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FTC announced its case against New York-based Cure Encapsulations Inc. and its owner, Naftula Jacobowitz, was the first one “challenging a marketer’s use of fake paid reviews on an independent retail website.”
February 28, 2019
A marketer of a weight loss supplement accused of paying a third-party website years ago to post dozens of fake reviews of the product on Amazon has reached an agreement with FTC to settle a complaint.
A proposed court order settling the complaint also would resolve allegations that New York-based Cure Encapsulations Inc. and its owner, Naftula Jacobowitz, made false and unsubstantiated claims for its Garcinia Cambogia supplement on its Amazon product page, including through the purchased reviews.
For example, the supplement was described as a “powerful appetite suppressant” and “Literally BLOCKS FAT From Forming,” according to an FTC news release. The government further alleged the defendants made various false and unsubstantiated claims related to weight loss, including the product causes up to 20 pounds of weight loss.
In a prepared statement emailed by its outside attorney, August Horvath of Foley Hoag LLP, Cure Encapsulations asserted it made its weight loss claims “in good faith based on prevailing scientific and medical information available to the general public at that time, including strong endorsements by reputable professionals such as Dr. Mehmet Oz.”
“The FTC believes there is little or no scientific evidence that Garcinia Cambogia helps with significant weight loss,” the statement acknowledged. “We settled this case to resolve our disagreement with the FTC over whether there is evidence that Garcinia Cambogia helps with weight loss, and it remains just that—a disagreement.”
In a phone interview with Natural Products INSIDER, Horvath said “the science may be different now” from when the claims were made.
“My client made those [claims] in good faith at the time based on the information that was out there,” he explained.
Under the consent order with FTC, Cure Encapsulations said, “[W]e will no longer claim that GC [Garcinia Cambogia] blocks fat formation, powerfully suppresses appetite or causes rapid and substantial or significant (more than 20 pounds) weight loss, but that does not mean that we ever made these claims dishonestly.”
Fake reviews on Amazon
In at least one respect, FTC’s case was not a typical investigation. In the Feb. 26 news release, the agency disclosed it was the first one “challenging a marketer’s use of fake paid reviews on an independent retail website.”
The defendants allegedly paid a website—amazonverifiedreviews.com—to develop and post reviews of the product on Amazon.
“That website offered Amazon sellers the ability to ‘Push your product towards the top!’ using ‘verified’ product reviews that will ‘help your product rank better in the internal search engine,’" FTC alleged in its complaint.
Jacobowitz advised the site’s operator he needed at least a 4.3 out of 5 stars, according to the agency’s news release.
“People rely on reviews when they’re shopping online,” said Andrew Smith, director of FTC’s Bureau of Consumer Protection, in a statement. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
The complaint suggested Jacobowitz requested 30 reviews.
Horvath explained the reason for the purported purchases of reviews: “My client was the target of negative fabricated reviews being posted by one of its competitors.”
He suggested competitors attacking each other through fabricated reviews was a trend at Amazon at the time.
Asked whether Jacobowitz was denying whether the reviews he paid for were fake, Horvath responded, “The client’s not admitting or denying that either way … I don’t think my client has complete insight into how this vendor functioned.”
According to FTC’s complaint, in one email written by Jacobowitz to the third-party website, he expressed the following concern: “Because of my upcoming holiday, I will not be able to watch my reviews not … get sabotaged by competition.”
The competition’s goal, he added in the email, “is to bring me down to a 4.2 overall rating, and I need to be at 4.3 overall in order to have the sales.”
Among the Amazon reviews FTC alleged were fabricated:
"Wow. I’m actually still amazed that it worked way faster than I expected. I have lost 20 pounds by using these amazing capsules. The pills help you with your intake of food, cleans all toxins from your body and does not allow fat or sugar to stick. Highly recommended!”
I am in-love with this product. It is amazingly simple to use but extremely effective. I lost around 8 pounds in roughly weeks of use and best part of it is I don’t get hungry. I have also noticed that i have been feeling amazing everyday since i began using the pill. Best of all, i have noticed no negative side effects and have had great weight loss results.”
"At first I was skeptical about purchasing these since they aren’t exactly cheap supplements, but I can tell you that these supplements really do work, and I based my purchase off of findings and research. I have lost 10 pounds in the first week of using these. I will definitely be recommending this to my family and friends.”
Cure Encapsulations allegedly purchased the reviews between October 2014 and June 2015. The company described the number of suspected fake reviews as “minimal” and reported they were swiftly “removed from amazon.com.”
“We regret that one of our employees engaged in such acts since it opposes our ethical standards,” the company said in its statement. Cure Encapsulations has “received more than 12,000 real reviews from real people, and we adhere to a strict code of conduct,” the statement added.
The third-party website, Horvath said, is out of business and was sued by Amazon in 2016. The website is no longer accessible.
The lawyer described false reviewers like the one outlined in the government’s complaint as “the low-hanging fruit four or five years ago,” though he suggested issues remain with reviews on Amazon.
“But the plays people are making now are much more sophisticated than this,” Horvath said. “It’s kind of late to be enforcing this type of low-hanging fruit in the Amazon review industry.”
Amazon targeted more than 1,000 alleged fake reviewers in three separate lawsuits, CNET reported in 2016.
"We will continue to pursue legal action against the root cause of reviews abuse -- the sellers and manufacturers who create the demand for fraudulent reviews," a spokeswoman for Amazon said in a written statement at the time to CNET, "as well as the ecosystem of individuals and organizations who supply fraudulent reviews."
In response to FTC’s announcement this week, a spokesperson for Amazon welcomed the agency’s “work in this area.”
“Amazon invests significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers,” the spokesperson said in a statement to INSIDER. “We have clear participation guidelines for both reviewers and selling partners and we suspend, ban and take legal action on those who violate our policies.”
A proposed court order for a permanent injunction and monetary judgment against Cure Encapsulations and Jacobowitz has been filed in the U.S. District Court for the Eastern District of New York.
The order would bar the defendants from making certain claims—including statements related to weight loss, appetite suppression, fat blocking and disease treatment—for any dietary supplement, food or drink unless they have human clinical tests to support the claims, FTC said. The defendants also must possess “competent and reliable scientific evidence” to substantiate any claims related to the efficacy or health benefits of the products above, the agency said.
Furthermore, Cure Encapsulations and Jacobowitz have agreed to:
email consumers who purchased the product, describing the government’s allegations regarding their efficacy claims; and
notify Amazon Inc. that they paid for reviews of their “Quality Encapsulations Garcinia Cambogia” capsules and identify such reviews.
Although the proposed order imposes a judgment of US$12.8 million, it will be suspended upon payment of $50,000 to FTC. The full amount of the judgment becomes due if the court finds the defendants misrepresented their financial condition.
Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition
Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.
Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.
Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).
Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.
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