The FTC has announced a $1.3 million settlement with Copeac. The settlement figure is derived from the monies allegedly made by Copeac from "deceptive fake news site ads for acai berries, colon cleansers, and other supposed weight-loss dietary supplements; and revenues they received for other products marketed on fake news sites."
The FTC shut down 10 fake news operations last year claiming that the websites were designed to look like real news outlets but were instead, "nothing more than advertisements deceptively enticing consumers to buy the featured acai berry weight-loss products from online merchants."
The settlement is with Intermark Communications, Inc. DBA Copeac, and is the result of the FTC’s first suit against an affiliate network:
As an affiliate network, Copeac not only operated its own fake news sites, it also recruited an entire network of affiliates that used fake news sites to promote products with allegedly deceptive claims. The FTC’s original complaint against the New York-based Copeac was part of a law enforcement sweep the agency conducted last year against 10 alleged operators of fake news sites. The FTC charged all of them with deceptive advertising for portraying the sites as legitimate news sites; making false and unsupported weight-loss claims; and failing to disclose that they were being paid by the merchants of their so-called weight-loss products. In settling with the Copeac defendants, the FTC amended its complaint by adding allegations that the operation developed an affiliate network, and by adding three individual defendants.
The FTC’s announcement goes into some depth as to how exactly the fake news sites worked:
With titles such as “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News,” the sites often falsely represented that the reports they carried had been seen on major media outlets such as ABC, Fox News, CBS, CNN, USA Today, and Consumer Reports. Investigative-sounding headlines presented stories that purported to document a reporter’s first-hand experience with acai berry supplements – typically claiming to have lost 25 pounds in four weeks, according to the FTC complaints. In pitching the acai weight-loss products, the defendants posted attention-grabbing ads on search engines and high volume websites, such as “Acai Berry EXPOSED – Health Reporter Discovers the Shocking Truth,” driving traffic to the fake news sites and ultimately to the sites where merchants sell the products, according to the complaints. The FTC received numerous complaints from consumers who paid between $70 and $100 for weight-loss products after having been deceived by fake news sites.
It should be noted that these settlements by consent decrees have the force of law but do not constitute an admission by the defendant that the law has been violated.