A push by the Federal Trade Commission to dismantle fake news Web sites that allegedly market bogus weight-loss products has derailed nearly a dozen companies this year, including one that the agency accused of bilking more than $25 million from U.S. consumers.
In a complaint filed Thursday, the FTC accused a Connecticut-based operation of hiring marketers to create sites that appeared to belong to legitimate news organizations, such as channel8health.com. Those sites would publish phony stories about the wonders of acai berry dietary products, the FTC said. They would use fake reporters who made false claims about their own experiences with the products. And they would mislead consumers into thinking they were offering a no-strings-attached free trial, the FTC said.
The case is related to a larger sweep the FTC announced in April, when it persuaded a judge to temporarily halt 10 operations that used the same tactics to sell similar supplements. That ongoing probe led the FTC to investigate Boris Mizhen, Lean Spa and two other firms Mizhen controls. At the FTC’s request, a U.S. District Court has frozen Mizhen’s assets and temporarily stopped his businesses from operating.
Mizhen’s attorney did not respond to requests for comment.
The government’s crackdown has helped cut back on deceptive marketing and billing practices linked to fake sites, said Steve Baker, director of the FTC’s Midwest regional office. But the lure of big bucks keeps attracting new scammers, he said.
“What we find with scams is that they copy each other and they continue as long as they’re making money,” Baker said.
In Thursday’s complaint, which the FTC filed jointly with the state of Connecticut, the government said Mizhen’s firms would attract consumers in several ways.
Sometimes, the marketers hired by his firms would place eye-catching ads on legitimate news sites. One ad featured an animated drawing of a woman’s bare midriff that would bulge and contract, with a headline promising “1 Tip for a Tiny Belly.”
Clicking on the ad would route consumers to fake news sites with stories that were sometimes written by “reporters” who claimed to have shed up to 25 pounds in four weeks after using Mizhen’s products. The stories had hyperlinks that enabled consumers to purchase the supplements, which included LeanSpa, NutraSlim and SlimFuel.
Aside from the fake weight-loss results, the sites also misled consumers into believing they were signing up for a free trial, though they had pay a nominal shipping and handling fee of less than $5, said David Dulabon, an FTC staff attorney in New York.
To pay for the fees, consumers would be asked to provide their credit card or debit card information. But the consumers were unwittingly enrolled in a continuity program that enabled Mizhen’s firms to automatically send products each month and charge each consumer $80 for one product or about $160 for two, Dulabon said.
“The other thing that was problematic is that consumers had a tough time canceling this continuity program,” he said.
Mizhen’s merchants would hire independent firms to set up merchant accounts at several banks to process credit and debit card transactions. None of the firms or banks were named in the FTC complaint.