Fake News Site Operator Marketing Acai Berry Products to Surrender All Assets
An operation that allegedly used fake news websites to deceptively market acai berry weight-loss products will pay more than $2 million to settle federal charges.
Last year, the Federal Trade Commission (FTC) charged defendants Circa Direct LLC and Andrew Davidson with running internet advertisements designed to look like news websites, with misleading titles such as "News 6" and "New Jersey Job Report." The websites purported to provide investigative journalists' reports on weight-loss products, work-at-home schemes, and penny auctions, but, according to the FTC, the sites were actually deceptive ads.
The FTC accused Circa Direct and Davidson, the company's owner, of making false and unsupported claims about acai berry products and failing to disclose their financial relationship to the sellers of the products and services promoted on the fake news sites. In one fake news story, for example, a "reporter" claimed to have lost 25 pounds in four weeks using a supplement.
The settlement imposes a judgment of nearly $11.5 million. The monetary judgment will be suspended when the FTC receives assets worth more than $2 million from the defendants' personal and corporate bank accounts, investment and retirement accounts, and proceeds from the sale of a home in Margate, New Jersey, and a 2010 Nissan Maxima.
Under the settlement, Circa Direct and Davidson are required to make clear when their commercial messages are advertisements rather than objective journalism. They are also required to disclose any financial connections they have with merchants.
The defendants are further barred from making deceptive claims about health-related products, such as the acai berry weight-loss supplements they marketed, and from making deceptive claims about other products, such as work-at-home schemes or penny auctions.
The FTC sued Circa and Davidson as part of a law enforcement sweep against 10 affiliate marketing operations accused of using fake news websites to market acai berry weight-loss products. The FTC has reached similar settlements with eight of the other operations.