Consumer fraud leads to acquirer loss.
Listen up Underwriters. Consumers have hundreds of needs that can be met if they buy something. When it doesn’t help them become wealthy, grow hair, lose weight, avoid foreclosure, cleanse colons, or repair credit, they will want their money back. From you.
1. FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also enforces Section 12 of the FTC Act, 15 U.S.C. § 52, which prohibits false advertisements for food, drugs, devices, services, or cosmetics in or affecting commerce.
2. 5. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and to secure such equitable relief as may be appropriate in each case, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b) and 56(a)(2)(A).
DEFENDANTS
1. 6. Defendant Coulomb Media, Inc. (“Coulomb Media”), is a Michigan corporation with its principal place of business at 776 Trombley Road, Grosse Point Park, Michigan 48230. Coulomb Media transacts or has transacted business in this district and throughout the United States. At all times material to this Complaint, acting alone or in concert with others, Coulomb Media has advertised, marketed, and promoted acai berry products, including Acai Ultra Lean, (collectively, the “Acai Berry Products”) to consumers throughout the United States.
2. 7. Defendant Cody Low, also known as Joe Brooks (“Low”), is the managing officer and registered agent of Coulomb Media. At all times material to this Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the authority to control, or participated in the acts and practices of Coulomb Media, including the acts and practices set forth in this Complaint. Defendant Low resides in this district and, in connection with the matters alleged herein, transacts or has transacted business in this district and throughout the United States.
1. 9. Since at least 2010, Defendants have advertised, marketed, and promoted various products to consumers throughout the United States, including the Acai Berry Products.
2. 10. Defendants promote these products through websites designed to look like news reports. The sites use domain names such as new6reports.com and consumerhealtwarning.com, and include titles such as News 6 Reports and Consumer News Reporter. The sites often include the names and logos of major broadcast and cable television networks, falsely representing that the reports on the sites have been seen on these networks.
3. 11. The sites purport to provide objective investigative reports authored by reporters or commentators typically pictured on the sites. The supposed authors of the reports claim to have tested the products on themselves and experienced dramatic and positive results. Following the reports are “responses” or “comments” that appear to be independent statements made by ordinary consumers.
4. 12. In fact, Defendants’ news reports are fake. Reporters or commentators pictured on the sites are fictional and never conducted the tests or experienced the results described in the reports. The “responses” and “comments” following the reports are simply additional advertising content, not independent statements from ordinary consumers.
5. 13. Defendants also promote products, including the Acai Berry Products, through websites designed to look like personal blogs. These sites use domain names such as stacysdietblog.com and lauraweightlossdiary.com and include headings such as “Stacy’s Workout – How I Lost 27 Pounds in 1 Month. . .” and “Laura’s Weight Loss Diary: ‘Here’s How I Lost 47 lbs of Stomach Fat in Just 2 Months With 2 Free Diet Products.’” The websites purport to be ordinary, independent consumers’ blogs describing personal experiences using the featured products and the positive results achieved.
6. 14. The sole purpose of Defendants’ websites is to promote the featured products on behalf of third-party merchants who then sell the products on other websites. Defendants’ promotional websites are designed to entice consumers to click on links that will transfer them to a merchant’s website. Defendants receive a commission or other payment for each consumer who clicks on a link and ultimately makes a purchase or signs up for a “free trial” on the merchant’s website. In this context, Defendants commonly are referred to as “affiliate marketers.”
7. 15. Defendants have failed to disclose in a clear and conspicuous manner that they are not objectively evaluating these products and, in fact, are being paid to promote the products. Defendants’ websites either fail entirely to disclose these facts, or fail to do so adequately. The relevant information, if disclosed at all, typically appears in small type at the bottom of the web page, following the fake consumer comments, well below the links to the products being sold.
16. In promoting products through their websites, Defendants also make deceptive claims about the products. Defendants have represented, for example, that the Acai Berry Products, either alone or in combination with a companion product, cause rapid and substantial weight loss. Defendants typically claim on their sites that reporters who tested the Acai Berry
Products, either alone or in combination with a companion product, on themselves lost twenty-five pounds in four weeks without any special diet or intense exercise.
8. 17. In truth and in fact, the Acai Berry Products, either alone or in combination with a companion product, do not cause rapid and substantial weight loss, nor do Defendants possess and rely upon a reasonable basis to substantiate representations that consumers who use the Acai Berry Products, either alone or in combination with a companion product, will rapidly lose a substantial amount of weight.