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Under the settlement, Circa Direct and Davidson are required to make clear when their commercial messages are advertisements rather than objective journalism. They are also required to disclose any financial connections they have with merchants.
Court Orders Fake News Site Operator To Surrender Assets Totaling More Than $2 Million
Defendants Settle FTC Charges that They Made Fake Endorsements and Deceptive Acai Berry Weight Loss Claims
October 19, 2012
An operation that allegedly used fake news websites to deceptively market acai berry weight-loss products will pay more than $2 million to settle Federal Trade Commission charges.
Last year, the FTC charged defendants Circa Direct LLC and Andrew Davidson with running internet advertisements designed to look like news websites, with misleading titles such as “News 6” and “New Jersey Job Report.” The websites purported to provide investigative journalists’ reports on weight-loss products, work-at-home schemes, and penny auctions, but, according to the FTC, the sites were actually deceptive ads. The FTC accused Circa Direct and Davidson, the company’s owner, of making false and unsupported claims about acai berry products and failing to disclose their financial relationship to the sellers of the products and services promoted on the fake news sites. In one fake news story, for example, a “reporter” claimed to have lost 25 pounds in four weeks using a supplement.
The settlement imposes a judgment of nearly $11.5 million. The monetary judgment will be suspended when the FTC receives assets worth more than $2 million from the defendants’ personal and corporate bank accounts, investment and retirement accounts, and proceeds from the sale of a home in Margate, New Jersey, and a 2010 Nissan Maxima.
Under the settlement, Circa Direct and Davidson are required to make clear when their commercial messages are advertisements rather than objective journalism. They are also required to disclose any financial connections they have with merchants. The defendants are further barred from making deceptive claims about health-related products, such as the acai berry weight-loss supplements they marketed, and from making deceptive claims about other products, such as work-at-home schemes or penny auctions.
In approving the settlement order, U.S. District Court Judge Renee Marie Bumb cited the fact that the order does not contain an admission of liability, and required the FTC to create and host a webpage that provides a notice from the court, a detailed summary of the factual allegations, and links to supporting documents.
The FTC sued Circa and Davidson as part of a law enforcement sweep against 10 affiliate marketing operations accused of using fake news websites to market acai berry weight-loss products. The FTC has reached similar settlements with eight of the other operations.
For more information about recognizing and avoiding deceptive claims made by fake news sites that market acai berries for weight loss, see THIS JUST IN: Fake News Sites Promote Bogus Weight Loss Benefits of Acai Berry Supplements.
The Commission vote to approve the proposed settlement in February 2012, prior to the arrival of Commissioner Maureen Ohlhausen, was 4-0. The U.S. District Court for the District of New Jersey entered the settlement on October 17, 2012.
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