At the request of the Federal Trade Commission, a federal judge in Illinois has frozen the assets of online marketers who allegedly tricked Web users into purchasing monthly supplies of herbal supplement acai berry.
The marketers -- Phoenix, Ariz.-based Central Coast Nutraceuticals and other related companies -- allegedly promised users "free" trials of products like "AcaiPure" in exchange for a small shipping fee. Ads promoting the supposed weight-loss supplement also falsely said that celebrities Rachel Ray and Oprah Winfrey endorsed the products, according to the FTC.
In addition to ordering an asset freeze, U.S. District Court Judge Charles Norgle directed the marketers to immediately stop telling consumers they can receive the products for a nominal fee, to refund money to consumers who requested refunds, and to stop using phony celebrity endorsements.
The FTC alleged in its lawsuit against the marketers "deceived consumers across the country out of tens of millions of dollars" by offering a "risk-free" 30-day supply of products for a shipping fee of just $4.95, but then enrolling consumers in a monthly membership program that charges up to $64.90 a month.
"In many instances, consumers have first become aware of their enrollment ... when they have received their second shipment," the FTC alleges. "By this time, Defendants already have charged consumers not only for the allegedly 'free' or 'risk free' trial shipment, but also for this second shipment."
The FTC additionally alleged that the defendants made it difficult for consumers to cancel their subscriptions. Further, according to the FTC, the defendants wrongly promised that their product could cause fast weight loss.
Late last year, the FTC also announced an enforcement action against a Web company that allegedly promised users "free" trials only to enroll them in pricey hard-to-cancel subscriptions. That billing model, called a "continuity plan" or "negative option plan," has come under attack by consumer groups who allege that companies are misleading online users.