Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Acai Berry Supplement Marketers Settle FTC Charges Concerning Fake News Websites, (Feb 7, 2013)

By Tobias J. Gillett, J.D., LLM.

Online marketers of acai berry supplements and other weight loss products have settled FTC charges that they deceptively used fake news websites to promote their products, the FTC has announced (FTC v. Beony International LLC, FTC File Nos. 112 3089 and X110024, Case No. 1:11-cv-02448).

According to the FTC’s complaint filed in the federal district court in Chicago, Beony International LLC had created websites on domain names like channel6reports.com, healthnews10.com, and consumertipsdaily6.com that featured titles like News 6 News Alerts, Health News Health Alerts, and Health 6 Beat Health News. The websites would often include the names and logos of major television networks, and would contain purported investigative news stories concerning acai berry and other weight loss products. The stories would claim that the products had caused dramatic results for the people who used them, and would have supposedly independent comments from consumers under them that would agree with the stories, but the stories were actually promotional material conceived by the marketers, according to the FTC.

The FTC alleged that the marketers received commissions from the merchants of the supplements and weight loss products for consumers who purchased products through links to the merchants’ websites on the fake news websites. According to the FTC, the marketers did not provide sufficient indication that their websites represented marketing materials and not legitimate news reporting, and that the weight loss claims attributed to the products they promoted were not accurate or supported by scientific evidence. The FTC alleged that the marketers’ actions violated the FTC Act.

The proposed settlement orders would require Beony, its owner, and one of its principal employees to provide clear notice when its material constitutes advertising rather than objective news reporting. The orders would also bar them from making deceptive claims about products they marketed, particularly weight loss products and health claims, and prohibit them from misrepresenting the results of tests or studies.

The orders impose a judgment of nearly $13 million on Beony and its owner, and another nearly $13 million judgment on the principal employee, although the order will be suspended after payment of over $1.6 million and the sale of a 2008 Porsche. If the financial information the company and individuals provided is later determined to be false, the full amount of the judgment will come due.

The settlement orders with Beony and the individual defendants conclude an FTC operation against marketers employing fake news websites to promote products that has resulted in settlements of over $9.4 million, according to the FTC.

Companies: Beony International LLC

News: ConsumerProtection FederalTradeCommissionNews