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  • 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.

  • 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.