Consumer News

Health Company Claimed Oprah Support, Settles Fraud Charges

An operation that marketed acai berry supplements, "colon cleansers," and other products using fraudulent free trial offers and phony endorsements from Oprah Winfrey and Rachael Ray will pay $1.5 million as part of a settlement for consumer refunds, the Federal Trade Commission said Monday.

The settlement against Phoenix-based Central Coast Nutraceuticals, Inc. protecting consumers from fraudulent internet marketing and false and misleading health claims bans the defendants from "negative-option" sales.

The FTC said that these include continuity plans and free or introductory price trial offers, in which consumers pay nothing up front or only a small fee to receive a product, but are then automatically charged a higher price unless they take steps to cancel the shipments, or return the product before the end of the trial period.

An FTC complaint in 2010 alleged that two individuals and five related companies claimed that their Acai Pure supplement would cause rapid and substantial weight loss, and that their Colotox colon cleanser would prevent colon cancer.

They also claimed that the consumer would be getting a “free” trial and full refunds upon request but the defendants allegedly repeated unauthorized charges to consumers' bank accounts.

The settlement includes an $80 million judgment, which represents the total amount of consumer injury caused by their scheme and a monetary judgment will be suspended when the FTC receives assets worth approximately $1.5 million from the defendants.

The FTC has banned the defendants from selling any products or services with a negative option feature, charging consumers credit cards without their consent, lying about celebrities who use their products, and all consumers must get a full refund if requested, along with other bans.

The defendants are also required to monitor the activities of any affiliate marketers selling products or services on their behalf.

According to the FTC, thousands of complaints came into law enforcement agencies and the Better Business Bureau about the company.

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