FTC: Acai-Berry Scammers Created ‘Fake’ News Sites And Traded On Famous Name Of ‘Consumer Reports’ To Fleece The Masess; Letters ‘CNN’ Were Used In Web Domains In Illinois, State AG Says

This "fake" news site is now known as "Exhibit A" in the FTC's case against alleged acai-berry scammers.

EDITOR’S NOTE: If this federal and state action doesn’t get the attention of the out-of-control, direct-sales crowd that divines itself the right to plant the seed that an “offer” is endorsed by famous companies and people, well, perhaps nothing will. Even as this story is being written, affiliates of Club Asteria, a purported “passive” investment company, are planting the seed that the firm is endorsed by Google, Yahoo, MSN and America Online. Club Asteria promoters also routinely trade on the name of the World Bank. Club Asteria is being pitched on forums populated by serial Ponzi scheme promoters.

UPDATED 2:23 P.M. EDT (U.S.A.) One of the most cherished brand names in the United States — “Consumer Reports” — was appropriated by acai-berry hucksters to confuse the marketplace and rip off customers, the FTC charged today.

As the PP Blog reported Friday in advance of the FTC’s formal news conference this morning, “fake” news websites also were used in the alleged scam. The FTC announced today that it was seeking an asset freeze against 10 acai-berry operations. The actions were brought in federal courts in Washington state, Illinois, Michigan, New Jersey, New York and Georgia.

Illinois brought its own action at the state level against an alleged acai huckster in Sauk Village, near Chicago.

“Almost everything about these sites is fake,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “The weight loss results, the so-called investigations, the reporters, the consumer testimonials, and the attempt to portray an objective, journalistic endeavor.”

Lisa Madigan, the attorney general of Illinois, said the scheme also masked a continuity-billing fraud while confusing the public about what is real and what is not.

“Consumers across the country visit these fake marketing sites that are carefully — and illegally — disguised to represent professional news organizations, only to wind up unknowingly debited for extra diet products,” Madigan said. “These Internet con artists are profiting from their purposely deceptive marketing ploys.”

Consumer Reports itself was affected in the brazen scheme, according to court filings. The publication, which is published by Consumers Union of Yonker’s, N.Y., is an American treasure that readers rely on for unbiased news and reviews.

The magazine filed an affidavit in the FTC case that advised a federal judge about the unauthorized trading on its name.

The website consumerproductsdaily.com, which has no tie to Consumer Reports or any of its websites, used language such as “As seen on . . .” followed by the logos for Consumer Reports and other news outlets, Consumer Reports said.

“Consumers Union has no affiliation with consumerproductsdaily.com or with any other website using the Consumer Reports logo in a similar fashion,” Consumer Reports said. “Consumers Union has never licensed or in any way authorized the use of the Consumer Reports trademark in connection with the website consumerproductsdaily.com or with any website employing a similar format.”

Injury to the Consumer Reports brand and confusion about perceived ties to acai-berry companies were not just limited to the consumerproductsdaily.com site, according to the affidavit.

“Additionally, Consumers Union has received numerous complaints and inquiries from consumers regarding web sites with a format similar to consumerproductsdaily.com, including consumerdigestweekly.com, weeklyhealthnow.com, healthnews10.com, and health9news.com,” Consumer Reports said. “Many of the complaints voiced concern that these web sites were infringing the Consumer Reports trademark, while other complaints questioned Consumer Reports’ affiliation with these web sites.”

For its part, the FTC said the “fake news sites” also used titles such as “News 6 News Alerts,” “Health News Health Alerts” and “Health 5 Beat Health News.”

“The sites often include the names and logos of major media outlets — such as ABC, Fox News, CBS, CNN, USA Today, and Consumer Reports — and falsely represent that the reports on the sites have been seen on these networks,” the agency said.

How slow were some affiliate marketers to take the clue that this form of marketing had come on federal radar screens? Even as marketers were using the name of Consumer Reports to hawk the alleged acai scam, the magazine was warning readers about  fake news sites pitching acai products.

Even after today’s actions, some affiliates are continuing to use the very template the government now describes as “Exhibit A” in a fraud case.

Charged by the FTC were Beony International LLC, Mario Milanovic and Cody Adams; Zachary S. Graham, Ambervine Marketing LLC and Encastle Inc.; Intermark Communications Inc. also doing business as Copeac and IMM Interactive; Ricardo Jose Labra; Thou Lee, also doing business as TL Advertising; Circa Direct LLC and Andrew Davidson; Coulomb Media Inc. and Cody Low, also known as Joe Brooks; DLXM LLC, and Michael Volozin, also known as Mikhail Volozin; Charles Dunlevy; Tanner Garrett Vaughn, also doing business as Lead Expose Inc., and Uptown Media Inc.

Named in Madigan’s complaint in Illinois was Ishmael Lopez Jr. Investigators there said at least two sites linked to Lopez used the letters CNN in their domain names, according to the complaint.

View government “Exhibit B,” which the FTC says outlines how the scheme was designed to work.