By: Linda L. Goodman
Last week, the Federal Trade Commission (“FTC”) announced its first case against a marketer’s use of paid fake reviews on an independent website. Cure Encapsulations, Inc. and its owner, Naftula Jacobowitz, settled with the FTC to resolve allegations that they made false and unsubstantiated claims for their garcinia cambogia weight loss supplement and that they paid a third-part website to write and post fake reviews on Amazon.
“People rely on reviews when they’re shopping online,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
The FTC alleges that the defendants paid a website, amazonverifiedreviews.com, to create and post Amazon reviews of their product, “Quality Encapsulations Garcinia Cambogia Extract with HCA” capsules on Amazon.com as an appetite-suppressing, fat-blocking, weight-loss pill.
The reviews they bought were posted on Amazon.com and gave the product a five-star rating. They were representing that the purchased Amazon reviews were truthful reviews written by actual purchasers, but in truth they were fabricated.
The FTC also alleges that the defendants made false and unsubstantiated claims on their Amazon product page, including through the purchased reviews, that their garcinia cambogia product is a “powerful appetite suppressant,” “Literally BLOCKS FAT From Forming,” “causes significant weight loss, including as much as twenty pounds, and causes rapid and substantial weight loss, including as much as two or more pounds per week.”
The court order settling the FTC’s complaint prohibits the defendants from making any claims for weight-loss, appetite-suppression, fat-blocking, or disease-treatment claims for any dietary supplement, food, or drug unless they have competent and reliable scientific evidence in the form of human clinical testing supporting the claims.
The defendants are required to have competent and reliable scientific evidence to support any other claims about the health benefits or efficacy of such products. The defendants are prohibited from making misrepresentations regarding endorsements, including that an endorsement is truthful or by an actual user.
The defendants are required to email notices to consumers who bought Quality Encapsulations Garcinia Cambogia capsules explaining the FTC’s allegations regarding their efficacy claims. And the defendants must notify Amazon, Inc. that they purchased Amazon reviews of their Quality Encapsulations Garcinia Cambogia capsules and to identify to Amazon the purchased reviews.
The order imposes a judgment of $12.8 million. This judgment is suspended upon payment of $50,000 to the FTC and payment of unpaid income tax obligations. The full amount of the judgment will be immediately due if there were misrepresentations as to the financial condition of the defendants.
For more information and to view the full complaint and order, go to the FTC’s website here: https://www.ftc.gov/enforcement/cases-proceedings/172-3113/cure-encapsulations-inc
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This article was originally posted on Cliclaw.com as part of my ongoing efforts to share valuable legal insights. I regularly contribute guest blogs to leading websites in the field of internet compliance. In these posts, I cover a range of topics to help businesses stay compliant in the ever-evolving digital world. You can read my latest guest contributions on Cliclaw.com.
This article is a publication of The Goodman Law Firm and is intended to provide information on recent legal developments. This article does not create an attorney-client relationship, nor should it be construed as legal advice or an opinion on specific situations. This may constitute “Attorney Advertising” under the Rules of Professional Conduct and under the law of other jurisdictions.
Linda L. Goodman is the founder of The Goodman Law Firm, concentrating its practice in internet business and law. Her firm’s clients include Advertisers, Affiliates, Affiliate Networks, and ISP’s.
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