The Federal Trade Commission (FTC) announced a $1.9 million proposed settlement with two marketers behind an alleged online scheme to use fake news websites to market acai berry supplements and other weight-loss products. Their operations are stopped permanently by the settlement, the FTC said.
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, the FTC said. 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.
The settlements require the defendants to make it clear when their commercial messages are advertisements rather than objective journalism, the FTC said. Also, the settlements 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 FTC filed its Complaint for Permanent Injunction and Other Equitable Relief against the marketers, alleging deceptive acts or practices and false advertisements in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. secs. 45(a) and 52. The Stipulated Final Judgment and Order was issued by the U.S. District Court for the Northern District of Illinois.
The two proposed settlements conclude the FTC’s 10-case sweep against online marketers who allegedly used fake websites 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, according to the FTC’s February 7, 2013 press release.
The FTC’s announcement notes that 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.