Markets Wired

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 FTC helps consumers recognize and avoid deceptive claims made by fake news sites that market acai berries for weight loss.  To learn more, see the consumer alert Fake News Sites Promote Bogus Weight Loss Benefits of Acai Berry Supplements, and the video Free Trial Offers, which explains how free trials are often used to market acai berry supplements and other products.

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.

NOTE:  A settlement order is for settlement purposes only and does not constitute an admission by the defendants that the law has been violated.  Settlement orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.