Company That Marketed Weight-Loss Products With Fake News Sites Must Return $16M To Consumers

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The Federal Trade Commission’s crackdown on deceptive weight-loss marketers continued today, as the agency announced an affiliate marketing network and its parent company must return $16 million to consumers who were lured into purchasing a range of weight-loss products through fake news websites.

The FTC announced that a U.S. district court ruled that LeadClick Media, an affiliate marketing network and its parent company, CoreLogic, Inc., were responsible for the false claims made by affiliate marketers it recruited on behalf of LeanSpa, LLC.

LeanSpa, a company that sold acai berry and “colon cleanse” weight-loss products, used a “free trial” ploy to enroll consumers into its recurring purchase program that cost $79.99 per month and was difficult to cancel.

According to the FTC’s complaint [PDF], LeadClick’s network lured consumers to LeanSpa’s online store through fake news websites designed to make consumers believe that the products were being vouched for by independent news outlets and consumers, rather than paid advertisers.

Today’s judgment stems from the FTC and state of Connecticut’s 2011 lawsuit against LeanSpa and its principal, Boris Mizhen, over alleged deceptive marketing practices. In January 2014, the FTC and Connecticut settled the suit after LeanSpa and Mizhen agreed to stop the practices and surrender assets for redress to customers.

In the case of LeadClick, the district court ruled that the fake news sites developed by the company’s affiliates deceived consumers by using real news organization names and logos along with reviews implied to be from actual customers.

In all, the court found LeadClick recruited the affiliates, had the power to approve or reject their marketing websites, paid the affiliates, purchased advertising space for them, and gave them feedback about the content of their sites.

Under the court order, LeadClick must give up nearly $12 million it received from LeanSpa as payment for marketing services, while CoreLogic must surrender $4 million it received from LeadClick.

Federal Court Rules Affiliate Marketing Network and its Parent Company Must Turn Over $16 Million They Received From Deceptive Marketing Scheme [Federal Trade Commission]

by Ashlee Kieler via Consumerist