Crackdown On Fake News Sites

FTC Accelerates Crackdown On Fake News Sites

By Chip Cooper, Esq.

We’ve all seen headlines in search results like this one – “XYZ Exposed: Miracle Diet or Scam”.  And perhaps we actually believed there was objective reporting or unbiased commentary behind the headline.  But after reading the web page, it was clear that the headline was just a clever way to catch your attention and lure you to a sales page with an aggressive sales pitch.

The Federal Trade Commission (FTC) has seen these headlines too, and the FTC doesn’t think they’re clever at all.  In fact, the FTC believes they constitute deceptive and unfair trade practices, as indicated by the FTC’s accelerated crackdown on affiliates of a popular diet drink with aggressive weight loss claims.

Modus Operandi

The modus operandi of these sites was to start with attention grabbing headlines such as the one listed above and these additional ones – “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News.”

The sites presented what appeared to be a skeptical commentator who raises the question of whether the diet drink is really effective.  The commentator appeared to be objective; however, after a few paragraphs the commentator would conclude that use of the diet drink would result in a 25-pound weight loss in 4 weeks – all this without changing diet or exercise according to the FTC.  The prices for the supplement ranged between $70 and $100.

The FTC’s Claims

When the FTC originally initiated law suits against these sites, Charles Harwood, Deputy Director of the FTC’s Bureau of Consumer Protection stated: “We are alleging that nearly everything about these Web sites is false and deceptive”.  In addition, the FTC pointed out that the defendants aggressively promoted the deceptive ads by spending millions of dollars for placement on high volume websites resulting in millions of views by consumers and substantial sales.

Specifically, the FTC contended that the offending sites:

  • failed to disclose their material relationships involving the payment of affiliate commissions with the merchants of the products;
  • failed to produce independent tests to support the claims made prior to public dissemination;
  • included a section of “consumer comments” that were completely fabricated;
  • used infringing logos of reputable media outlets such as ABC, Fox News, CNN and Consumer Reports to give the false impression of credibility; and
  • misappropriated the image of a French reporter for use on the sites.

The Settlements

The cases brought by the FTC were against six affiliates of the merchant that manufactured and supplied the weight loss supplement.

In the settlements, the defendants agreed that they will permanently cease their allegedly deceptive practice of using fake news websites.  In addition, the settlements require that the defendants cease making deceptive claims about their other products, including work-at-home schemes and penny auctions which most of them promoted.

The big hammer in the settlements included fines in an aggregate amount which represented the affiliate commissions the defendants received through their fake news sites.

These settlement results clearly indicate that the FTC aggressively pursued every dollar they could under the circumstances (the final amounts left most of them with few real assets, if any):

  • one defendant’s $2.5 million judgment was suspended when he pays $280,000 and records a $39,500 lien on his home;
  • another defendant’s fine of $204,000 was suspended pending the payment of $13,000 plus the proceeds from the sale of a BMW automobile, and
  • still another defendant was suspended pending the payment of almost $80,000 over a 3 year period.

Conclusion

The take-aways from these cases include:

  • fake news sites are virtually guaranteed to get you sued by the FTC,
  • ditto for fake testimonials or user comments,
  • diet supplements of any kind are high on the FTC’s radar screen for regulatory scrutiny,
  • the FTC is serious about enforcing its guidelines that affiliates are required to conspicuously disclose the fact that they are paid commissions for endorsements,
  • consistent with the FTC’s long-standing policy, advertising claims should be substantiated prior to public dissemination.

The FTC continues to make it absolutely clear that the days of the “Wild, Wild West” on the Internet, when it was open season on deceptive marketing practices, is clearly over for good.

Here’s How To Make Sure You, Your Business & Website Is FTC Compliant

By now it should be clear how important it is for you to be FTC compliant. But how can you do that without spending $7,500-$8,000 or more on Internet Attorneys?

Smart business owners around the world are doing it with the help of FTC Guardian.

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The training is titled: 3 Tragic (Legal) Privacy Policy List Building Mistakes That Can Get You In Hot Water With The FTC Today – Resulting In Your Business Being Shut Down… And How To Solve It!

Here are some of the things you’ll discover on the training:

  • Real-Life Examples of People Who Didn’t Think They Were At Risk, But Who Got Nailed By The FTC, And Why It Could Happen To You, Too
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  • The 3 Enormous Powers The FTC Has That Can Change Your Life – And Your Family’s Life – Forever!
  • How to Avoid FTC Claims When Collecting Leads With Optin Forms
  • 3 Privacy Policy Mistakes Every Digital Marketer Is Making, And Why You're In The FTC Crosshairs.
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Remember: legal protection is a massively important part of your business, and it’s one you cannot afford to ignore any longer.

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Disclaimer:  This article is provided for informational purposes only. It’s not legal advice, and no attorney-client relationship is created. Neither the author nor FTC Guardian, Inc. is endorsed by the Federal Trade Commission.

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