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The Federal Trade Commission Keeps a Watchful Eye on Internet Affiliate Marketers

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The Federal Trade Commission (“FTC”) announced settlement yesterday with an online marketer accused of using fake news sites to entice customers to buy acai berry weight-loss products and colon cleansers.  The settlement was the latest in a string of FTC actions aimed at Internet affiliate marketers using fake web sites to make weight-loss claims.

Clickbooth, a web marketing company based in Sarasota, Florida, has agreed to a $2 million settlement with the FTC over allegations that it knowingly supported false and unsubstantiated claims on fake news sites.

The FTC alleged that Clickbooth and its affiliate marketers designed websites that falsely appeared as if they were part of legitimate news organizations.  According to the FTC, the websites “often included the names and logos of major broadcast and cable television networks, falsely representing that the reports on the sites had been seen on the networks.”  The websites featured investigative-sounding headlines that ostensibly documented reporters’ first-hand experiences with the weight-loss products, including one titled “1 Trick of a Tiny Belly: Reporter Loses her ‘Belly’ using 1 Easy Tip.”

The settlement agreement bars Clickbooth from a wide range of deceptive advertising practices and also requires Clickbooth and its affiliates to make clear that their messages are advertisements and not objective journalism.

The Clickbooth settlement reflects the FTC’s ongoing efforts to curb the use of fake news sites promoting weight-loss products, work-at-home schemes, and penny auctions.  In its initial sweep of internet affiliate marketing, the FTC brought action against ten companies using fake news sites and announced settlement with nine of those companies in January, March, and October 2012.  The recent settlement with Clickbooth indicates that the FTC continues to keep a watchful eye on the use of fake news sites by Internet affiliate marketers.