Judge Orders Online Spammers to Pay $3.7M

     (CN) – A federal judge in New York ordered key players in an international spam operation to repay the $3.7 million earned from promoting bogus Hoodia weight-loss products and an anti-aging pill online.

     The order marks the settlement of an October 2007 lawsuit filed by the Federal Trade Commission, the first case to use the US SAFE WEB Act, a federal law aimed at shielding consumers from international scams. The Act targets international perpetrators of Internet fraud and deceptive advertising, as well as spam and spyware distribution. The Act allows for easier exchange of information among the FTC and its foreign counterparts.
     According to the agency, the spammers promised that an extract of the hoodia gordonii plant would result in weight loss, and that a “human growth hormone” pill would reverse aging. The claims were unsubstantiated, the FTC said, and violated both the FTC Act and the CAN-SPAM Act.
     The FTC said the operation used spam emails to drive unknowing consumers to sites selling the products, violating federal laws on false advertising. The emails had fake return addresses and used deceptive subject lines, according to the filing. They also failed to provide an opt-out link or a physical address in the email, the FTC claimed.
     The FTC settled with three defendants – Spear Systems and two individuals, one in the United States and one in Australia – in May 2008, and the new court orders apply to HBE Inc., two corporate defendants, and two Canadian residents.
The orders bar the defendants from making false and unsupported claims about health benefits of any food, drug or dietary supplement.

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