$25 Million for Snake Oil, FTC Says

     HARTFORD (CN) – Diet-supplement pushers Leanspa and Nutraslim bilked consumers of more than $25 million through “fake news websites” that deceptively offer a “free trial,” then charge customers $80 a month and make it almost impossible to cancel, the FTC and Connecticut say in Federal Court.
     The Federal Trade Commission and Connecticut also sued Boris Mizhen, individually and as an officer of Leanspa and Nutraslim – both Connecticut LLCs – and the British branches of both companies.
     Mizhen, of Guilford, Conn., owns, directs and/or control all the defendant corporations, which own and operate at least nine websites through which they sell their stuff. Many of the pages tout the supposed diet and “cleansing” properties of acai berries. The products go by a variety of names, including LeanSpa Acai, LeanSpa with Pure HCA, and LeanSpa Cleanse. The companies, based in Bramford, Conn., falsely claim the products can make the user lose 25 lbs. a month without a special diet or exercise, according to the complaint.
     The defendants also sell their stuff through affiliate marketers and affiliate networks, the FTC says. For each consumer who signs up for the so-called free trial on one of the defendants’ websites, the defendants pay a fee to the affiliate network, which in turn pays a commission to the affiliate marketer.
     Mizhen uses “fake news websites” to rope in customers, and uses false claims – such as “Clinically Tested to Reduce Belly Fat!” – to sell the snake oil, the FTC says.
     “Defendants paid affiliate networks millions of dollars and had knowledge that consumers were lured to their websites through fake news sites featuring their products,” the complaint states.
     The bogus “news” ran under headlines such as “1 Trick of a Tiny Belly: Reporter Loses Her ‘Belly’ using 1 Easy Tip.” When consumers try to navigate away from the page, a pop-up message tells them the product is available on a “free trial basis.”
     Complaints about the fake news sites started coming into the Connecticut Better Business Bureau as early as November 2010, just 2 months after the company started, the FTC says.
     Through the websites, the defendants ask for $4.95 for shipping and handling for the “free trial,” but their goal is to get credit or debt card information. When they do, the victims are automatically enrolled in “continuity plans” for “monthly product shipments in which defendants make recurring charges to the consumers’ credit card or bank accounts, usually $79.99 or more every month,” according to the complaint.
     Victims who try to cancel have “great difficulty reaching a live person … and if they do speak with someone, they are told they must navigate through a series of steps, including obtaining a Return Merchant Authorization number, returning the product back to a facility, and paying postage costs for returning the product.”
     When they try to cancel on the defendants’ website by clicking the “Easy Cancel” button, they are likely to receive a notice that their account could not be found, or are that if they cancel they will be charged $19.41 for the “free” bottle they received, the FTC says. And if a doughty consumer manages to get an RMA number and pays to send back the trial offer, they may be charged cancellation fees and may not receive a full refund.
     The plaintiffs seek disgorgement, an injunction and fines for deceptive trade, violations of consumer law and of the FTC Act, unauthorized electronic transfers of money from victims’ bank accounts, misrepresentations, false claims, failure to disclose, and other charges.

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