Affiliate Network Pays $1 Million to Settle FTC Fake News Charges
The Coleadium, Inc. affiliate network, also known as “Ads4Dough,” and its owner will pay $1 million to settle a Federal Trade Commission complaint that they used fake news sites to make deceptive claims to promote acai berry supplements and “colon cleansers” as weight-loss products. In addition, the FTC charged that they used “free trial” offers to trick consumers into signing up for additional shipments that were billed monthly.
The products included the acai berry supplements AcaiOptimum, AcaiBurn-Force Max, Acai Tropic, Acai Fit, and Acai Elite Blast; as well as colon cleansers Natura Cleanse, Smart Colon Flush, Advanced Colon Max, and Colo Flush.
The FTC’s complaint alleges that Coleadium and its owner, Jason Akatiff, acted as intermediaries between online merchants selling the products and affiliate marketers who used fake news Web sites to promote them and funnel consumers to the merchants’ sites. The complaint alleges that through their affiliates, the company and its owner:
- made false or unsupported claims that use of the acai and colon cleanser products would cause rapid and substantial weight loss;
- falsely represented that the stories on the fake news sites were objective news reports written by real reporters who conducted independent tests of the products, and that the comments following were those of independent consumers;
- failed to adequately disclose that the content on the fake news sites was authored by affiliate marketers who, along with the defendants, received payments from the merchants; and
- failed to adequately disclose that consumers who sign up to receive a trial supply of the advertised products but who do not return the products and cancel quickly will be charged for the products, and will be shipped more products and billed on a recurring basis.
In addition to the $1 million payment, the settlement requires Coleadium and Akatiff to monitor the affiliate marketers in their network to ensure that their statements are truthful and in compliance with federal advertising law. In addition, they are barred from making any material deceptive representations, including deceptive claims about weight loss and health, and about relevant studies, tests and research.
They also are barred from failing to disclose any material connection between themselves or others marketing or selling products, and the endorsers of the products; that the content of a “news” website or other publication was not written by an objective reporter but is an advertisement placed for payment; and that consumers may be subject to recurring charges when they sign up for trial supplies of the products.