Oprah and celebrity surgeon Dr. Mehmet Oz filed a lawsuit this week, demanding that the more than 500 Web sites that falsely claim the pair endorses the sites’ diet pills and miracle cures shut down. The lawsuit says that many of the sites are actually “credit card scams or other fraudulent schemes” that con customers into costly subscriptions to their products.
According to the suit, the concoctions “purport to be dietary supplements, such as for ‘resveratrol,’ ‘acai berry’ and colon cleansing; cosmetics, such as cellulite and anti- wrinkle creams; and/or over-the-counter drugs, such as tooth-whitening products.” Winfrey and Oz say the companies have “gravely injured” their valuable reputations, with thousands of disgruntled customers filing complaints with the Better Business Bureau and various law-enforcement agencies. The lead defendant is FWM Laboratories of Hollywood, Fla.
This is a rough time to be on the long tail of Internet marketing and online advertising. Yahoo is elminating $75 million in low-quality, high frequency ads to please high-end advertiers and users annoyed by the ads, and the federal government is aggressively pushing to restrict third-party cookies that track user behavior based on privacy concerns. So it doesn’t help that shady characters in the Internet marketing and affiliate space are giving a bad name to the industry.
A day before Oprah filed her lawsuit, Illinois Attorney General Lisa Madigan also filed lawsuits against a bevy of companies.
Madigan filed consumer fraud lawsuits against three suppliers and a local affiliate marketer of acai berry products charging that the companies lure customers with free trial offers – through aggressive Internet marketing techniques – and then charge customers’ credit cards prematurely, do not always supply the product and make it nearly impossible to cancel.
“For thousands of dieters, the quest for a miracle product has become a nightmare,” Madigan said in a statement. “Far too often, consumers end up losing their money – not weight – in these deals.”
Madigan filed lawsuits against Advanced Wellness Research, its successor, Netalab, and Nicholas Molina, the former president of Advanced Wellness and an agent of Netalab. Both companies are based in Florida. She also filed a lawsuit against Crush LLC and its owner, TMP Nevada, Inc., based in Utah. In addition, Madigan sued Amirouche & Norton, LLC and Larby Amirouche, an affiliate marketer that uses Internet search engines, pop-up ads, Web sites, and advertising on social networking sites to drive Internet traffic to suppliers’ Web sites. Madigan’s complaint alleges that the marketer misleads consumers through false advertising and false endorsements.
“We must hold these Internet scammers accountable for their role in a seedy marketing game that steers unsuspecting consumers to online schemes,” according to Madigan. “We also need to send a clear message to other marketers and networks in the business of designing misleading, traffic enticing schemes.”
The Acai Berry celebrity endorsement ads, which have been around for a while, are a classic example of the shady practices.
According to the Better Business Bureau, the acai berry has been featured on national TV shows and praised by doctors and celebrities for its high level of antioxidants. Marketing claims about the acai include that it fights cancer and aging and promotes dietary health and weight loss – and these claims are working, with sales of acai products approaching $15 million last year, up from $500,000 per year in previous years.
The Better Business Bureau says that producers of acai berry supplements, juices and tea have been very successful peddling their goods in ads on the Internet and on social networking Web sites such as Facebook. In November alone, more than 1.5 million people searched for the term on Google. Online ads and Web sites often include a photo of a celebrity — such as Oprah — and claim that she endorses the acai as a weight loss miracle.
“BBB can’t speak to the restorative or weight loss properties of acai-based products, but we are taking companies to task for their misleading sales and marketing practices,” Steve Cox, BBB spokesperson, said in a statement recently. “Many businesses across the country are using the same selling model for their acai products: they lure customers in with celebrity endorsements and free trial offers, and then lock them in by making it extremely difficult to cancel the automatic delivery of more acai products every month.”
The BBB named two companies at the time, FX Supplements, in Fort Worth, Texas, and Central Coast Nutraceuticals in Arizona as bad players in the industry. Complaints ranged from difficulty canceling subscriptions and being forced to close bank accounts and cancel credit cards to stop recurring charges.
The Arizona AG recently announced a $1,375,000 settlement with Central Coast Nutraceuticals and its owner, Graham Gibson, of Phoenix. The settlement resolved a consumer fraud lawsuit that alleged deceptive online sales practices by CCN.
The government is looking for villains online and Internet marketers are making it easy for them. While there is a growing movement to promote best practices, more needs to be done or else the government will slap restrictions on everyone that may cure the ills but kill the patient.