In the case of the Federal Trade Commission vs. Clickbooth, an affiliate network, the FTC won. Clickbooth must pay $2 million to the FTC as a settlement. The case claimed that Clickbooth misled consumers by placing untrue weight loss claims on various fake news sites. The products that were being offered were colon cleansers and acai berry supplements. The $2 million that the FTC has collected from the case will be used to refund customers who bought the deceptive products.
On top of the settlement payout, Clickbooth also has to adhere to a set of rules, barring them from using any of the following types of deceptive marketing ploys:
• Not disclosing a material connection of a product to a seller
• Unsupported or misleading claims
• Misrepresenting a test or study
• Misrepresentation of any material fact in the sale of a product
The original complaint stated that merchants had been paying Clickbooth to market weight loss products to consumers since 2008. Also, Clickbooth had used affiliate marketers to promote sales, which was being carried out via deceptive practices. On top of that, Clickbooth had built websites for Central Coast Nutraceuticals, who said they would pay approximately $1.5 million to settle any FTC charges.
Clickbooth had its affiliate marketers make specific claims about the products and many of the marketers even built websites from which to promote the product. The main problem was that these websites were designed to look like a news site. The domain names themselves also sounded as if they were news websites. Website URLs included dailyconsumeralerts.com and channel5healthnews.com. The articles and advertising on the sites also sounded like bonafide news reports. One article was titled, “Acai Berry Diet Exposed: Miracle Diet or Scam?” The worst part was that the websites used both the logos and names of widely recognized news networks.
There were various problems with this strategy. For one, the claims about the products were untrue. Secondly, the “reports” that claimed that actual reporters had reviewed the products were untrue as well. Third, the comments on the websites were not written by actual consumers. One of the other several problems is that the “news reports” never clarified that they were actually advertisements.
Post Date: December 17, 2012
