Internet Marketers Settle FTC Charges

WASHINGTON—FTC is clamping down on “negative option” sales tactics, announcing settlements with two online marketers of weight loss dietary supplements. The firms promoted “free” product samples, which enrolled customers in continuing product shipment programs with auto billing. In separate cases, JAB Ventures and Complete Weightloss Center were charged with violations of the FTC Act including making false or unsubstantiated health claims, failing to adequately disclose the enrollment in the program and failing to obtain express consent on charges, as well as violations of the Electronic Fund Transfer Act. The settlements bar the companies from engaging in any type of such practice in the future, and imposed judgments of $7.8 million (JAB) and $2.5 million (Complete Weightloss), the majority of which was suspended with an avalanche clause.