Notice from the United States District Court for the District of New Jersey
The United States District Court for the District of New Jersey has approved a settlement between the Federal Trade Commission (“the FTC”) and Defendants Circa Direct LLC and Andrew Davidson (the “Defendants”).
The FTC had alleged that the Defendants falsely marketed certain acai berry-based products as promoting rapid and substantial weight loss when, in fact, they do not. While the Defendants do not admit to these allegations, they have submitted no evidence to this Court to the contrary. Below you may find a summary of the evidence that the FTC contends supports its allegations.
What does the FTC charge in its complaint?
The FTC’s complaint charged that Circa Direct LLC and Andrew Davidson, its founder and owner, blanketed the Internet with ads falsely claiming that acai berry diet pills can cause substantial and easy weight loss. According to the FTC, the Defendants got paid to drive people to other companies’ websites that actually sold the advertised products. To do this, they bought space on popular – and legitimate – news sites like msnbc.com or latimes.com and ran ads that had taglines like “Acai Berry Exposed (Consumer Report),” “Washington Warning! Health Reporter,” or “Discovers the Shocking Truth!” to make it look like they were previewing news stories. Using domain names like “Online6reports” and titles like “Acai Berry Diet Exposed: Miracle Diet or Scam?,” the Defendants’ websites – to which the ads linked – appeared to be investigative reports by independent journalists, who concluded that the product worked as promised. The Defendants made money every time someone clicked from their “news stories” and bought the acai berry products from the other companies’ sites. But nothing in the Defendants’ ads was real – not the claims, the investigations, the testimonials, the journalists, or the media affiliations.
The FTC’s complaint charges that the Defendants violated the law in three ways:
- Count 1 charges that the Defendants claimed that people using certain acai berry products would lose a substantial amount of weight rapidly – as much as 25 pounds in four weeks. But according to the FTC, those representations were false.
- Count 2 charges that the Defendants claimed their webpages were objective news reports written by independent journalists who had performed independent tests showing that the acai berry products were effective for weight loss. The Defendants also claimed that “comments” following their “articles” were written by consumers who happened to visit the site. In fact, the “articles” and “comments” weren’t written by independent journalists or consumers.
- Count 3 charges that the Defendants failed to disclose that they got commissions or other payments when people bought the products or signed up for “free trials” on the websites selling the products.
Here’s a list of the products the FTC says the Defendants marketed deceptively using these tactics:
Acai Berry and Other ‘Diet’ Pills
Acai Ultra Lean
LeanSpa with Pure HCA
Super Acai 1200
South Beach Java
Brite White Smile
Pür Whitening Tray Kit
Vibrant Smile Pen
Robert Allen’s Multiple Streams of Income Course
Home Income Profit System
Home Income Wealth System
What evidence does the FTC rely on to show that the Defendants were involved in the allegedly deceptive marketing?
The FTC submitted documents and testimony to the Court in support of its request for an order stopping the Defendants’ false ads. Business records and email from two advertising companies – Pulse 360 and Supermedia – and a FTC investigator’s report show that the Defendants paid lots of money to run these fake “news reports” ads on websites like msnbc.com, weather.com, and superpages.com. The Defendants gave copies of the ads they wanted to run, including fake news ads for acai berry diet pills, to Pulse360; and Supermedia. According to the Pulse 360 advertising company, the Defendants told the advertising companies on which websites to place these ads, either naming a website or specifying an audience the Defendants sought to reach, such as people who are interested in “health and fitness.” Records from Pulse 360 also show that the Defendants determined the specific website to which the ad would take people who clicked on it. Both Pulse 360 and Supermedia kept records concerning its dealings with the Defendants in the normal course of business.
Screen captures and videos that one FTC investigator made, and screen captures another FTC investigator made, of the ads placed by the Defendants, establish that people who clicked on them were taken to fake news sites that appeared to report on a journalist’s first-hand experience with the product. Some of the websites to which the Defendants’ fake news ads linked also were named in business records the FTC received from the Pulse 360 advertising company. Using domain name registration records, the FTC identified the Defendants as the owner of all these fake news websites. A review of the Defendants’ fake news sites, including, for example, these websites that a FTC investigator found, establishes that they typically feature links to yet another website – not owned by the Defendants – where people can buy a particular brand of the product advertised. Information from Pulse 360, Supermedia, and Defendants’ ads themselves establishes that the Defendants also used similar phony news reports to advertise supposed colon cleansers, teeth whiteners, work-at-home programs, and surplus auctions. According to documents the FTC submitted to this Court, including incorporation papers, transaction records from the advertising companies Pulse 360 and Supermedia, and emails from Pulse 360 and Supermedia, Defendant Andrew Davidson was head of Circa Direct, and he personally created and purchased the fake news ads, negotiated the placement of the ads, and registered the company’s websites.
What scientific evidence led the FTC to conclude that the Defendants’ claims were scientifically implausible?
The Defendants’ fake news reports claimed that acai berry diet pills cause substantial and fast weight loss – typically touting weight loss of 25 pounds in 4 weeks without diet or exercise. The FTC submitted an expert report from Dr. Edward R. Blonz that the product cannot do what the Defendants claim. Dr. Blonz earned a Ph.D. in nutrition from the University of California at Davis, and has more than 25 years of experience in the field. He is a member of the American Society for Nutrition, a Fellow of the American College of Nutrition, a Fellow of North American Association, a member of the Obesity Society, and a Certified Nutrition Specialist. His report concludes there is no science that acai berries – either eaten as a fruit or in a pill – can help with weight loss, nor is weight loss of the sort the Defendants promise possible with any pill.
The science behind Dr. Blonz’s conclusions is well-established. To lose weight, you must burn more calories than you take in. A pound is the equivalent of 3,500 calories. Adults on average consume between 2,000 and 2,500 calories a day. So, as the report explains, to lose the amount of weight the Defendants promised – 25 pounds in 4 weeks – you would need to burn 3,125 more calories per day than you take in. Even if you ate no food and ran 25 miles a day – if that were physically possible – you would not lose weight as fast as the Defendants promised you would using the acai berry pills.
The entire record the FTC submitted to this Court can be found here.
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