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Tag: acai berry scams

  • URGENT >> BULLETIN >> MOVING: FTC Goes To Federal Court To Block Alleged $467 Million Scam Operating Globally Online; International Cooperation Cited In Exposing Colossal Fraud Caper, Officials Say

    David Vladeck of the FTC.

    BULLETIN: UPDATED 3:50 P.M. EDT (U.S.A.) The FTC has gone to federal court to halt what it described as a $467 million, online fraud scheme operating across international borders. The scheme was exposed through international cooperation among the FTC, the Canada Competition Bureau, Service Alberta, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud, the Edmonton Better Business Bureau and the BBB of Southern Nevada, officials said.

    Charged in the case were Jesse Willms, Peter Graver, Adam Sechrist, Brett Callister, Carey L. Milne and several companies.

    Willms, a Canadian, released a statement on his website that described the FTC case as a “disagreement.”

    “We believe our business practices are compliant with the law and are working to resolve this disagreement with the appropriate government agencies,” the statement attributed to Willms read in part.

    The FTC had a far different take.

    Part of the scheme falsely traded on the names of Oprah Winfrey and Rachael Ray while also making false claims of cancer cures and weight loss, the FTC charged. In fact, the FTC said, Winfrey has sued Willms.

    Named corporate defendants by the SEC were: 1021018 Alberta Ltd., also doing business as Just Think Media, Credit Report America, eDirect Software, WuLongsource and Wuyi Source; 1016363 Alberta Ltd., also doing business as eDirect Software; 1524948 Alberta Ltd., also doing business as Terra Marketing Group, SwipeBids.com and SwipeAuctions.com; Circle Media Bids Limited, also doing business as SwipeBids.com, SwipeAuctions.com, and Selloffauctions.com; Coastwest Holdings Ltd.; Farend Services Ltd.; JDW Media LLC; Net Soft Media LLC, also doing business as SwipeBids.com; Sphere Media LLC, also doing business as SwipeBids.com and SwipeAuctions.com; and True Net LLC, also doing business as Selloffauctions.com.

    In addition to using the names of Winfrey and Ray, the scheme also traded on the famous names of CNN, USA Today, CBS, the “60 Minutes” television show and other brands, the FTC said.

    “None of these entities have endorsed or positively reported on any of the 10 Willms defendants’ products,” the FTC said. The agency added that financial service-providers were duped and manipulated into processing payments for the alleged scam, in part through the creation of “dummy” websites designed to sanitize the scheme.

    “Shell corporations” also were used to hoodwink service-providers, the FTC alleged. Consumers were fleeced out of at least $412 million in the scam, which netted nearly half a billion dollars, the agency charged.

    The heart of the scheme was a continuity-billing fraud in which consumers who responded to “free” trial offers were billed for products and services they never requested, the agency said.

    “The defendants used the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit card and bank accounts,” said David C. Vladeck, director of the FTC’s Bureau of Consumer Protection. “‘Free’ must really mean ‘free’ no matter where the offer is made.”

    A Canadian official said cross-border cooperation was vital as agencies combat online fraud schemes.

    “Internet fraud is a global problem that requires an international enforcement response,” said Lisa Campbell, deputy commissioner of competition for the Competition Bureau of Canada. “International cooperation ensures that fraudsters can’t hide behind borders.”

    Auction fraud also was part of the massive scam, the FTC said.

    “Willms and 10 companies he controls used deceptive tactics in offering ‘free trials’ for various products online, including acai berry weight-loss pills, teeth whiteners, and health supplements containing resveratrol (the supposedly healthful ingredient in red wine), as well as for a work-at-home scheme, access to government grants, free credit reports, and penny auctions,” the FTC said.

    Penny auctions, the agency said, are “online auctions in which consumers must purchase bids, usually for $0.50 to $1 each. Regardless of whether a consumer actually wins a penny auction, the consumer has paid for each bid he or she placed during the auction. However, each bid that is placed raises the price of the auctioned item by a penny.”

    “Willms and his companies obtained consumers’ credit or debit card account numbers, by enticing them with bogus ‘free’ or ‘risk-free’ trial offers that supposedly required only small shipping and handling fees, and also promised phony ‘bonus’ offers just for signing up,” the FTC said.

    Consumers, though, often were “charged for the ‘free’ trial plus a monthly recurring fee, typically $79.95,” the agency said.

    Making matters worse, the agency alleged, consumers also were “charged monthly recurring fees for the so-called bonus offers,” the agency said.

    A purported money-back guarantee was no remedy because “consumers were often unsuccessful in canceling the charges or obtaining refunds, and the process involved time-consuming phone calls and other steps that made the deals far from risk-free.”

    Meanwhile, the “penny auctions” were corrupt, the agency charged.

    “The complaint charges that the defendants’ penny auction offers falsely indicated consumers would receive free ‘bonus’ bids, but those who provided credit or debit card numbers to facilitate future auction buying were hit with charges they did not know about, including $150 for introductory ‘bonus’ bids and $11.95 per month for ongoing ‘bonus’ bids,” the FTC charged.

    Winfrey and Ray never endorsed the program, despite the appearance that they had, the FTC said.

    Affiliate marketers in pursuit of commissions helped the massive fraud scheme go viral, affecting consumers in the United States, Canada, the United Kingdom, Australia and New Zealand, the FTC said. Important details were buried in the “fine print,” the agency charged.

    The complaint was filed in federal court in Seattle. Willms resides in Alberta, according to the complaint. Graver, Callister and Milne are from Utah. Sechrist lives in Pennsylvania.

    Some of the corporate defendants are from Canada. Others are from England, Cyprus, Utah, Idaho and Nevada, according to the complaint.

    “Offshore merchant banking services” were used as part of the scam, the FTC said.

    “Because these corporate defendants have operated as a common enterprise, each of them is jointly and severally liable for the acts and practices,” the FTC said.

  • MOTHER’S DAY FANTASY POST: Legendary MLM Scammer Phil Pumpernickel Says He’ll Package ‘Troll Spray’; Fraudster Announces He’ll Coax Affiliates To Trade On Donald Trump’s Name To Reel In The ‘Birthers’

    EDITOR’S NOTE: The “story” below is not real. The PP Blog occasionally presents fantasy posts, parody and satire as a means of advancing the discussion about issues in the world of online crime and marketing schemes.

    SOUTH FLORIDA (PPBlog) — Phil Pumpernickel, the unapologetic scammer who once started an “opportunity” that hawked caskets MLM-style after telling the world he was moved to do so after being reduced to tears by the “fine Christian” conducting his “sainted grandmother’s” funeral, is getting in the “troll spray” business.

    Pumpernickel said he decided to “seize the moment” and launch a new frauduct after being impressed by a photographic depiction of troll spray used as an avatar on Scam.com by a fellow MLM aficionado doing battle with critics.

    “Those people who speak out against MLM and all the so-called ‘scams’ are just a bunch of bigots,” Pumpernickel said. “They’re all a bunch of mindless trolls. Many of them not only are anti-MLM, but are anti-American.

    “I mean, they actually think Obama was born in the United States,” he protested. “I’m so glad I saw that avatar. It’s important for trolls to be put in their place and dressed down in public. All the best MLMers are doing that now — that and coming up with great, highly descriptive terms such as ‘bigots’ and ‘haters’ and ‘whiners’ to describe the self-appointed critics. All of these things are helping  to paint MLM in the most favorable light. The pro-MLMers at Scam.com are PR geniuses, I’ll tell you, and I can’t thank them enough. In any event, I decided to build an entire new scam around a ‘troll-spray’ theme.”

    Although the MLM casket business failed during “prelaunch” in no small measure “because of the trolls,” Pumpernickel said, the troll-spray business would be different.

    “What I’m going to do,” he said, “is plant the seed that affiliates should use more pictures of Donald Trump this time to help sanitize the opportunity. I can get the ‘Birthers’ that way, and make people believe Trump has endorsed the program.”

    The failure of affiliates to take full advantage of Trump’s celebrity to hawk the casket “opportunity” was one of its biggest shortcomings, Pumpernickel conceded.

    “People can call me a lot of things — and I’m well aware of my reputation as a serial scammer — but they’ll never be able to claim this time that my affiliate’s efforts to trade on Trump’s name without authority were insufficient,” the celebrated scammer said. “My fellow scammers made it perfectly clear to me that I need to ‘Trump’ up my next fraud scheme, and I listened.”

    Pumpernickel added that he was considering advice from a “group” of fellow scammers who recommended he add the names and images of Oprah Winfrey and former Presidents Bill Clinton and George W. Bush to the troll-spray promos. He declined to name members of the group, except to say “they are all veteran scammers who’ve made millions and millions and millions.”

    But Pumpernickel hinted that there is some early dissension in the ranks about how best to proceed with the troll-spray scam.

    “Some of these people are convinced that trading on Oprah’s name without permission ‘works’ because of the chain-letter scams and the impressive success of the recent acai-berry scams,” Pumpernickel said. “My take is a bit different at the moment, given what the FTC did in the acai cases, but I’ve agreed to take the matter under advisement. In this early, pre-prelauch stage, though, I’m given to believe that Oprah may be a little too hot right now. The FTC is playing hardball.”

    Pumpernickel said he was less concerned about using the names of the former presidents.

    “Hey,” he said, “the Mantria people used Clinton. And the AdSurfDaily people used Bush. No one can doubt the success of those schemes — and the scams are old enough now that trotting out the Presidents again to plant the seed that they endorse troll spray just might be viewed as a fresh approach.”

    Among the lies he intended to make go viral were that the troll-spray product not only was useful in keeping anti-MLM trolls at a distance in person and on forums, but also could be used to improve a car’s gas mileage, grow apples the size of “Washington state” and cure cancer, Pumpernickel said.

    “What I’ll do,” he revealed, “is simply plant the seed that the product has all of these benefits. My affiliates have proven over time that they can be relied upon to do no checking or independent research whatsoever. Marketing online is beautiful in this way. They’ll take the ideas I plant, and before it’s all over, they’ll have Trump as the president of the company, Bush as director emeritus and a famous cancer hospital not only saying the product cures the disease, but also that the entire hospital staff is warding off the disease by consuming apples that are bigger than pumpkins.”

    Ultimately, Pumpernickel said, “the goal of any good scam is to plant the seed that fabulous wealth is possible.

    “We’ll do that, too, of course,” he promised. “I’ve had success in the past by rambling on and on about commissions 10 levels deep and talking about the ‘millions’ I’ve made. But the best viral scams are the ones that mix those elements with what I call the ‘Real Unreal.’

    “For example, Trump is a ‘real’ person,” Pumpernickel said, “but it’s ‘unreal’ that he”ll be involved in the troll-spray product. My best promoters will be the ones who make the best use out of all the ‘Real-Unreal’ elements out there. I mean, the possibilities are endless.”

    Pumpernickel said he was in the process of negotiating with a vendor to brand and package the troll spray, which a newly created shell company likely would market for $19.95 per can, with volume discounts if the product is purchased by the case.

    Prospects will be told they can join the opportunity for “free” and will be encouraged to invite their mothers to do so.

    “It’s always best when we have a good group of mothers helping us market our scams,” Pumpernickel said. “We should be ready to start the prelaunch by Father’s Day next month. If something goes wrong with the actual prelaunch and launch and people don’t get paid, I’ll just change the rules and tell the folks to pretend it never happened. I learned that by observing the launch and prelaunch of Data Network Affiliates last year.

    “And if people ask too many questions,” he concluded, “I’ll plant the seed that I know leg-breakers and call all the critics ‘bigots.’ It’s great PR.”

  • BULLETIN: FTC Goes To Federal Court To Take Down Alleged Acai Berry Scam Operating On ‘Fake News Websites’; Some Domains Listed In Complaint Now Load Error Messages Or Blank Pages

    Is this an image of a "fake" reporter sometimes listed as "Julia," "Stacie" or "Karen," depending on the acai-berry site?

    BULLETIN: (Also see editor’s note below.) The Federal Trade Commission says a major law-enforcement initiative is under way to stop an acai-berry weight-loss scam that features “fake” news stories on websites that appear to be real media outlets but are really just sites that flog acai products. The agency appears to have filed at least six lawsuits against multiple defendants. Although the complaints are filed in Washington state and Illinois, the corporate and individual defendants do not all reside in those states, according to documents viewed by the PP Blog.

    Some of the defendants reside in Minnesota, Texas, Michigan, California and New York.

    Although the FTC said today that it did not plan to announce until Tuesday the names of the defendants in the cases alleging that fake news sites were hawking acai products, some sites that aggregate court filings are showing that the agency filed complaints Wednesday against Tanner Garrett Vaughn in Washington state; Ambervine Marketing LLC, Encastle Inc. and Zachary S. Graham in Illinois; Beony International LLC, Cody Adams and Mario Milanovic in Illinois; IMM Interactive Inc. in Illinois; Ricardo Jose Labra in Illinois; and Thou Lee in Illinois.

    Details of the filing that names Thou are unclear. Like the others, the Thou case is listed on Justia.com, with the FTC as the plaintiff and Thou as a defendant. The case number is sequential to the others, which suggests it was filed at the same time.

    Separately, Courthouse News Service has obtained a copy of the complaint against IMM Interactive, which once was known as Intermark Communications Inc. and does business as COPEAC and Intermark Media, according to the FTC. Courthouse News published the IMM Interactive complaint yesterday.

    It is unclear if the FTC  is filing actions in states beyond Washington and Illinois. The PP Blog checked several domain names alleged by the FTC to have delivered fraudulent news content about the acai berry. Each of the domains threw error messages.

    It was not immediately clear if the domain owners shut down the sites independently or if one or more federal judges ordered the sites taken down. Each of the URLs tested by the PP Blog had domain names that implied visitors were at a journalism site.

    “Millions of consumers are being lured to websites that imitate those of reputable news organizations,” the FTC said today. “The ‘reporters’ on these sites supposedly have done independent evaluations of acai berry supplements, and claim that the products cause major weight loss in a short period of time with no diet or exercise.

    “In reality,” the agency continued, “the websites are deceptive advertisements placed by third-party or ‘affiliate’ marketers. The websites are aimed at enticing consumers to buy the featured acai berry weight-loss products.”

    In past acai-berry cases, the FTC has said Internet Marketers had ripped off customers in promos featuring bogus testimonials and hidden continuity-billing schemes. Talk-show host and business icon Oprah Winfrey has filed lawsuits against acai promoters who’ve traded on her name.

    EDITOR’S NOTE: The acai-berry scandal is growing, and it may not be easy for promoters in the direct-selling sphere to contain or explain away. Some sites that appear to use “fake” reporters continue to be operational and appear to be hosted on any number of domain names owned by individual promoters. One “fake” reporter featured in “news” accounts appears to have been referred to by three different names, but also appears to be the same “person” — that is, the sites used the images of an attractive female  “reporter” and changed the “reporter’s” name. Details about how much weight the “reporter” purportedly lost also varied from site to site. One site we viewed had a disclaimer in small type at the very bottom of the page. The disclaimer appeared against a gray screen, which created a washing effect. The type was smaller than the type of the fake news report, which used black type against a white background. We could not read the disclaimer without glasses.

    Perhaps the most intriguing element of the developing story is why the promoters simply did not permit the acai-berry products to be sold on their own merits. An entire fantasy world featuring interchangeable, fake reporters or news anchors appears to have been created to drive sales.

    To be sure, today is not a banner day for Internet Marketers. When MLM and direct-sales aficionados in general wonder why there are so many critics, they need look no further than the acai-berry sector. Despite case after case in which the government and private litigants such as Oprah Winfrey alleged elements of false advertising and bogus business practices, purveyors of the schemes dialed up the acai madness to greater and greater extremes.

    A big section of the public no longer may know what is real and what is fake in the acai world. One of the reasons is that promoters also have used the names of real media companies to plant the seed that they endorsed the acai offers.  Today alone we have seen the logos of CNN, Forbes magazine, ABC, CBS News and USA Today in acai promos. The promoters clearly were trying to plant the seed that the famous media companies had endorsed the product.

     

  • BULLETIN: FTC Charges Central Coast Nutraceuticals In Acai-Berry Fraud Case That Alleges Overbilling And ‘Fake Endorsements’ From Oprah, Rachel Ray

    This website was part of a $30 million acai-berry scam that offered purported "free trials," overbilled customers repeatedly and fraudulently traded on the names of Oprah Winfrey, Rachel Ray and other celebrities and well-known brands, the FTC alleged.

    UPDATED 4:56 P.M. EDT (U.S.A.) Calling the operations of Arizona-based Central Coast Nutraceuticals Inc. (CCN) and affiliated companies a “$30 million” scam in 2009 alone, the Federal Trade Commission has obtained a court-ordered asset freeze in an acai-berry fraud case.

    Charged along with CCN were Graham D. Gibson, Michael A. McKenzy and four companies that shared the same Phoenix street address : iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

    The FTC’s case file includes statements from Oprah Winfrey’s Harpo Inc. and author and TV personality Rachel Ray that they never endorsed acai-berry products as the alleged scammers claimed and that their intellectual property was being abused.

    The FTC’s action may send shockwaves across Internet Marketing slime pits, which routinely trade on celebrity names to sanitize “business opportunities” that imply famous people and entities endorse offers that appear online.

    At the same time, the FTC action may have a chilling effect on online hucksters who make misleading or unproven claims that their products cure anything from cancer to obesity.

    A big part of the scheme centered on bogus “free trial” offers and corrupt billing practices in which “numerous unauthorized charges” were made to customers’ credit-cards and debit cards, the FTC alleged.

    Another part of the scheme centered on false claims that using a product known as AcaiPure “could lead to rapid and substantial weight loss,” the FTC charged.

    “Too many ‘free’ offers come with strings attached,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “In this case, the defendants promised buyers a ‘risk free’ trial and then illegally billed their credit cards again and again — and again.”

    Vladeck said the FTC estimated “that about a million people have fallen victim to this scam,” with the scheme spreading in part owing to the fraudsters’ use of “fake endorsements” from Winfrey and Ray.

    “Ms. Oprah Winfrey has never endorsed or approved AcaiPure,” said Douglas J. Pattison, chief executive officer of Harpo Inc.

    In fact, Pattison said in court filings, Winfrey “has never endorsed any acai berry supplement or acai berry related product by name” and “has never approved or agreed to have her image or name used in conjunction with the sale and marketing of any acai berry related product.”

    Winfrey sued more than 40 companies for trademark infringement last year, amid claims scammers were using her image and brand to fleece the public.

    For her part, Ray said in court filings that she, too, had been victimized by Internet Marketers who used her image and brand to pull off fraud schemes.

    “I did not approve or agree to the use of my name or my image on this website. . . . I have never used, endorsed or approved AcaiPure. I am not associated with nor do I endorse or approve any acai berry product, company or online solicitation of such products, including AcaiPure,” Ray said.

    In another move that may cause great unease in the part of the Internet Marketing landscape that entitles itself to divine testimonials and plant the seed that famous people endorse their fraudulent offers, the FTC included photos of the websites and shared a video that allegedly made fraudulent claims.

    Visit the FTC website to view the video.