FTC Settles for $2 Million in Acai Berry Fraud Case

Defendants running websites that promoted acai berry weight-loss products have agreed to roughly a $2 million settlement in response to Federal Trade Commission charges of deceptive marketing.

The FTC accused the defendants, Circa Direct LLC and Andrew Davidson, with running Internet advertisements that were intended to mislead the public into believing they were actual news websites with such monikers as "News 6" and "New Jersey Job Report". Circa Direct and Davidson allegedly made unsubstantiated claims about acai berry products and failed to disclose they received commissions or other compensation when consumers purchased products or signed up for trials on the websites. The websites also allegedly included information on penny auctions and work-at-home schemes.

One "reporter" claimed to have shed 25 pounds in a month using a supplement, according to the FTC. The government agency submitted a monstrous record to a federal court in support of its allegations against the defendants, including a report from a University of California professor with an M.S. and Ph.D. in Nutrition who said losing such weight within that timeframe is not plausible.

In his declaration, Dr. Edward R. Blonz noted a person would have to incur a deficit of 3,125 calories per day in order to lose 25 pounds in 28 days. "Using running as a way to illustrate caloric expenditure, a 200 pound individual would need to run approximately 25 miles each day to burn an additional 3,125 calories over that needed for normal daily activities," he wrote.

The "Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief" was entered last week in the U.S. District Court for the District of New Jersey. It did not include an admission or finding of liability.

It actually imposes a judgment of nearly $11.5 million, although the FTC noted it will be suspended when the agency receives more than $2 million in assets from the defendants, including proceeds from the sale of a home in Margate, N.J. Circa Direct and Davidson also are barred from making deceptive claims. They also must disclose when their commercial messages are ads rather than journalism and reveal any financial connections they have with merchants.

The case was part of a broader government crackdown against 10 affiliate marketing operations alleged to have used fake news websites as a means to promote acai berry weight-loss products. The FTC said it has reached similar settlements with eight of the other operations.