The marketers behind an online scheme that the Federal Trade Commission charged with deceptively using fake news websites to market acai berry supplements and other weight-loss products have agreed to pay more than $1.6 million in settlements that will permanently halt their operation.
The two proposed settlements conclude the FTC’s 10-case sweep against online marketers that allegedly used fake news sites to promote weight-loss products. Collectively, the defendants in the sweep and in two additional cases against associated affiliate networks have agreed to pay more than $9.4 million to settle the charges against them.
As part of the FTC’s ongoing crackdown on bogus health claims, the settlements require the defendants to make it clear when their commercial messages are advertisements rather than objective journalism. The settlements also bar the defendants from further deceptive claims about any product or service, including the acai berry weight-loss supplements, colon cleansers, teeth whiteners, work-at-home plans, and surplus auctions that they marketed. The defendants also must disclose any material connections they have with merchants.
The settlements with Beony International and owner Mario Milanovic, and Beony International employee Cody Adams, each impose a $13 million judgment, which will be suspended when the defendants pay over $1.6 million and sell a 2008 Porsche. If it is later determined that the financial information the defendants provided the FTC was false, the full amount of their judgments will become due.
At the request of the FTC in 2011, federal courts temporarily halted the Beony operation and nine others. In its cases against these 10 schemes, the FTC alleged that their websites were designed to appear as if they were part of legitimate news organizations, but were actually nothing more than advertisements deceptively enticing consumers to buy acai berry weight-loss products featured in the “news reports.” With titles such as “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News,” the sites often falsely represented that the reports they carried had been seen on major media outlets such as ABC, Fox News, CBS, CNN, USA Today, and Consumer Reports. Investigative-sounding headlines presented stories that purported to document a reporters’ first-hand experiences with acai berry supplements—typically claiming to have lost 25 pounds in four weeks, according to the FTC complaints.
The Commission vote authorizing the staff to file the proposed settlement orders against Beony International and Mario Milanovic, and against Cody Adams were 4-0-1, with Commissioner Maureen K. Ohlhausen not participating.