FTC Obtains Court Orders Barring Skincare Marketers From Deceptive Marketing and Billing Practices

The defendants behind a group of California-based marketers have been permanently barred from the deceptive marketing and billing tactics they allegedly used to promote their skincare products, under court orders resolving Federal Trade Commission charges against them.

Twenty-nine defendants who sold Auravie, Dellure, LéOR Skincare, and Miracle Face Kit branded skincare products have agreed to court orders with the FTC or had default orders entered against them.

“These defendants tricked people into paying for skin care products and abused the credit card system to extend their scheme,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “The Commission will continue to attack scams that rely on supposed ‘free trial’ offers and unauthorized credit card charges.”

The agency’s original complaint, filed in June 2015, charged seven individuals and 15 companies with selling their skincare products through false advertisements for “risk-free trials.” According to the FTC, the defendants convinced consumers to provide their credit card information, purportedly to pay nominal shipping fees.

However, the defendants allegedly used consumers’ credit card information to impose unauthorized recurring monthly charges of up to $97.88 per month for unordered products. The FTC also charged defendants with misrepresenting themselves as accredited by the Better Business Bureau (BBB).

The Commission charged the defendants with violating the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Electronic Fund Transfer Act. In October 2015, the FTC filed an amended complaint, adding eight corporate defendants, two individual defendants, and one corporate relief defendant to the case, which brought the total number of defendants to 33.

Since May 2016, the Commission has approved five stipulated court orders, all of which have been entered by the Court. Additionally, the court has entered a default judgment and order against 19 corporate defendants. These orders have resolved the claims against all but four of the AuraVie defendants.

Each final order bans the defendants from selling products through a “negative option,” in which the consumer’s silence is interpreted as consent to receive and pay for goods and services. The orders also bar them from future deception and credit card laundering.

The stipulated orders entered against Paul Medina, Oz Mizrahi, Motti Nottea, Roi Reuveni, Alon Nottea, Doron Nottea, Igor Latsanovski, CalEnergy, Inc., Adageo, LLC, and Zen Mobile Media, Inc. and the default judgment and order entered against 19 corporate defendants include monetary judgments of more than $72.7 million. The stipulated order judgments are partially suspended based upon the defendants’ abilities to pay. The orders require these defendants to surrender virtually all of their assets to the FTC, totaling over $2.7 million.

The Commission votes approving each stipulated final order were 3-0. The FTC filed the proposed orders in the U.S. District Court for the Central District of California. Litigation continues against: 1) Secured Merchants, LLC; 2) Kristopher Bond, also known as Ray Ibbot; 3) Alan Argaman, and 4) relief defendant Chargeback Armor, Inc.

NOTE: Stipulated final orders and default judgments and orders have the force of law when approved and signed by the District Court judge.

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