The FTC has settled its case against Circa Direct and its owner Andrew Davidson for advertising acai berry products with fake news headlines such as, “Acai Berry Diet Exposed: Miracle Diet or Scam?”
The FTC, which polices deceptive advertising, charged Davidson and Circa Direct with making “false and unsupported claims” about the acai berry products and failing to disclose that the news was in fact paid advertising.
“In many cases they’re making unsubstantiated claims for what are basically physiologically impossible levels of weight loss,” said Laura Sullivan, an FTC attorney involved with the case.
Davidson’s group paid legitimate websites to place the ads that posed as headlines. Davidson was also linked to the “one simple trick” group of ads. Users clicking on either of these ads were taken to a landing page, which appeared to contain articles written by reporters who had tried the products. The authors were not reporters and the events recounted in the articles were not real.
The FTC has brought cases against 10 similar companies hawking acai berry products. The advertising was part of an affiliate marketing program. Affiliate programs give advertisers a percentage of sales and are a favorite compensation structure for spam operations.
“It can be a very profitable enterprise, unfortunately for consumers because that means that’s the scale of the harm,” Sullivan said.
Davidson and Circa were not required to admit to wrongdoing as part of the settlement. Instead, the FTC has posted a notice for consumers, advising them that the content is in fact advertising.
Davidson will have to give up all of the profits from the deceptive practices. Although a court technically imposed a $11.5 million judgment, the FTC has agreed to settle for about $2 million in assets, including money from Davidson’s personal and corporate bank accounts, investment and retirement accounts and proceeds from the sale of a Margate, New Jersey, home and a 2010 Nissan Maxima.
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