FTC Stops International Spamming Enterprise that Sold Bogus Hoodia and Human Growth Hormone Pills
Agency Brings First Action Using US SAFEWEB Act
As most affiliate marketers have noticed by now, the internet has been flooded with offers for hoodia diet products and HGH type nutritional products for quite some time. Apparently, the FTC has noticed as well, and is doing something about products that they allege do not work. They have a new tool in their enforcement arsenal, and they are using it with great force.
This is the first agency law enforcement action where FTC staff employed the U.S. SAFE WEB Act to share information with foreign partners. Passed by Congress last year, the Act recognizes that spam, spyware, fraud, and other practices harmful to consumers are increasingly global in nature, and strengthens the FTC’s ability to cooperate with foreign counterparts. In addition to sharing key information for law enforcement efforts, it also gives the FTC enhanced authority in investigative assistance, protecting the confidentiality of information from foreign sources, and strengthening enforcement relationships.
In this case, the FTC used the new Act in cooperation with Canada and Australia to pursue defendants who allegedly sent spam which consisted of unwanted and illegal e-mail messages about hoodia weight-loss products and human growth hormone anti-aging products that the Federal Trade Commission alleges don’t work. The FTC alleged that the international enterprise used spammers to drive traffic to Web sites selling two kinds of pills. One kind, called “HoodiaLife” and “HoodiaPlus,” was supposed to contain hoodia gordonii and cause significant weight loss. The other, called “HGHLife” and “HGHPlus,” was supposed to be a “natural human growth hormone enhancer” that would dramatically reverse the aging process. The FTC’s spam database received over 175,000 spam messages sent on behalf of the operation.
The FTC alleges that the claims made for the products were false and unsubstantiated. The federal district court judge ordered an immediate temporary restraining order and asset freeze. According to the FTC complaint, the defendants (Spear Systems, Inc., Bruce Parker, Lisa Kimsey, and Xavier Ratelle, doing business as eHealthylife.com) falsely claimed that their supposed “hoodia” products cause rapid and substantial weight loss, including as much as 25 pounds in a month; cause users to lose safely three or more pounds per week for multiple weeks; and cause permanent weight loss. The complaint also charges that the defendants falsely claimed that their supposed HGH products would contain human growth hormone and/or cause a clinically meaningful increase in a consumer’s growth hormone levels. According to the FTC, the defendants also falsely claimed that their HGH products would turn back or reverse the aging process, including: reducing cellulite, improving hearing and vision, causing new hair growth, improving emotional stability, increasing muscle mass, and causing fat and weight loss. The FTC charges that the defendants made all of these claims without evidence to support them.
In addition, the FTC alleges that the operation violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) by initiating commercial e-mails that contained false “from” addresses and deceptive subject lines, and failed to provide an opt-out link or physical postal address.
Whether or not you’ve run campaigns on behalf of the company’s charged, you need to be aware of what the FTC is doing online. Being aware of the current prosecutions by the FTC helps you to stay out of the way of emerging trends in enforcement. At this point, you should review the offers you are running, and make sure that they don’t run afoul of the FTC’s stated approach to the hoodia, and HGH weight loss and health claims. Remember, just because you’re “just the affiliate,” or “just the network” doesn’t mean the FTC won’t hold you responsible for the ads you run.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc. Mark sits on the eCommerce and Technology Committee of the Association of Corporate Counsel, and is a member of the International Association of Privacy Professionals.
Copyright 2007 Mark J. Meckler
