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Tag: free-trial scams

  • 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.

  • 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.