The FTC has announced that three Florida-based affiliate marketers charged with using unlawful SPAM email, false weight-loss claims and phony celebrity endorsements to market bogus weight-loss products will pay $500,000 to settle Federal Trade Commission charges. Terms of the settlement also prohibits the defendants from the deceptive advertising and marketing tactics alleged in the complaint.
According to the FTC’s complaint the individual and corporate defendants paid affiliate marketers to send consumers millions of illegal SPAM emails from hacked email accounts, making it appear that the messages came from the consumers’ family members, friends, or other contacts. The email messages linked to what purported to be a “news story.”
However, the links actually led to websites that the FTC alleges deceptively promoted the defendants’ unsubstantiated weight-loss products (e.g., Original Pure Forskolin and Original White Kidney Bean).
According to the Commission the websites deceptively claimed that the defendants’ products could cause rapid weight loss.
As set forth in the complaint, the websites also falsely represented that the products had been featured or endorsed by Oprah Winfrey or the hosts of the television show “The Doctors.” The FTC alleges that these weight-loss claims were false and unsubstantiated, and that the featured celebrities had no affiliation with the defendants’ products.
The FTC alleged that the defendants’ email practices violated both the FTC Act and the CAN-SPAM Act.
The settlement also sets forth that the defendants: must possess competent and reliable scientific evidence to back up any health of efficacy claims they make in the future; are barred from falsely representing that any health claims have been approved by the U.S. Food and Drug Administration; are required to preserve all scientific evidence used to support health claims made for their products; are prohibited from misrepresenting, or helping anyone else misrepresent, that a product or program has been endorsed or approved by specific celebrities, that testimonials reflect typical consumer experience, that any website or other publication is an objective news report when it is actually an advertisements, and that independent tests demonstrate a product’s effectiveness.
The order further prohibits the defendants from making a range of misrepresentations about their products, including their total cost, as well as claims related to refunds or cancellation terms. The order specifies how the defendants must monitor their affiliate marketers in the future, and bars them from violating the CAN-SPAM Act in the way alleged in the complaint.
Finally, the order imposes a judgment of $1,303,822.98 against the defendants, which will be partially suspended upon payment of $500,000 to the Commission. The full amount will become due if they are later found to have misrepresented their financial condition.
If you are the subject of an Attorney General or FTC investigation or enforcement action, contact an FTC Defense Lawyer to ensure that your matter is handled properly and proactively, from the start.
Copies of the complaint and order can be seen, here and here.
Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.
HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.
