Markets Wired

The Clickbooth affiliate network has agreed to pay $2 million to settle Federal Trade Commission charges that its affiliate marketers deceived consumers through bogus weight-loss claims on fake news sites about acai berry supplements and so-called “colon cleansers.”

The FTC will seek to use the $2 million judgment announced today to provide refunds to consumers who were allegedly deceived by the defendants’ marketing.  The settlement also bars the defendants from a wide range of deceptive marketing practices, including making misleading or unsupported claims; misrepresenting any material fact in the sale of any product; failing to adequately disclose a material connection to the seller of any product, service, or program; and misrepresenting the existence or result of a test or study.

According to the complaint, Sarasota, Florida-based Clickbooth has been paid by merchants since 2008 to market supposed weight-loss products to consumers, and recruited a network of affiliate marketers who deceptively advertised those products.  The complaint also alleges that the defendants prepared and designed websites for Central Coast Nutraceuticals, a merchant that agreed to pay $1.5 million to settle FTC charges of deceptive advertising and unfair billing related to the sale of weight loss and colon cleanse products.

The FTC alleges that the defendants recruited affiliate marketers to advertise the merchants’ so-called weight loss products online.  Clickbooth then monitored the ads that its affiliates used, suggested certain claims for the affiliates to make, and even designed some websites for the affiliates to use, according to the complaint.  Marketing products such as Acai Pure, Acai Max, Pure Berry Max, Acai Advanced Cleanse, Acai Ultraberry Slim, TriSlim, Slimberry, HCG Extreme, ColoThin, Tone DeTox, and ColoPure, some Clickbooth affiliates designed their websites to look like news reports, using domain names such as channel5healthnews.com, dailyconsumeralerts.com, and online6health.com. The supposed news reports had titles such as “Acai Berry Diet Exposed:  Miracle Diet or Scam?” and “1 Trick of a Tiny Belly:  Reporter Loses her ‘Belly’ using 1 Easy Tip,” according to the FTC.  The sites often included the names and logos of major broadcast and cable television networks, falsely representing that the reports on the sites had been seen on the networks.

The defendants named in the complaint – John Daniel Lemp and two companies he controls, Clickbooth.com, LLC and IntegraClick, LLC – violated the FTC Act by making false or unsupported claims about weight loss products, the FTC alleges.  The Clickbooth defendants also are responsible for their affiliates’ misrepresentations that the affiliate marketers’ websites are objective news reports, that objective reporters have performed independent tests of the products, and that “comments” in the affiliate marketers’ ads have expressed views of actual consumers, according to the complaint.  The defendants’ affiliates failed to disclose that the contents of their advertisements actually were paid advertisements, and that consumers who sign up for a “free trial” would be billed on a recurring basis for additional shipments of the product, according to the FTC.

Two other recent settlements involving online affiliate network marketers of acai berry supplements and other weight loss products that made allegedly deceptive claims include the affiliate network Coleadium, Inc., which does business as Ads4Dough, and  IMM Interactive, Inc., which operated the affiliate network Copeac.

The FTC helps consumers recognize and avoid deceptive claims made by fake news sites that market acai berry supplements for weight loss.  To learn more, see the consumer alert THIS JUST IN: Fake News Sites Promote Bogus Weight Loss Benefits of Acai Berry Supplements, and the video Free Trial Offers, which explains how free trials are often used to market acai berry supplements and other products.

The FTC also is grateful for the assistance provided by the Florida Office of the Attorney General in this matter.

The Commission vote authorizing the staff to file the complaint and approving the proposed consent decree was 5-0.  The FTC filed the complaint and proposed consent decree in the U.S. District Court for the Northern District of Illinois, Eastern Division on November 13, 2012.

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 defendants have actually violated the law.  The consent decree is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated.  Consent decrees have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers 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, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.