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FTC settles with companies over fake weight-loss ads on Web

By Trine Tsouderos, Chicago Tribune –

CHICAGO — If you have gone near a computer in recent years, you have probably seen Internet ads that promise weight loss through “1 weird old tip” and show a belly going from fat to flat. Or the ads with a “shocking,” “urgent warning” about acai berries. Or the one featuring a fit blonde doing a pushup with the words “I got skinny real fast! See how I lost 25 pounds in just 3 weeks. Click here now!”

If you were unable to resist, you were likely whisked to what appeared to be a news site featuring an investigation into the wonder of some product, available for a free trial. Maybe you remember a reporter, perhaps Julia Millar at News 6, who gushed, “I couldn’t be any happier with the results.”

Millions of people clicked on these ads, which ran tens of billions of times, according to the Federal Trade Commission. Millions of people signed up for the free trial offer.

The problem was, the whole thing was fake, according to the FTC. The health claims were fake, the news sites were fake, the testimonials were fake, the glowing comments under the stories were fake and, often, the free trial wound up being fake — as many consumers later realized when they found unwanted charges on their credit cards.

And Julia Millar at News 6 who lost an astonishing 25 pounds in four weeks on a combination of acai berries and a colon cleanser? She’s fake too, though the photo is of a real and unwitting person, French newswoman Melissa Theuriau.

“Consumers really were hoodwinked,” said Steven Wernikoff, an FTC attorney based in Chicago.

On Wednesday, the FTC announced settlements with two companies and related defendants it says were involved with these kinds of ads — New York-based Copeac and Michigan-based Coulomb Media. Both federal lawsuits were filed in 2011.

Under the settlement, defendants in the Copeac case will pay $1.35 million, according to court records. Defendants in the Coulomb case will pay $171,000, plus a certificate of deposit and proceeds from the sale of a Chevrolet Tahoe, if they don’t violate the terms of the agreement, according to court records.

The agreements are the latest in a series of settlements of cases brought by the FTC in an ongoing crackdown against the purveyors of these sites, an industry the federal agency estimates has raked in $1 billion.

In February, the FTC settled with Jesse Willms, a young Canadian ordered to turn over up to $359 million, sell his home and hand over a $12,000 fur coat, a $30,000 fish tank, a Red Bull drink machine and his Cadillac Escalade, among other items, all to be sold.

Settlement money will be used for restitution and consumer education efforts, according to the FTC, which points consumers seeking redress to its website. Anything left over will be deposited into the U.S. Treasury.

In settling the lawsuits, the defendants are not admitting guilt or agreeing they have violated the law.

In a statement sent by his lawyer, Willms said his company no longer sells the products in question. “We have taken steps to assure that our business practices are in full compliance with the law,” he wrote.

Attorney Richard B. Newman of the law firm of Hinch Newman LLP, representing Coulomb Media, had no comment. An attorney who represented Copeac on the case did not return emails or calls.

The FTC lawsuits — 10 since 2010 — offer consumers a window into the Darwinian world of Internet advertising, in which companies and individuals battle for attention and, more importantly, cash from the hundreds of millions of global consumers online at any given moment.

Wernikoff said the FTC’s investigation began several years ago with complaints filed by consumers who complained that they thought they were signing up for free trial offers but found they were actually being charged between $70 and $100.

“Even setting aside all of the ads that were junking up the Internet, the consumers were complaining a lot about purchasing products from different merchants and being confused about what the terms were,” he said.

When FTC staff began digging into how consumers learned about the products — often colon cleansers and other dietary supplements — they found the fake websites tied to teaser ads flooding the Internet, he said.

The FTC says the “news” sites connected to these companies have been shut down, though a Google search pulls up many similar pages, suggesting they remain widespread online.

Wernikoff said the massive proliferation of these ads, many of them identical or nearly identical although the products being marketed may be different, was not due to any coordinated effort. Instead, it was simple copycatting of ads and websites that generated clicks.

The bottom line for consumers, Wernikoff said: If an offer or health claim seems too good to be true, it probably is. And, he said, legitimate news organizations don’t generally sell products they review.

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