FTC goes after fake news ads on the Web

An example of what the FTC calls a fake news ad. Photo: From FTC court documents

The Federal Trade Commission has asked the federal courts to temporarily halt what it calls “allegedly deceptive tactics” of 10 operations using fake news websites to market acai berry weight-loss products.

The FTC seeks to permanently stop this misleading practice and has asked courts to freeze the operations’ assets pending trial.

Last fall,  I blogged about misleading ads in the Lawrence Journal World’s LJWorld.com online edition that appeared as legitimate news reports.

Now the Federal Trade Commission has asked the federal courts to temporarily halt the allegedly deceptive tactics of the companies using using the fake news websites to market acai berry weight-loss products.  The FTC seeks to permanently stop this misleading practice and has asked courts to freeze the operations’ assets pending trial.

Interestingly, when I checked today, I found at least one major daily newspaper, the Chicago Sun-Times, is running another version of those fake news ads which make claims about hometown moms pulling down thousands of dollars a month working from home.  Journalistically, this raises ethical questions so I called Sun-Times Managing Editor Andrew Herrmann today for comment.  He referred me to Sun-Times General Counsel Jim McDonough who emailed saying: “We are aware of this matter and we are investigating.” 

I responded to Mr. McDonough, asking when I might  to get a response regarding the Sun-Times use of third-party advertising on its web site. This evening, I received this reply from the Sun-Times counsel: “We will not make any further comments on this matter.” (More on that in a minute.)

Profit System Online is using an ad that masqueraded as a CNBC report .

The Lawrence Journal World pulled similar third-party web ads last fall that touted the virtues of signing-up for a so-called “Internet Income System.”  The misleading ads claimed it made one local mom $6,795 a month while working 10-13 hours a week from home.

I also found a similar  advertisement masquerading as a report featuring the logos for the financial and business news cable network CNBC.  I contacted CNBC about the fake CNBC report and was told-

“This company and its website have no affiliation with CNBC, and we are currently looking into this matter.”

From FTC court filing

Meanwhile in Chicago

The FTC announced legal action against third-party Internet marketers of acai berry weight-loss pills who may be using the same fake news websites to sell their products.

The acai berry comes from a species of palm native to Central and South America and has become a popular diet supplement in recent years.

According to the FTC,  millions of consumers are being lured to websites that imitate reputable news organizations whose “reporters” have supposedly done independent evaluations of acai berry supplements. The web sites claim the products cause major weight loss in a short period of time with no diet or exercise.

“In reality,” says the FTC, “the websites are deceptive advertisements placed by third-party or “affiliate” marketers.  The websites are aimed at enticing consumers to buy the featured acai berry weight-loss products. ”

More specifically, in a federal court filing in Seattle, Washington, the FTC wrote:

In fact, Defendant’s news reports are fake. The featured reporters on the sites are not
journalists and never conducted the research or experienced the results described in the report. The
“responses” and “comments” following the reports are simply additional advertising content, not
independent statements from ordinary consumers.

The influx of cases signals that the FTC views phony Web content as a serious problem, says Jeffrey Greenbaum, an expert in advertising law and a partner in Frankfurt Kurnit Klein & Selz.MediaPost reports:

The influx of cases signals that the FTC views phony Web content as a serious problem, says Jeffrey Greenbaum, an expert in advertising law and a partner in Frankfurt Kurnit Klein & Selz.

He adds that the FTC has a long history of criticizing deceptive formats in traditional media — such as infomercials that appear to be real news programs. A series of enforcement actions around 20 years ago resulted in consent decrees that require infomercials to include disclosures stating that they are paid ads.

“It’s even easier to create fake content online,” Greenbaum says, “and even harder for consumers to distinguish it.”

PaidContent.org reports:

The news sites claimed to feature “objective investigative reports,” but the FTC states in its lawsuits that the reporters were “fictional” and never did any tests with acai berry products at all.

The sites had names like consumernewspicks.com and Channel9NewsReport.com, and featured attractive news “reporters” …claiming they had tested the products themselves. But everything about the sites—the news reports, the reporters giving them, even the comments—is bogus, according to FTC court documents.

ConsumerAffairs.com adds:

The sites also allegedly use the names and logos of well-known broadcast and cable television networks, falsely representing that the reports on the sites have been seen on those networks, the FTC said.

I mentioned that the LJWorld.com website quickly pulled the misleading ads after I blogged about them last fall.  “We agree that this ad is misleading and unacceptable, and it has been removed from our site,”  Edwin Rothrock, director of marketing strategies for The  World Company said in a reply.

That’s still not the case for one (I suspect there are many more) other newspaper who risks its news credibility and the incomes of unsuspecting readers by running the fake ads.

The April 19 Chicago Sun-Times featured a series of banner ads at the bottom of the Herb Gould story about the Chicago Bulls play-off victory over the Indiana Pacers that link to two fake news sites. This one is for a fake publication called "Consumer Finance Reviews."

Case in point: Today’s Chicago Sun-Times. It featured a series of banner ads for at least two fake news sites at the bottom of Herb Gould’s sports story about the Chicago Bulls play-off victory over the Indiana Pacers.

Coincidentally, Chicago is where several of the FTC lawsuits have been filed  against the third-party Internet marketers the government claims are  using fake news ads to sell their products.

One of the Sun-Times ads clicks through to a website that masquerades as an investigative report by “Consumer Finance Reviews”  into an out-of-work mom who turned $47 into

The Chicago Sun-Times featured another banner ad for a fake news sites at the bottom of the Herb Gould story about the Monday Chicago Bulls play-off victory over the Indiana Pacers. This one was links to a fake online news service called "World3NEWS.com."

$6,795 by using an online work at home program.

The other Sun-Times ad takes you to what appears to be a report by an online news operation called  World3NEWS.com.  The so-called news report features a Lincoln, Neb. mom who also knocks down $6,795 a month by belonging to a paid survey club called Survey Revenue System.

I’ll be curious to see if the FTC’s action will shut down such misleading advertising for good. More realistically, the FTC’s action may slow down the ads pretending to dispense factual information produced by legitimate news organizations.

This is where I get preachy:  Newspapers and other news organizations who run fake news online ads should pay closer attention. After all, they are paid by these unscrupulous merchants to run the ads; the same merchants post misleading ads on news organization websites knowing they drive customer traffic to their fake news sites. The fake news sites then link to the sites where the merchants sell their questionable products.

Newspapers and other news organizations have an ethical responsibility to their readers and viewers to make sure no misleading third-party advertising appear on their websites. The Society of Professional Journalists Code of Ethics spells it out:

Journalists should — Distinguish news from advertising and shun hybrids that blur the lines between the two.

False and/or misleading advertising is not good for news customers who depend on fact-based information. It’s not good for the news organization’s own legitimate news gathering reputation.

The FTC will ask the courts to permanently bar the allegedly deceptive claims, and to require the companies to provide money for refunds to consumers who purchased the supplements and other products.  The FTC charges that the defendants:

  • make false and unsupported claims that acai berry supplements will cause rapid and substantial weight loss;
  • deceptively represent that:
    • their websites are objective news reports;
    • independent tests demonstrate the effectiveness of the product, and
    • comments following the “articles” on their websites reflect the views of independent consumers; and
  • fail to disclose their financial relationships to the merchants selling the products.

The Federal Trade Commission has a new consumer alert to help consumers recognize and avoid deceptive claims made by fake news sites that market acai berries for weight loss.  It also has a new video detailing the risks of free trials, which often are used to market acai berry supplements and other products.

Thanks to PaidContent.org,  the five lawsuits are listed and linked below. Except for the Vaughn suit, all were filed in Chicago federal court.

»  FTC v. Ricardo Jose Labra. [PDF] The defendant is accused of running fake news sites like consumernewspick.com and theconsumerweeklydigest.com, which ran fake news reports and used the logos of major broadcast and TV networks. Labra is also accused of promoting products through fake blogs like kristingotskinny.com

»  FTC v. Ambervine Marketing et al. [PDF] This lawsuit says that Ambervine and another company, Encastle, were run out of Minnesota by Zachary S. Graham, who ran fake news sites including usahealthnewstoday.com and usahealthreportstoday.com, which he called USA Health News.

»  FTC v. Beony International LLC et al. [PDF] FTC lawyers state that Beony was run out of San Diego by Mario Milanovic, who ran sites like channel6reports.com, healthnews10.com, and consumertipsdaily6.com.

»  FTC v. IMM Interactive, Inc. [PDF] IMM is located in Woodbury, New York, and hosted fake sites including channel2local.com, channel9healthbeat.com and news4daily.com. The sites used the logos of major TV networks and had names like “News 4 Daily.”

»  FTC v. Tanner Garrett Vaughn [PDF] Filed in Seattle. Vaughn ran websites including BreakingNewsAt6.com and Channel9NewsReports.com.

What are your thoughts on these deceptive online ads? Give us your comments. We’d like to know if you think this form of advertising is fair and honest.