BULLETIN: Florida-based XM Brands Inc., Kenneth Jacobi Named In North Dakota Cease-And-Desist Order That Alleges Deceptive Trade Practices, Refusal To Cooperate In Probe; Firm Sells Acai Berry, Teeth-Whitening Products

BULLETIN: (UPDATED 6:10 P.M. EDT (U.S.A.) North Dakota Attorney General Wayne Stenehjem has issued a cease-and-desist order against Kenneth Jacobi and his company, XM Brands Inc., amid allegations of deceptive trade practices in the sale of acai berry and teeth-whitening products on the Internet.

Jacobi’s enterprises are based in Hollywood, Fla. In the order, North Dakota said it also had “concerns about the safety and efficacy of the products” sold by Jacobi and XM Brands and warned participants in the business not to destroy evidence.

“Efficacy” means effectiveness.

“XM Brands’ deceptive marketing practices are a ruse to trick consumers into unwanted or unauthorized purchases,” Stenehjem said. “Making it worse, because consumers often purchase the products via pop-up websites, it is very difficult for them later to locate the website to cancel.”

The PP Blog visited three websites referenced in the order by their URLs. All three sites — VividWhiteSmiles.com, MyEverBriteSmile.com and DazzlingWhiteSystem.com — were registered behind a proxy. North Dakota investigators said Jacobi and XM Brands “are believed” to own the sites.

The alleged scheme featured “free trial” or “negative option” marketing practices that tricked consumers and trapped them into making unwanted and unauthorized purchases, investigators said.

“Consumers unknowingly are enrolled by XM Brands in a membership program with automatic future shipments of products, and XM Brands charges the consumer’s credit card the full price of the product each month until the consumer is eventually able to cancel the enrollment,” Stenehjem said.

In the order to cease and desist, the state alleged that XM Brands and Jacobi “have refused to provide responses and produce documents” requested by the state after it launched an investigation May 6.

Parrell Grossman, director of North Dakota’s Consumer Protection division, advised consumers to be on the look out for scammers.

“Teeth whitening, anti-aging, acai berry, and diet pill products lend themselves to deceptive ‘free trial’ or ‘negative option’ marketing techniques,” Grossman said. “Steer clear of deceptive website solicitations and instead talk to your dentist, health care provider, or local health food store about safe and effective solutions.”

XM Brands is awash in a sea of complaints, North Dakota investigators said.

“One Better Business Bureau in Florida received over 1,000 complaints against XM Brands last year alone,” Stenehjem’s office said.

Florida also is investigating XM Brands, according to the website of Attorney General Bill McCollum. The Better Business Bureau of Southeast Florida and the Caribbean says it is compiling information on the firm and has received “numerous” complaints.

As of today, the BBB website referenced 1,387 complaints against XM Brands.

Read the cease-and-desist order, which references a number of names that may be associated with Jacobi’s business. The order applies to the businesses and their “officers, directors, owners, agents, servants, employees and representatives.”

Jacobi and XM Brands are “liable for their own misconduct and/or for directing others to engage in misconduct,” according to the order. The state issued a warning in the order that destruction of evidence or hiding documents and records could result in criminal prosecution.