FTC Charges Settled on Fake Endorsements and Deceptive Acai Berry Weight Loss Claims

The Federal Trade Commission (FTC) settled a $2 million complain against "an operation that allegedly used fake news websites to deceptively market acai berry weight-loss products."

On October 17, 2012, the US District Court for the District of New Jersey approved the settlement in FTC v. Circa Direct requiring the defendants to pay more than $2 million in assets, and to make clear when their messages are advertisements rather than news articles.

The FTC had charged Circa Direct LLC and Andrew Davidson with:

running internet advertisements designed to look like news websites, with misleading titles such as “News 6” and “New Jersey Job Report.” The websites purported to provide investigative journalists’ reports on weight-loss products, work-at-home schemes, and penny auctions, but, according to the FTC, the sites were actually deceptive ads. The FTC accused Circa Direct and Davidson, the company’s owner, of making false and unsupported claims about acai berry products and failing to disclose their financial relationship to the sellers of the products and services promoted on the fake news sites. In one fake news story, for example, a “reporter” claimed to have lost 25 pounds in four weeks using a supplement....

Under the settlement, Circa Direct and Davidson are required to make clear when their commercial messages are advertisements rather than objective journalism. They are also required to disclose any financial connections they have with merchants. The defendants are further barred from making deceptive claims about health-related products, such as the acai berry weight-loss supplements they marketed, and from making deceptive claims about other products, such as work-at-home schemes or penny auctions....

The FTC sued Circa and Davidson as part of a law enforcement sweep against 10 affiliate marketing operations accused of using fake news websites to market acai berry weight-loss products. The FTC has reached similar settlements with eight of the other operations.

The FTC (as well as state consumer protection laws) prohibits false, deceptive, and misleading advertising. Manufacturers of dietary supplements, foods, beverages, and weight loss products need to ensure that they are not running afoul of these legal prohibitions. It's best to consult and experienced FDA and FTC attorney to be sure that structure-function claims, references to clinical trials, medical testimonials, consumer endorsements, or simply content, period, are legally compliant in light of federal laws against false advertising.

Marketing claims can wreak havoc when companies stumble across the regulatory tripwire. Weight loss claims, whether the product involves HCG or a natural product, can particularly trigger enforcement scrutiny. Here, the FTC focused on acai berry claims--as it broadcast in THIS JUST IN: Fake News Sites Promote Bogus Weight Loss Benefits of Acai Berry Supplements. The FTC warned:

More and more, scam artists are exploiting your trust in well-known news organizations by setting up fake news sites to peddle their wares. The fake sites, which usually display logos of legitimate news organizations, promote everything from bogus weight loss products to work-at-home opportunities, anti-aging products and debt reduction plans.

The Federal Trade Commission (FTC), the nation's consumer protection agency, cautions that many websites have sprouted up that claim to be objective news sources and describe a so-called "investigation" of the effectiveness of acai berry dietary supplements. Acai palm trees are native to Central and South America, and supplements made with acai berries have become popular in recent years.

A typical site displays the logo of a legitimate major television network, newspaper, or magazine, followed by a "reporter's" first-hand experience using the product. The reporter may claim a dramatic weight loss over several weeks, with no change in diet or exercise routine. Throughout the fake news site are links to other websites where consumers can buy the reviewed weight loss products or sign up for a "free" trial. Testimonials or comments from supposedly satisfied customers also may be posted on the site.

Through its investigations of "news" sources like these, the FTC found that nearly everything about these sites is fake. The websites – owned by marketers – are simply a tool to entice consumers to click on links to the sellers' sites, then buy acai berry supplements. The sellers pay the marketers a commission based on the number of consumers they lure to their sites. There is no reporter, no investigation, no dramatic weight loss, no satisfied consumer who left a comment, and no affiliation with a reputable news source. As a rule, legitimate news organizations do not endorse products. The photographs of the reporters are copied from legitimate news sources, and the images showing weight loss are stock photographs. The comments are cut and pasted from other, similarly fake sites. The weight loss claims – such as "lose 25 pounds in four weeks" – are not only false, but impossible to achieve in the time frame and manner described on the sites.

The FTC's advice to consumers?

Writing in plain language, the FTC warns: "Don’t be hooked by promises, testimonials, or supposed endorsements from reporters; all you’ll lose is money." Among the red-flag claims the FTC lists these:

Claims to watch out for include:

Lose weight without diet or exercise!

Getting to a healthy weight takes work. Take a pass on any product that promises miraculous results without the effort. The only thing you’ll lose is money.

Lose weight no matter how much you eat of your favorite foods!

Beware of any product that claims that you can eat all the high-calorie food you want and still lose weight. Losing weight requires sensible food choices. Filling up on healthy vegetables and fruits can make it easier to say no to fattening sweets and snacks.

Lose weight permanently! Never diet again!

Even if you’re successful in taking weight off, permanent weight loss requires permanent lifestyle changes. Don’t trust any product that promises once-and-for-all results without ongoing maintenance.

Just take a pill!

Doctors, dieticians, and other experts agree that there’s simply no magic way to lose weight without diet or exercise. Even pills approved by FDA to block the absorption of fat or help you eat less and feel full are to be taken with a low-calorie, low-fat diet and regular exercise.

Lose 30 pounds in 30 days!

Losing weight at the rate of a pound or two a week is the most effective way to take it off and keep it off. At best, products promising lightning-fast weight loss are a scam. At worst, they can ruin your health.

Everybody will lose weight!

Your habits and health concerns are unique. There is no one-size-fits-all product guaranteed to work for everyone. Team up with your health care provider to design a nutrition and exercise program suited to your lifestyle and metabolism.

Lose weight with our miracle diet patch or cream!

You’ve seen the ads for diet patches or creams that claim to melt away the pounds. Don’t believe them. There’s nothing you can wear or apply to your skin that will cause you to lose weight.

If you are marketing (or affiliate marketing) these products, you still have legal concerns to address. State enforcement officials are also active with respect to marketing and advertising of dietary supplements and false claims. For example, the FTC announced: "The Illinois Attorney General’s office is announcing an additional case against an affiliate marketer using fake news websites to promote acai berry weight-loss products."

The bottom line: driving customers to weight loss products through fake news headlinges (such as “Acai Berry EXPOSED – Health Reporter Discovers the Shocking Truth”) is a regulatory red flag. Part of the problem is that the news sites aren't really news:

Reporters or commentators pictured on the sites are fictional and have not conducted the tests or experienced the results described in the reports, the FTC alleges. The “responses” and “comments” following the reports are simply additional advertising content, not independent statements from ordinary consumers. The defendants receive commissions when consumers buy the products or sign up for “free trials” on the product-selling sites – but they fail to adequately disclose their lack of objectivity and their financial incentive to get consumers to buy the products. According to the FTC, the defendants collectively have paid more than $10 million to advertise their fake news sites, and have likely received well in excess of that amount in ill-gotten commissions.

The FDA and FTC have taken enforcement action against products involving not only the acai berry, but other products (including supplements and drugs, such as HCG).

Contact the FDA and FTC legal team at the Michael H. Cohen Law Group if you have legal concerns about marketing (or affiliate marketing) a dietary supplement product, particularly if making weight loss claims. Our legal experts can provide guidance regarding your dietary supplement product or project.

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