FTC cracks down on fraudulent news sites

  • Article by: ON YOUR SIDE CONSUMER ALERTS
  • Updated: January 28, 2012 - 4:39 PM

A Rochester man who allegedly created fake news websites in order to sell weight-loss products must stop the practice, the Federal Trade Commission announced last week.

Last year, the FTC sued Zachary S. Graham, 21; a Minnesota company he managed called Ambervine Marketing LLC; and a Texas business partly controlled by him.

The commission said the defendants' advertising, and that of five other marketers nationwide, deceptively used investigative-style news headlines and articles to sell their acai berry products.

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

In an order this month, a U.S. District Court in Illinois imposed a $952,644 judgment on Graham, Ambervine and the Texas business, Encastle Inc. That figure represents the amount gained by use of the deceptive advertising, the FTC said. The defendants, without admitting guilt, agreed to entry of the order.

The full judgment will be suspended when Graham pays $110,000 plus part of the proceeds from the sale of his 2011 Toyota Tacoma truck. The payment will go toward redress to customers, who typically paid $70 to $100 for his products.

JANE FRIEDMANN

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