By now, it shouldn’t be news. Using illegal spam and bogus news sites to convey false claims for diet products is bound to attract FTC attention. Oh, and did we mention the phony representation that the products were endorsed by Oprah and the people on the TV show "The Doctors"?
Those are just some of the allegations in a case the FTC has filed against Glendale, California-based Sale Slash, Purists Choice, Artur Babayan, and Vahe Haroutounian. How does the operation work? The defendants peddle a host of weight loss products which supposedly contain stuff like green coffee, garcinia cambogia, and “Premium White Kidney Bean Extract.” According to the complaint, one way they market the products is by misappropriating people’s email contacts lists. The defendants send – or hire affiliates to send – unsolicited messages that look to the recipients to be from friends, family members, or other contacts. To add to the authenticity, the heading often includes the purported sender’s name, reinforcing the impression that the email is from someone the recipient knows. The messages include glowing recommendations of the products, with linksto where consumers can buy them.
In addition, the defendants place banner ads – or get others to place them – with enticing claims like “1 Tip for a tiny belly: Cut down on a bit of your belly every day by following this 1 weird old tip.” (The campaign is ubiquitous. If you haven’t seen these ads, you may be the only person who needs to spend more time online.)
From bogus emails and banners, the defendants often steer consumers to fake news sites like the ones the FTC has challenged as deceptive in a host of other cases. Then there are sites with headlines like “Insider Report: Oprah and Other Celebrities Lose 4 lbs/Week of Belly Fat With This Secret Our Readers Can Try Now!” The sites promise easy weight loss without diet or exercise and advise haste because “Due to recently being featured on TV, we cannot guarantee supply.”
What’s the financial incentive for marketing methods like this? When a consumer clicks a link on a site or in an message to buy the product, it results in a cha-ching for whoever placed the link.
In addition to alleging that the defendants’ weight loss promises are deceptive, the complaint charges them with a host of CAN-SPAM violations, including false header information, misleading subject lines, and the failure to provide a functioning opt-out mechanism and a valid postal address. The FTC says the celebrity endorsements are equally phony.
A federal judge in California entered a temporary restraining order that freezes the defendants' assets. But even at this early stage, the lawsuit sends four messages to marketers:
- The FTC’s CAN-SPAM Rule draws clear lines between acceptable promotion and deceptive practices. Time for a refresher? Read CAN-SPAM Act: A Compliance Guide for Business.
- No diet, no exercise? No way. Making bogus weight loss claims could win you a one-way ticket to the center of the FTC’s law enforcement radar screen.
- Affiliate arrangements won’t insulate wrongdoers from liability. The FTC has taken action – and will continue to take action – against multiple links in the affiliate chain responsible for alleged violations of the law.
- Advertisers like to drop prominent names because they attract the attention of prospective buyers. But if celebrity endorsements are false, guess who else’s attention they attract. The FTC’s.