If you are infuriated by the avalanche of fake ads on whatever digital platform you are using, you should celebrate this week’s Federal Trade Commission (“FTC”) action against a particularly egregious group of defendants at the head of a large network of online marketers. These charlatans were selling skin creams, weight loss products, libido enhancers and muscle building supplements using deceptive practices and, as a result, the court imposed a $179 million dollar judgment against them which is partially suspended. According to the FTC, the government agency that promotes competition and protects consumers by stopping unfair, deceptive, or fraudulent practices in the marketplace, this is the amount they stole from consumers over a five-year period. The terms of the judgment and settlement prohibit the defendants from using the deceptive marketing tactics that they used to promote their products and bans them in part from future “free trial” sales techniques that automatically send and bill products to consumers. The action sends a clear message to creators of fake advertisements that our government is finally paying attention to their dastardly acts.
We are no strangers to the three men who are the subject of this FTC action. The defendants Richard Fowler, Ryan Fowler, and Nathan Martinez ran a company called Tarr, Inc., and 3 years ago we linked them to scam ads for weight loss products using my name, likeness, and clips from “The Dr. Oz Show”. I went so far as to track them down to their San Diego headquarters, knock on their door, and demand them to stop. We fully cooperated with the FTC and shared the results of our investigation with the FTC, who separately brought this major action against this company.
We’ve done similar investigations with others, like “Shark Tank” Shark, Barbara Corcoran, who busted into another San Diego company at the root of advertisements using her image to sell face cream. But finding these perpetrators is extremely difficult as they are often cloaked behind a wall of shell companies and anonymous registrations. Major web search companies protect the identities of these companies as part of their business practices and prevent private citizens from finding the culprits. Even when you are able to track down and shutter a scammer, another literally pops up minutes later online.
This is not just about selling fake and potentially dangerous products by pretending they are sold by your favorite celebrity. The lack of legal enforcement of fake advertisements led directly to the even more destructive web trend of fake news. Just in case you erroneously believe fake news is all about political agendas, let’s be clear, this trend is primarily about the money. Fake news pieces are designed to stimulate clicks which lead to sales of all kinds of products. This was well illustrated by the notorious fake news creator Jestin Coler, who was originally tracked down by NPR Reporter Laura Sydell and cyber sleuth John Jansen, and who appeared on “The Dr. Oz Show.” Ironically, self-described liberal Coler crafted fake news stories attacking Secretary of State Hilary Clinton because right leaning individuals click more often on fake pieces then liberals. He only cared about the money, not the politics. The resulting fake news pieces affect our brains by activating areas associated with our sense of self and emotions, so we are less able to make rational decisions.
While we continuously warn our viewers about these illegal product ads, many people still fall victim to these dubious sites because these scams look legitimate and frequently offer “free trials” only to continuously bill your credit cards for hundreds of dollars for fake and potentially harmful products. I’ve been fighting this battle since my days on the Oprah Winfrey show over 10 years ago. Our aggressive legal efforts to thwart these advertisers led to no meaningful financial penalties due to the balkanized and covert structure of the illegal ad system, so this FTC ruling is a remarkable endorsement of our arguments. (We discussed this in detail last year.)
But unless the FTC continues to enforce the law and the large search engines and social media companies start policing the scams that appear on their pages and pass through their servers, this problem will continue to grow. We are also calling on the marketing industry to stop those individuals that give legitimate marketers a bad name. However, until the Internet neighborhood is cleaned up, you are still mostly on your own. So, beware of any ads with pictures of influential celebrities selling dubious products, and ads that make big promises and offer “free trials”. Remember the old saying, “If it sounds too good to be true, it probably is”.