Feds Close Bogus 'News' Sites That Pimp Supplements & Weight-Loss Potions
Sites promoted acai berry supplements, colon cleansers under guise of news
Monday, September 17, 2012
Everybody has an idea about what news is, or should be, but there's pretty broad agreement that one thing it shouldn't be is advertising in diguise. "Ads4Dough" probably doesn't sound like the most objective news organization, and the Federal Trade Commission (FTC) has charged that it is, in fact, deceptive.
The FTC says that the Coleadium, Inc. affiliate network, Ads4Dough's parent, recruited affiliate marketers that made deceptive claims on fake news sites to promote acai berry supplements, and so-called “colon cleansers,” as weight-loss products.
According to the FTC, in addition to misleading consumers about the effectiveness of the supposed weight-loss products, the marketers recruited by the defendants also promoted “free trials” of the products, in which consumers were tricked into signing up for additional shipments of products, and were billed monthly.
$1 million settlement
Under the agreed-upon settlement, the defendants will pay $1 million, and will be required to monitor affiliate marketers in their network to ensure that their statements are truthful and in compliance with federal advertising law.
The FTC’s complaint against California-based Coleadium and its owner, Jason Akatiff, alleges that they acted as intermediaries between online merchants who sold the purported weight-loss products and the affiliate marketers who used websites designed to look like objective news reports to promote the products and draw consumers to the merchants’ sites.
The products advertised included the acai berry supplements AcaiOptimum, AcaiBurn-Force Max, Acai Tropic, Acai Fit, and Acai Elite Blast; as well as colon cleansers Natura Cleanse, Smart Colon Flush, Advanced Colon Max, and Colo Flush.
Fake news sites
The FTC brought 10 cases against fake news site operators in April 2011. Eight have been resolved, with the defendants paying collectively more than $2 million. One of those news site operators, Intermark Communications, Inc., doing business as Copeac, also ran an affiliate network.
Coleadium and Akatiff allegedly assembled a network of affiliate marketers, approved the affiliates to market the products, monitored the traffic the affiliates generated through fake news sites, and paid the affiliates commissions based on the traffic generated.
Under the settlement order, in addition to paying $1 million to the FTC, Coleadium and Akatiff are barred from making any material deceptive representations, including deceptive claims about weight loss and health, and about relevant studies, tests and research. They also are barred from failing to disclose any material connection between themselves or others marketing or selling products, and the endorsers of the products; that the content of a “news” website or other publication was not written by an objective reporter but is an advertisement placed for payment; and that consumers may be subject to recurring charges when they sign up for trial supplies of the products.
Also under the settlement, the defendants must obtain adequate information about the affiliate marketers they hire, provide the affiliate marketers with a copy of the settlement order, monitor all their affiliate marketers who are selling any good or service, promptly review and approve the affiliate marketers’ advertisements, immediately stop the processing of payments generated by any affiliate marketer using deceptive advertisements, and terminate any affiliate marketer engaged in such conduct.
Supposedly derived from acai palm trees that are native to Central and South America, acai berry supplements often are marketed to consumers who hope to lose weight.
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