The man whose company reaped millions from a purported cure for baldness will forfeit 80 percent of his bankruptcy proceeds to settle a false advertising lawsuit, the government said Wednesday.
But the hundreds of thousands of consumers who doled out $49.85 apiece for Helsinki Formula will probably see nothing of the $27 million in profits Hal Z. Lederman made off the product, the Federal Trade Commission said.
“It’s likely that the cost of returning the money to the consumers will exceed what they’ll get back,” said Eleanor Durham, an FTC attorney who helped litigate the case.
Between 1985 and 1990, Lederman’s Pantron I Corporation sold $100 million of the Helsinki Formula, mainly through what was then a new advertising technique called “infomercials.”
With actor Robert Vaughan featured in many of the program-length commercials, the company claimed it had scientific proof that Helsinki Formula promoted hair regrowth.
But the FTC disagreed with that assertion and filed a false advertising suit in 1988.
A 1992 decision by a federal court in Los Angeles barred the company from claiming its product had scientific backing. But the court said the product could be advertised as effective for some people and denied a request for consumer redress.
On appeal, however, the federal court was ordered to revamp its decision to reflect that the Helsinki ads were false and to call on the company to provide monetary relief.