Don't try this at home

Thursday, March 31, 2005

The head EDPro in Bristol, CT wants his money back.

In 2003, the Bristol invested $15,000 in a telemarketing company, iworx. The company is based in Scarborough, ME. It supposedly walked out on its deal, and now the city wants its incentive money back. Read more.

Don't hold your breath. It looks like Bristol can kiss its fifteen grand good-bye.

A little checking reveals that this company sells (or at the time sold) weight loss cream, called gel-a-thin. iworx advertised gel-a-thin in magazines (like Cosmopolitan) and the Internet. The advertisements directed consumers to dial an "800" number to order the product.

According to the advertisements, gel-a-thin is a "breakthrough topical gel" that "emulsifies, shrinks fat on contact." The cream "penetrates the skin and emulsifies fat". A one month supply costs $59.95.

I know so much about this, because its all in a complaint issued against the company by the Federal Trade Commission. Learn more. For some entertaining reading, you can download the complaint here.

It turns out that the defendant in the FTC action was also the target of a Warning Letter by the Food and Drug Administration for another product. With this product, the defendant allegedly claimed that '“Skin Zinc Spray' is useful in treating psoriasis, eczema, seborrheic dermatitis, and dandruff". Learn more.

There's another tip-off that this company is shaky: It's web site has no products. Visit the site.

The major lesson: If you want to invest public money in companies, do your homework. The process is called "due diligence".

posted by Ed Morrison |

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