FTC takes aim at deceptive ads

  • Updated: May 22, 2011 - 9:52 AM

The Federal Trade Commission says that two Minnesotans were using deceptive practices in promoting a questionable weight loss product.

Two Minnesota men are not only pitching a questionable fat-fighting product, they're also doing it with Internet advertisements masquerading as legitimate news reports, according to the Federal Trade Commission.

Last month, the FTC filed a federal court action in Chicago against Zachary Graham of Rochester and Thou Lee of St. Paul. Graham is an officer of both Ambervine Marketing of Minnesota and Encastle Inc. of Texas, and Lee operates TL Advertising.

The FTC said the men's companies get commissions when consumers go to their websites and then click through to companies that sell the products, the FTC said. The product they are promoting is made from acai berries, which come from acai palm trees, native to Central and South America. Sheldon Lustigman, a New York attorney representing Graham, denies the company engaged in deceptive practices. "My client did create news sites but the subject they covered, as far as we know were accurate in terms of what had been objectively published by other real news sites," he said. He said his client was "promoting" the acai berry products, not selling them.

He also said that use of acai berry products results in weight loss. "There are a lot of studies that show they are effective," he said. Asked by Whistleblower if he could produce any such studies, Lustigman said he could not.

The FTC filed an affidavit from Dr. Robert Kushner, clinical director of the Northwestern Comprehensive Center on Obesity in Chicago, who said he knew of "no scientific studies that have established that acai berries are effective in causing significant weight loss."

The FTC has obtained a stipulated preliminary injunction against Lee's operations and a temporary restraining order against Graham.

Guy Ward, staff attorney in the FTC's Midwest regional office who sued Graham, said suits had been filed against a total of 10 operations around the country that market acai berry products.

Matthew Wernz, another FTC attorney in Chicago who sued Lee, said the 10 firms collectively spent $10 million on advertising.

The FTC says the fake news sites typically use titles like "News 6 News Alerts" and "Health News Health Alerts" and include the names and logos of major media outlets such as ABC, Fox News, CBS, CNN, USA Today and Consumer Reports, falsely claiming that reports on the site have been reported by those news organizations.

"Almost everything about these sites is fake," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a statement. "The weight-loss results, the so-called investigations, the reporters, the consumer testimonials, and the attempt to portray an objective journalistic endeavor."

RANDY FURST

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