The Federal Trade Commission (FTC) has pressed charges on affiliate marketing operations accused of deceptively advertising açaí weight-loss supplements online. FTC filed 10 separate complaints requesting that federal courts halt the operations of these internet marketing schemes, which use fake news websites to draw customers to sellers of açaí products.
The defendants (operating under company names like Beony International, Coulomb Media and Intermark Communications) run websites that illegally display the logos of prominent news organizations, like CNN, USA Today and Consumer Reports, and display false reports from non-existent journalists extolling the weight-loss virtues of açaí. These false investigations—meant to entice skeptics with headlines like “Açaí Berry Diet Exposed: Miracle Diet or Scam?”—are positioned as objective reporters' personal experiments with the supplements, but usually end with ludicrous claims of losing 25 pounds in four weeks, according to FTC. The fake reporter is typically given a byline and a photo, and on several of the websites, FTC has identified the photo as a misappropriated headshot of French journalist Melissa Theuriau.
FTC has yet to name any of the companies responsible for actually selling the supplements—which go under names like LeanSpa and Max Cleanse Pro—as it has yet to root out any merchants involved. Affiliate marketing is a mazy operation, easily obscuring the original source. Ads are posted on high-trafficked sites, email servers and search engines, which then lead to various fake websites and eventually to the merchants' sites.
"Tens of billions" of ads
In an April 18 press conference, FTC staff attorney Steve Wernikoff addressed the magnitude of the açaí scams, stating that “tens of billions” of such advertisements were present on various websites. Collectively, the ten defendants in FTC's case paid over $10 million to advertise and maintain their false websites, Wernikoff added, implying that they made millions more in revenue from the açaí merchants.
Chuck Harwood, FTC's deputy director of consumer protection, noted in the press conference that numerous consumers complained of paying up to $70 to $100 for açaí products once on the merchant website, foisted by dubious trial memberships and auto-charging schemes.
These affiliate marketing schemes are not unique to açaí, however. Everything from teeth whitening ads to work-from-home offers to “Pres Obama want to give you Free Cash you could be Cashing your Federal Check In as little as 12 days” are apt to grace your inbox or Google search. FTC's staffers often repeated that their bent was on squashing devious affiliate marketing. Adam Sokol, of the Illinois Attorney General's Office, stated that the charges are “not an indictment of the açaí berry,” but simply an attempt to rout deceptive marketing.
NBJ Bottom Line
Açaí will have to burn, however, as its prevalence in online marketing and uniquely egregious advertisements offer FTC the best case to build upon. Harwood noted that FTC had a substantial history of law enforcement involving açaí weight-loss supplements, harking back to a 2010 case filed against açaí marketer Central Coast Nutraceuticals over devious claims.
And affiliate marketers make outlandish and unsubstantiated weight-loss claims on their fake news sites, representing a materially evident breach of acceptable advertising.
It's unlucky for açaí that the Commission chose it to set precedent, but since little to no evidence links the berry to weight loss, the case could clear out some of the noise surrounding the super fruit. Consumer interest waxes and wanes when it comes to fad ingredients and super fruits, but açaí supplements showed no signs of slowing last year. Despite heavy sales losses at leading açaí direct-seller Monavie, NBJ pegs the U.S. consumer market for açaí supplements at $349 million in 2010, growing 18% over 2009 sales.
Also, a stronger leash on affiliate marketers could have strong benefits for the weight-loss market in general. As much as the ban on ephedra or the Hydroxycut recall, the proliferation of devious and overblown claims in internet and television advertisements in the last decade has added to consumer resistance to weight-loss products in general. A little less spam might do the industry some good.