FTC Cracking Down on Media Channels Running Deceptive Diet Ads (9)

FTC Updates Media Guidelines on Deceptive Diet Ads

Announces $34 Million in Settlements with Diet Product Marketers


The Federal Trade Commission Tuesday announced settlements with four diet product marketers for alleged false and deceptive advertising that will see $34 million returned to consumers, and at the same time released new media guidelines, an online tutorial tabbed "Gut Check," for helping media outlets spot and reject ads with facially false diet claims, something the FTC has been urging them to do since at least 2003.

But the FTC isn't waiting for media outlets to find the new guidelines. According to an FCC official, it is sending letters to 75 media outlets, trade associations and others with info on how to spot bogus claims and let those outlets know about the FTC resources available.

"Every time a con artist is able to place an ad for a bogus weight loss product on a television or radio station, in a newspaper or magazine, or on a legitimate website, it undermines the credibility of advertising and does incalculable damage to the reputation for accuracy that broadcasters and publishers work hard to earn," wrote Jessica Rich, director of the FTC's Bureau of Consumer Protection.

Connecticut-based LeanSpa LLC used fake news websites to promote its acai berry and "colon cleanse" weight loss products. The fake websites used online addresses designed to resemble legitimate news sites, including channel8health.com, dailyhealth6.com, and online6health.com.

The owners of LeanSpa, Boris Mizhen of Guilford and his wife, Angelina Strano were hit with a $32.72 million judgement against them and three weight loss businesses they own based in Branford following a settlement with the state of Connecticut and the Federal Trade Commission (FTC) over alleged deceptive and unfair marketing and sales practices.

Mizhen and Strano, don’t have the money to pay the full cost of the settlement associated with a 2011 federal lawsuit against their Branford-based businesses, LeanSpa LLC, NutraSlim LLC and NutraSlim U.K. Ltd., Connecticut Attorney General George Jepsen and Department of Consumer Protection Commissioner William Rubenstein said Tuesday.

So a court-appointed receiver will oversee the sale of real estate of Mizhen and Strano, as well as the liquidation and transfer of other assets.

The asset sale is expected to yield as much as $7 million, Jepsen said. Money from the settlement will be placed in an FTC-administered fund to be used to provide relief to an as yet undetermined number of consumers who have suffered harm as a result of the three companies actions.

The company allegedly charged $79.99 for trying LeanSpa, and made it difficult to cancel recurring monthly shipments.

Cases are still in the process against LeanSpa’s affiliate network and two other defendants.

Gut Check: http://www.business.ftc.gov/document...ht-loss-claims

CLAIM #1: Causes weight loss of two pounds or more a week for a month or more without dieting or exercise
CLAIM #2: Causes substantial weight loss no matter what or how much the consumer eats
CLAIM #3: Causes permanent weight loss even after the consumer stops using product
CLAIM #4: Blocks the absorption of fat or calories to enable consumers to lose substantial weight
CLAIM #5: Safely enables consumers to lose more than three pounds per week for more than four weeks
CLAIM #6: Causes substantial weight loss for all users
CLAIM #7: Causes substantial weight loss by wearing a product on the body or rubbing it into the skin

Originally Posted by gritz

Gut Check: http://www.business.ftc.gov/document...ht-loss-claims

CLAIM #1: Causes weight loss of two pounds or more a week for a month or more without dieting or exercise
CLAIM #2: Causes substantial weight loss no matter what or how much the consumer eats
CLAIM #3: Causes permanent weight loss even after the consumer stops using product
CLAIM #4: Blocks the absorption of fat or calories to enable consumers to lose substantial weight
CLAIM #5: Safely enables consumers to lose more than three pounds per week for more than four weeks
CLAIM #6: Causes substantial weight loss for all users
CLAIM #7: Causes substantial weight loss by wearing a product on the body or rubbing it into the skin

Federal Court Rules Affiliate Marketing Network and its Parent Company Must Turn Over $11.9 Million They Received From Deceptive Marketing Scheme
FTC and State of Connecticut Charged LeadClick Media with Operating a Network That Used Fake News Sites to Promote Diet Pills
FOR RELEASE https://www.ftc.gov/news-events/pres...ork-its-parent

A U.S. district court has ruled that LeadClick Media, an affiliate marketing network, and its parent company, CoreLogic, Inc., must turn over $11.9 million in ill-gotten gains they received from a deceptive marketing scheme that sold purported weight-loss products.

In granting the FTC’s request for summary judgment, the court ruled that LeadClick was responsible for the false claims made by affiliate marketers it recruited on behalf of LeanSpa, LLC, a company that sold acai berry and “colon cleanse” weight-loss products. According to the FTC's complaint, LeanSpa used a “free trial” ploy to enroll consumers into its recurring purchase program that cost $79.99 a month and that was difficult to cancel.

LeadClick’s network lured consumers to LeanSpa’s online store through fake news websites designed to trick consumers into believing that independent news outlets and independent customers, rather than paid advertisers, had reviewed and endorsed LeanSpa’s products.

“This ruling is good news because it takes ill-gotten gains out of the hands of companies who knew they were promoting a scam and gives them back to the consumers who lost millions of dollars,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “It also makes clear that a parent company cannot retain ill-gotten gains of its subsidiaries.”

The FTC’s case dates back to December 2011, when the Commission and the State of Connecticut first sued LeanSpa and its principal, Boris Mizhen. In January 2014, the FTC and the State of Connecticut settled with LeanSpa and Mizhen, who agreed to stop their deceptive practices and surrender assets for redress to consumers.

In the summary judgment ruling, the court held that the fake news sites developed by LeadClick’s affiliates deceived consumers by using real news organization names and logos along with purported testimonials from users of LeanSpa’s products. In finding LeadClick responsible for the deceptive content on its affiliates’ websites, the court noted that LeadClick recruited the affiliates, had power to approve or reject their marketing websites, paid the affiliates, purchased advertising space for them, and gave them feedback about the content of their sites. The court also rejected LeadClick’s claim that it was immune from liability under Section 230 of the Communications Decency Act, because it was responsible in part for the fake news sites promoting LeanSpa’s products.

The court ordered LeadClick to give up the $11.9 million it received from LeanSpa as payment for its affiliate marketing services. It also ruled that LeadClick’s parent company, CoreLogic, must disgorge $4.1 million in ill-gotten gains it received from LeadClick, as part of the $11.9 million total judgment. LeadClick and CoreLogic are appealing the decision.

Funds recovered from the defendants will be used by the FTC to provide redress to consumers affected by the scam.

Karma Is A Bitch

Wondering if we put everything the FTC wants on these advertorials sites, it's not will be targeted as well

Originally Posted by cmdeal

Federal Court Rules Affiliate Marketing Network and its Parent Company Must Turn Over $11.9 Million They Received From Deceptive Marketing Scheme
FTC and State of Connecticut Charged LeadClick Media with Operating a Network That Used Fake News Sites to Promote Diet Pills
FOR RELEASE https://www.ftc.gov/news-events/pres...ork-its-parent

A U.S. district court has ruled that LeadClick Media, an affiliate marketing network, and its parent company, CoreLogic, Inc., must turn over $11.9 million in ill-gotten gains they received from a deceptive marketing scheme that sold purported weight-loss products.

In granting the FTC’s request for summary judgment, the court ruled that LeadClick was responsible for the false claims made by affiliate marketers it recruited on behalf of LeanSpa, LLC, a company that sold acai berry and “colon cleanse” weight-loss products. According to the FTC's complaint, LeanSpa used a “free trial” ploy to enroll consumers into its recurring purchase program that cost $79.99 a month and that was difficult to cancel.

LeadClick’s network lured consumers to LeanSpa’s online store through fake news websites designed to trick consumers into believing that independent news outlets and independent customers, rather than paid advertisers, had reviewed and endorsed LeanSpa’s products.

“This ruling is good news because it takes ill-gotten gains out of the hands of companies who knew they were promoting a scam and gives them back to the consumers who lost millions of dollars,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “It also makes clear that a parent company cannot retain ill-gotten gains of its subsidiaries.”

The FTC’s case dates back to December 2011, when the Commission and the State of Connecticut first sued LeanSpa and its principal, Boris Mizhen. In January 2014, the FTC and the State of Connecticut settled with LeanSpa and Mizhen, who agreed to stop their deceptive practices and surrender assets for redress to consumers.

In the summary judgment ruling, the court held that the fake news sites developed by LeadClick’s affiliates deceived consumers by using real news organization names and logos along with purported testimonials from users of LeanSpa’s products. In finding LeadClick responsible for the deceptive content on its affiliates’ websites, the court noted that LeadClick recruited the affiliates, had power to approve or reject their marketing websites, paid the affiliates, purchased advertising space for them, and gave them feedback about the content of their sites. The court also rejected LeadClick’s claim that it was immune from liability under Section 230 of the Communications Decency Act, because it was responsible in part for the fake news sites promoting LeanSpa’s products.

The court ordered LeadClick to give up the $11.9 million it received from LeanSpa as payment for its affiliate marketing services. It also ruled that LeadClick’s parent company, CoreLogic, must disgorge $4.1 million in ill-gotten gains it received from LeadClick, as part of the $11.9 million total judgment. LeadClick and CoreLogic are appealing the decision.

Funds recovered from the defendants will be used by the FTC to provide redress to consumers affected by the scam.

what happened to the affiliates?

If we take a step back for a moment, and look at things logically, this move by the FTC is actually a win for those of us running legit businesses and looking for long-term profitable relationships within the industry.

We don't want the term 'affiliate' to be publicaly viewed as some guy in his underwear running scammy ads from his bedroom.

Were not? LOL