Last summer, federal regulators charged the operators of an alleged spam scam of hijacking hacked email accounts to spread the word about a slew of unproven weight-loss products. Now, the three affiliate marketers have agreed to pay $500,000 to put the case behind them.
The Federal Trade Commission announced today that Colby Fox and his companies, Tachht, Inc. and Teqqi, LLC, agreed to settle the June 2016 complaint that accused the organizations of inundating consumers with illegal spam emails in an attempt to sell them bogus weight-loss products using false celebrity endorsements. A fourth defendant has not settled.
According to the original complaint [PDF], since 2014 the marketing operation paid for emails to be sent to consumers from hacked email accounts, making it appear to consumers that the messages came from their family members, friends, or other contacts.
While the messages appeared to be short notes informing recipients of interesting news stories, the links provided in the emails led to websites deceptively promoting the companies’ unproven weight-loss products, such as Original Pure Forskolin and Original White Kidney Bean.
The websites are designed to look like news reports about one of the weight-loss products, often using logos, photos, and names from Oprah Winfrey or the television show The Doctors.
The FTC claims the websites deceptively claimed that the defendants’ products could cause weight loss of 17 pounds in 4 weeks, or “41.7lbs in 2.5 months.”
Once a user clicked on the links highlighted in the fake news reports, they were taken to the company’s website and sold the weight-loss product.
Each time a consumer clicked through to the sales website and purchased a supplement, the organizations paid their affiliate marketers a commission, the FTC claims.
The FTC’s proposed settlement [PDF] imposes a judgement of $1.3 million against Fox, Tachht, and Teqqi. Of that judgment, the defendants must pay $500,000 due to inability to pay. The full amount will become due if the companies are found to misrepresent their financial condition.
Additionally, the companies are prohibited from making false and unproven weight-loss claims and must have competent and reliable scientific evidence to back up any health claims made in the future.
They are also barred from misrepresenting, or helping others to misrepresent, that a product or program has been endorsed or approved by specific celebrities or featured on The Doctors television show, that testimonials reflect typical consumer experience with the product, that any website or other publication is an objective news report when it is actually an ad.