Tuesday, April 4, 2017

Lunada Biomedical, Inc: Amberen Product Remedy for Menopausal Symptom Relief? Think Again (2015)


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.  


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 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.


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. 


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. 


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.

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