“Too many `free` offers are conditional,” said David Vladeck, director of the FTC`s Consumer Protection Bureau. “In this case, the defendants promised buyers a `risk-free` trial, then illegally charged their credit cards over and over again – and again and again. We estimate that about one million people have been victims of this scam. As if that wasn`t enough, there were false recommendations from celebrities like Oprah Winfrey and Rachael Ray for a product that didn`t work at all. The FTC sued CCN, two people and four affiliates for several violations, including misleading advertising for AcaiPure, an acai berry supplement, as a weight loss product and Colopure, a colon cleansing supplement, as an aid in preventing cancer. Acai berry supplements derived from acai palms native to Central and South America have become popular in recent years. Last year, the Better Business Bureau called the fake trial offers “free” — including those for acai supplements offered by the defendants in this case — as one of the “10 Best Scams and Scams of 2009.” At the request of the Federal Trade Commission, a U.S. District Court ordered distributors of acai berry supplements, “colon cleansers” and other products to temporarily suspend an Internet sales system that allegedly defrauded consumers of $30 million or more in 2009 through misleading advertising and unfair billing practices alone. The FTC will seek a permanent ban. Since 2007, harassed consumers have flooded law enforcement and the Better Business Bureau with more than 2,800 complaints about the company. The Federal Trade Commission announced that a deal that marketed acai berry supplements, “colon cleansers” and other products using allegedly fraudulent free trial offers and false recommendations from Oprah Winfrey and Rachael Ray will pay $1.5 million as part of a settlement.

The money will be made available to consumers for refunds. The case against Phoenix-based Central Coast Nutraceuticals, Inc. is part of the FTC`s ongoing efforts to protect consumers from fraudulent internet marketing and false and misleading health claims. The settlement order prohibits defendants from making so-called “negative option” sales, such as continuity plans and free trial or introductory price offers, where consumers pay nothing in advance or only a small fee to receive a product, but are then automatically charged a higher price unless they take steps to cancel shipments or return the product before the end of the trial period. The FTC accused the defendants of violating the Federal Trade Commission Act, as well as the Electronic Funds Transfer Act and its implementing legislation, Regulation E. At the FTC`s request in August 2010, a federal court stopped the allegedly illegal conduct of the Central Coast Nutraceuticals defendants, imposed an asset freeze, and appointed an insolvency administrator to oversee the defendants. The settlement order against the defendants includes an $80 million judgment representing the total amount of harm caused to consumers by their system. The monetary judgment is suspended if the FTC receives from the defendants assets worth approximately $1.5 million. Harassed consumers flooded law enforcement and the Better Business Bureau with thousands of complaints about the company. The defendants` marketing focused on the growing popularity of acai berry supplements derived from acai palms native to Central and South America.

The Better Business Bureau called the fake trial offers “free” — including those for acai supplements offered by the defendants in this case — one of the “10 Best Scams and Scams of 2009.” For more information about free trial offers, products that claim to treat, prevent, or cure diseases, and weight loss products, see: “Free Trials” Are Not Always Free, Miracle Claims for Health: Adding a Dose of Skepticism and Weight Loss Promises. The court order ends central Coast Nutraceuticals, Inc.`s allegedly illegal conduct, imposes an asset freeze and appoints a temporary receiver through CCN and several affiliates, while the FTC continues its case to end the company`s falsified health claims and other deceptive and unfair behavior. In addition to Gibson and Central Coast Nutraceuticals, Inc., the settlement order resolves the FTC`s allegations against all other defendants in the case: Michael A. McKenzy; iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC. The Commission`s vote authorizing staff to file the complaint and approve the proposed settlement order was 3-1 and Commissioner J. Thomas Rosch was voted no. Judge Charles R. Norgle, Sr. of the U.S. District Court for the Northern District of Illinois, East Division, signed the settlement order on January 3, 2012.NOTE: A settlement order is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated. Settlement orders have the force of law if they are approved and signed by the District Judge. The 2010 FTC complaint alleged that two people and five affiliates falsely claimed that their Acai Pure supplement would result in rapid and significant weight loss and that their Colotox colon cleanser would prevent colon cancer.

Although the defendants claimed to offer a “free” trial for a small fee and full refunds upon request, they allegedly repeatedly made unauthorized debits to consumers` bank accounts, making it almost impossible to avoid paying the full price of the products, typically from $39.95 to $59.95. The FTC`s complaint alleges that in order to sell AcaiPure, marketers made dramatic statements on their website, including: Marketers also deceived consumers about their alleged “free” or “risk-free” trial offers and the fees and refund terms that consumers could expect, according to the FTC`s complaint. The FTC also claims that marketers made numerous additional unauthorized debits to consumers` credit and debit accounts. Allegedly misleading practices include: Under the Settlement Order, defendants are also required to monitor the activities of affiliated marketers selling products or services on their behalf, including reviewing any marketing materials used to ensure they comply with the order. The Commission`s vote allowing staff to file the complaint and seek an injunction was 5-0 in population. The FTC filed its lawsuit and sought an injunction against the defendants in the U.S. District Court for the Northern District of Illinois, Eastern Division. On 6 August 2010, the court granted the application for an interim injunction. The lawsuit also names Graham D.

Gibson and Michael A. McKenzy and four companies affiliated with Central Coast Nutraceuticals, Inc. as defendants.