Morinda, a Provo-based multilevel marketing firm, will pay $100,000 to four states and has agreed stop making misleading claims about its juice that contains the extract of the tropical Noni plant.
Morinda has agreed to pay attorneys general in Arizona, California, New Jersey and Texas, $25,000 each and stop advertising unsubstantiated claims about the product derived from the Noni plant in Tahiti, according to documents signed the states' attorneys general and Morinda.The states claimed the company represented many druglike curative powers of their products for ailments including arthritis, carpal tunnel syndrome, hemorrhoids, depression and diabetes.
"It's a startup problem that we've corrected," said Ben Tyler, general counsel for Morinda, speaking Thursday from the company's convention in Nashville. Tyler said that since the initial complaints from the states, the company has hired lawyers to review advertising and its Internet site to screen information. Under the settlement, Morinda did not admit any wrongdoing.
"The states have acknowledged that our nose is clean on this," Tyler said. "We have a good product. We don't need to violate laws to sell it."
The states said that Morinda marketed the beverage, not as a food, but as a drug, although the U.S. Food and Drug Administration had not approved it as a drug. In addition to its juice, the firm also markets a skin cream and mineral supplements that enhance the use of the Noni juice.
In New Jersey, although the state had not received complaints from consumers, it was concerned about claims which the company had made on its Internet site. Texas officials said they had received consumer complaints, according to Genene Wiggins, a spokeswoman for the New Jersey Division of Consumer Affairs.
Morinda, which started business in July 1996, has been riding a wave of success, reporting $64 million in sales in 1997. The company averages about $6 million in monthly sales and has about 150,000 distributors, Tyler said.
The company's leadership team was recently honored as Utah Entrepreneurs of the Year. Like many nutritional supplement companies based in Utah, the firm uses multilevel or "network" marketing to sale its product through representatives in the United States and in Costa Rica, Jamaica, Sweden, Norway, Taiwan, Tahiti and Finland. The firm is lead by Kerry Asay, John Wadsoworth, Stephen Story, Kim Asay and Kelly Olsen.
States will use money to cover investigative costs and for its consumer education program, Wiggins said. Consumers in the four states have been given 90 days to request refunds from Morinda.