January 25, 2012
WASHINGTONSix online açai marketers have agreed to settle with FTC over charges of deceptive advertising of açai and other weight-loss products using fake news sites. The settlements permanently halt the fake news websites and require the six companies clearly inform consumers when marketing is advertisement and not legitimate news. The marketers have also agreed to collectively pay roughly $500,000 to FTC as a penalty for breaking the law. This represents the amount of commission these marketers made for employing the deceptive advertisements.
The defendants also are required to disclose any material connections they have with merchants, and will be barred from making deceptive claims about other products, such as the work-at-home schemes or penny auctions that most of them promoted. The settlements also require that these defendants to the Commission because their advertisements violated federal law. This money amounts to most of their assets.
FTC alleged that the defendants' websites were designed to look like legitimate news, with titles such as: News 6 News Alerts, Health News Health Alerts, or Health 5 Beat Health News." The news reports featured carried investigative-sounding headlines and claimed to document a reporters first-hand experience with açai berry supplements typically claiming to have lost 25 pounds in four weeks, according to the FTC complaints.
The sites falsely noted these reports being carried by reputable news sites including ABC, Fox News, CBS, CNN, USA Today, and Consumer Reports. However, the sites were actually deceptive advertisements enticing consumers to buy açai berry weight-loss products from online merchants. FTC received numerous complaints from consumers who paid between $70 and $100 for weight-loss products after having been deceived by fake news sites.
Due to the reported financial condition of the defendants, FTC agreed to suspend the financial judgment until it receives certain stated assets from each defendant. However, if it is determined the defendants falsely represented their financial condition, the full amount of the judgments would become due. Specifically:
Ricardo Jose Labras $2.5 million judgment will be suspended when he pays $280,000 and records a $39,500 lien on his home.
The $953,000 judgment against Zachary S. Graham, of Ambervine Marketing LLC and Encastle, will be suspended when he pays $110,000 plus most of the proceeds from the sale of a truck.
Tanner Garrett Vaughns $203,000 judgment will be suspended when he pays close to $80,000 over a three-year period.
Thou Lees $204,000 judgment will be suspended when he pays $13,000 plus the proceeds from the sale of a BMW.
Charles Dunlevys $143,000 judgment will be suspended when he pays an estimated $2,000 from frozen assets and the sale of a boat.
The $594,000 judgment against DLXM, LLC and Michael Volozin will be suspended because of the defendants inability to pay.
More information about the cases and settlements is available at the FTC website.
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