’s executive officers play major roles in the marketing of
Amberen and were given authority to control all marketing aspects of this case.
The International Marketing Company (IMC) and its President, Carol Nicholson, were
very influential in the marketing of the product. Nicholson had a particularly
central role in the controversy since she began publishing articles on her
personal blog account about her experience with Amberen and recommending the
product with links on her blog directing people to the Amberen website. Nunez
and her defendants, Newport and Wasserman, became the first major voices to
target Lunada on this matter in court. Other stakeholders include the FTC, who
eventually
 |
| Carol's Blog, featuring Carol Nicholson, President of IMC |
accused Lunada of false advertising and deceptive acts or practices
before the USDC in 2015. Also,
purchasers or customers of the Amberen product
were manipulated by Lunada’s deceptive advertisements. Lastly, Lunada
Biomedical and their product Amberen were all directly involved and affected by
the conflict.
Individualism
Individualism suggests that “business actions should maximize profits
for the owners of the business, but do so within the law” (Salazar). When analyzing this case
from an individualist perspective, you must consider two questions. Did the
action maximize profits? Was it legal? First, considering that Lunada is
subject to pay $40 million in this lawsuit and has lost the trust of their
customers, Lunada did not maximize profits. Lunada has only paid $250,000 of
which the rest has been suspended by the USDC based on their inability to pay
(FTC v. Lunada Biomedical, Inc.). Second, seeing that Lunada’s illegal
practices are what got them into this lawsuit, their action was not legal.
Lunada had the responsibility to ensure that their product was exactly what
they claimed it to be. After Lunada received results from the Medicus Study in
2012, it was their job to relabel and reconsider how they advertise Amberen. Unfortunately,
Lunada failed to comply with their records and proceeded to convey false
information to the public resulting in a messy lawsuit that costed the company
millions. Therefore, by the ethical theory of individualism, the company’s
decision was not ethical.
Utilitarianism
The ethical theory of
utilitarianism considers the happiness of the stakeholders. Happiness is
measured by how humans react or feel after a particular situation. In the end,
the majority happiness is the most ethical decision for a utilitarian. The
stakeholders for the Amberen controversy were not very happy with Lunada’s
decision. Executive officers were to blame for allowing Lunada to advertise
false data to the public. Each was fully responsible for the company’s
decision, and all of them are not happy with the outcome. Carol Nicholson and
her marketing company lost their reputation and Nicholson lost a lot of
customers and fans as a result. Nunez and her Lawyers were happy since they won
their case and were granted a sum of money in return. The FTC is also happy for
winning their case and stopping Lunada from further manipulating and misleading
the public. The customers of Lunada were upset and likely won’t put their trust
in Lunada again. Lunada and their product Amberen will be unhappy as their
reputation, money, and trust was lost to this Lawsuit because of their bad decision.
For Lunada to win over the majority happiness, they would need to provide the
consumers with what they want. This might mean providing customers with a full
refund, relabeling their product, and ensuring they have a product that works
for its intended purpose and beyond the customer’s expectations. Lunada did not
accomplish this and their decision would be considered unethical by a
utilitarian.
Kantianism
 |
| Misleading Amberen Advertisement Implying Weight Loss |
A Kantian would analyze
this case by determining if the action is rational in the sense that the
motivation for the company’s actions come from goodness itself. The action must
conform to the Formula of Humanity which is defined as treating people and
their rationality as valuable in itself (Salazar). The basis of Kant’s
principles is to respect your own rationality and the rationality of others,
while having the right motivation behind your actions or doing something right
simply because it is the right thing to do (Salazar). In this case, Lunada was
focused on maximizing profits through their advertising to attract their
customers. Lunada has advertised Amberen through television, radio commercials,
email, websites, and others which attracted a significant amount of women
interested in relieving their menopause and losing weight. In addition, they advertised
a customer satisfaction percentage of 93% and could not furnish proof on how
they got that number (FTC v. Lunada Biomedical, Inc. (2)). Lunada took what
they claimed was scientifically proven to relieve menopause symptoms and
eliminate body weight, and used it as a focus to distract consumers from the
reality of the product. In no manner did Lunada respect or even consider the
rationality of their customers. Lunada must first apologize to its customers
and adhere to the public’s opinions. Lunada must shift their focus on their
customers now more than ever and do their best to go above and beyond that
of which is expected of them. They were
not motivated by the good will but rather, by their interests in profits and
popularity. Lunada did not conform to Kant’s principles and a Kantian would
conclude that Lunada acted unethically.
Virtue
Theory
Analyzing this case on
behalf of virtue ethics requires one to analyze those character traits that
promote wellness or flourishing of the stakeholders involved in the controversy
(Salazar). Executives Donna Kasseinova, Roman Trunin, and Emil Arutyunov were
all responsible for and involved in the labeling, marketing, distribution, and
sales of Amberen (FTC v. Lunada Biomedical, Inc. (2)). As a team, they acted
dishonestly with their marketing strategies and advertising claims. They failed
to put in the hard work to find out if their product really fulfills its
purpose and instead, they denied that their product could possibly be
mislabeled and falsely advertised. They were also afraid of losing their
customer base and their reputation which resulted in them denying their
negligence and hurting themselves even more so.
They lacked in courage, temperance, justice, and honesty. Any virtue
that they did maintain has no value seeing that they disregarded those of most
importance. To possess these important virtues, Lunada must acknowledge their
weaknesses and improve them. Courage is no easy virtue, and depending on the
situation, it may be something you don’t have. One must rationalize their
purpose or their job and apply those virtues to what they know is the rational
thing to do. If the executive officers of Lunada were more willing to exceed to
the customer’s expectations and desires, being honest and fair, they would
never have had to worry about the lawsuit they are in today. Taking into
consideration the purpose of the executives of Lunada, virtue theory would
define their actions as unethical.
 |
| Amberen Website False Advertising Claim |
Justified Ethics Evaluation
After summing up all the
ethical perspectives on Lunada and their product Amberen, it is no surprise
that I would rate Lunada’s actions as unethical. Lunada failed to abide by the
fundamental principles of civilization. Honesty is so important for any
business and civilization to thrive because without it, people don’t trust each
other, people take advantage of other, and once the issue presents itself, the
business doesn’t profit. Such is the case for Lunada Biomedical, who
manipulated what at one point was intended to be good, into something few can
rely on.
References
DesJardins,
Joseph R. An Introduction to Business Ethics. 5th ed. New York, NY:
McGraw-Hill/Irwin, 2014. Print.
Federal
Trade Commission v. Lunada Biomedical, Inc. Stipulated Order for Permanent
Injunction and Monetary Judgement Against All Defendants. U.S. District Court
Central District of California. 25 May 2016. Lunada Biomedical, Inc.
N.p., n.d. Web. 31 Mar. 2017. <
https://www.ftc.gov/system/files/documents/cases/160525lunadastip.pdf>
Federal
Trade Commission v. Lunada Biomedical, Inc. (2). Compliant for Permanent
Injunction and Other Equitable Relief. U.S. District Court Central District of
California. 12 May 2015. Lunada Biomedical, Inc. N.p., n.d. Web. 31 Mar.
2017.
<https://www.ftc.gov/system/files/documents/cases/150506lunadacmpt_0.pdf>.
Lunada
Biomedical v. Nunez. 2nd District Court of Appeal of the State of California. 9
Oct. 2014. Justia Law. N.p., n.d. Web. 31 Mar. 2017.
<http://cases.justia.com/california/court-of-appeal/2014-b243205.pdf?ts=1412881268>.
Salazar,
Heather. "The Business Ethics Case Manual: The Authoritative Step-by-Step
Guide to Understanding and Improving the Ethics of Any Business." The
Case Manual (n.d.): Web.
No comments:
Post a Comment