Markets Wired

Spammers must stop sending unwanted and illegal e-mail messages about hoodia weight-loss products and human growth hormone anti-aging products that the Federal Trade Commission alleges don’t work. At the FTC’s request, a district court judge ordered a halt to the e-mails and to product claims that the FTC charges are false and unsubstantiated. The law enforcement action, announced today at an international meeting of government authorities and private industry about spam, spyware, and other online threats, is the first brought by the agency using the U.S. SAFE WEB Act to share information with foreign partners.

The FTC alleged that the international enterprise, with defendants in the United States, Canada, and Australia, used spammers to drive traffic to Web sites selling two kinds of pills. One kind, called “HoodiaLife” and “HoodiaPlus,” was supposed to contain hoodia gordonii and cause significant weight loss. The other, called “HGHLife” and “HGHPlus,” was supposed to be a “natural human growth hormone enhancer” that would dramatically reverse the aging process. The FTC’s spam database received over 175,000 spam messages sent on behalf of the operation.

The FTC alleges that the claims made for the products were false and unsubstantiated. According to the FTC complaint, the defendants falsely claimed that their supposed “hoodia” products cause rapid and substantial weight loss, including as much as 25 pounds in a month; cause users to lose safely three or more pounds per week for multiple weeks; and cause permanent weight loss. The complaint also charges that the defendants falsely claimed that their supposed HGH products would contain human growth hormone and/or cause a clinically meaningful increase in a consumer’s growth hormone levels. According to the FTC, the defendants also falsely claimed that their HGH products would turn back or reverse the aging process, including: reducing cellulite, improving hearing and vision, causing new hair growth, improving emotional stability, increasing muscle mass, and causing fat and weight loss. The FTC charges that the defendants made all of these claims without evidence to support them.

In addition, the FTC alleges that the operation violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) by initiating commercial e-mails that contained false “from” addresses and deceptive subject lines, and failed to provide an opt-out link or physical postal address.

This is the first agency law enforcement action where FTC staff employed the U.S. SAFE WEB Act to share information with foreign partners. Passed by Congress last year, the Act recognizes that spam, spyware, fraud, and other practices harmful to consumers are increasingly global in nature, and strengthens the FTC’s ability to cooperate with foreign counterparts. In addition to sharing key information for law enforcement efforts, it also gives the FTC enhanced authority in investigative assistance, protecting the confidentiality of information from foreign sources, and strengthening enforcement relationships.

FTC Chairman Deborah Platt Majoras announced the complaint and temporary restraining order today in Arlington, Virginia during her keynote address at the third joint workshop between the London Action Plan (LAP) and the European Union’s Contact Network of Spam Authorities (CNSA). This is the first LAP-CNSA meeting held in the United States. The LAP, created in 2004, is a global network of industry representatives and law enforcement agencies involved in the fight against spam, phishing, and other online threats. The CNSA, which the European Commission created in the same year, is a network of spam enforcement authorities from EU Member States.

As part of the joint LAP-CNSA workshop, which has participants from more than 20 countries, the organizations will hold joint sessions with the Messaging Anti-Abuse Working Group, a global organization that includes network operators, e-mail service providers, and vendors, and works against abuse and online exploitation on existing networks and emerging services.

The complaint was filed against Spear Systems, Inc., Bruce Parker, Lisa Kimsey, and Xavier Ratelle, doing business as eHealthylife.com. The federal district court judge ordered an ex parte temporary restraining order and asset freeze. A hearing is scheduled for October 11, 2007 to determine whether to extend the halt to the defendants’ claims and the asset freeze until the Commission’s case is resolved. The FTC ultimately seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains. The product at issue in the complaint was the subject of a referral by Electronic Retailing Self-Regulatory Program to the FTC.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.