The Federal Trade Commission has banned some marketers of dietary and skincare products from making deceptive claims and misleading consumers via fake news sites and online advertising and is making them cough up at least $6.4 million.
The FTC said a "vast network" of marketers have agreed to settle FTC charges they peddled over 40 weight loss, muscle building, and wrinkle reducing products using fake news sites, fake magazines, phone celebrity testimonials and more.
The settlement says the marketers were paid $179 million by their customers over more than five years, which is the size of the judgment, but will suspend all but $6.4 million after that amount is paid in cash and forfeiture of assets.
The fake news sites included ones posing as Good Housekeeping and Men's Health, with reporters and fake endorsements from Dr. Oz and Jennifer Aniston, among others. Oz exposed the unauthorized use of his name on an April 2014 episode of his syndicated show, after which they transitioned away from weight loss products toward muscle builders and wrinkle creams, the FTC pointed out in its complaint, but they continued to use other bogus celebrity endorsements for those.
The also used bogus "as seen on" CNBC, Fox News and CNBC come-ons on their Web sites.
According to the complaint and settlement, "Richard Fowler, Ryan Fowler, Nathan Martinez and the 19 companies they control (collectively operating as Tarr, Inc.) used deceptive offers and unsubstantiated claims and wound up charging hundreds of dollars for "no cost, risk-free" trials, in violation of the FTC Act, the Restore Online Shoppers Confidence Act and that Electronic Funds Transfer Act.
The court order approved by the Southern District of California "permanently bans the defendants from using negative option features to sell dietary supplements, cosmetics, foods, or drugs; products that are sold on a trial or sample basis; or products that are sold as add-ons when consumers purchase other products."
The FTC decision approving the settlement was 2-0. The FTC is down to one Republican, acting chair Maureen Ohlhausen, and one Democrat, Terrell McSweeny, but they don't need a quorum to act so long as they are in agreement.