The proposed settlements will require that the six operations make clear when their commercial messages are advertisements rather than objective journalism, and will bar them from making further deceptive claims about health-related products, said the FTC.
They must also collectively pay roughly $500,000 to the FTC because their advertisements violated federal law.
Millions of consumers lured onto fake news sites
Federal courts temporarily halted these operations and four others last year at the request of the FTC following allegations that millions of consumers had been lured onto websites selling supplements via third party websites purporting to be from reputable news organizations.
These (entirely fake) ‘news’ sites typically featured skeptical reporters that were subsequently wowed by the miracle weight loss effects of acai, with many claiming to have lost 25lbs in a month without otherwise altering their diet or lifestyle.
Meanwhile, firms behind the fake sites had spent millions buying ad space on reputable sites to ensure click throughs to their fake news sites, and in turn click throughs to merchant sites selling the supplements, claimed the FTC.
The FTC received numerous complaints from consumers who had paid $70-100 for acai weight-loss pills after reading reports on the fake news sites.
The settlements
- Judgments against the defendants will be suspended when the FTC receives the following assets from them:
- Ricardo Jose Labra’s $2.5m judgment will be suspended when he pays $280,000 and records a $39,500 lien on his home.
- Zachary S. Graham’s (Ambervine Marketing and Encastle) $953,000 judgment will be suspended when he pays $110,000 plus most of the proceeds from the sale of a truck.
- Tanner Garrett Vaughn Vaughn’s $203,000 judgment will be suspended when he pays close to $80,000 over a three-year period.
- Thou Lee Lee’s $204,000 judgment will be suspended when he pays $13,000 plus the proceeds from the sale of a BMW.
- Charles Dunlevy’s $143,000 judgment will be suspended when he pays an estimated $2,000 from frozen assets and the sale of a boat.
- DLXM, LLC and Michael Volozin’s $594,000 judgment will be suspended because of the defendants’ inability to pay.
Ongoing crackdown
The settlements are the latest in a series relating to online acai berry marketers, with defendants in the recent Central Coast Nutraceuticals case (click here for details) required to pay $1.5m.
The FTC has also acted against LeanSpa, which it sued in conjunction with the State of Connecticut, and Jesse Willms. (Click here for details.)
While a growing body of clinical evidence suggests free-radical-scavenging acai berries can deliver exciting cardiovascular and other benefits, they do not help you to lose weight, claim experts.
Speaking to NutraIngredients-USA last year, AIBMR Life Sciences chief executive Dr Alex Schauss - an expert on the science behind acai – said it was “about time” the FTC cracked down on firms making claims about acai and weight loss.
He added: “It’s incredibly frustrating and really quite intolerable that they are making these fraudulent claims about losing weight when there is such strong science behind acai’s genuine benefits. It’s distracting attention from the really exciting research on this extraordinary antioxidant.”