The marketers of supposed weight-loss supplements have settled charges by the U.S. Federal Trade Commission that they used illegal spam e-mail to market their products.
This was the first agency law enforcement action where FTC staff employed the U.S. Safe Web Act to share information with foreign partners. Passed by Congress last year, the law recognizes that spam, spyware and online fraud are increasingly global in nature, and it allows U.S. law enforcement agencies and the FTC to share information with investigators in other countries.
The FTC settlement with Spear Systems and company executives Bruce Parker and Lisa Kimsey requires the defendants to give up US$29,000 in ill-gotten gains, the FTC announced Tuesday. The settlement also bars the defendants from making false or unsubstantiated claims about health benefits of any supplements and bars them from violating the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, known as CAN-SPAM.
The FTC filed a lawsuit last October in U.S. District Court for the Northern District of Illinois, Eastern Division, against a group of defendants in the U.S., Canada and Australia. The FTC accused the defendants of using spammers to drive traffic to their Web sites, where they sold “bogus” weight-loss supplements. The defendants claimed that their “hoodia” products caused rapid, substantial and permanent weight loss, the FTC said.
The operation violated CAN-SPAM by sending commercial e-mail that contained false “from” addresses and deceptive subject lines and failed to provide opt-out links or a physical postal address, the FTC alleged.
The FTC litigation continues with another defendant, Xavier Ratelle, based in Quebec. In addition, 9151-1154 Quebec, doing business as Q Web; 9064-9252 Quebec; HBE; and Abaragidan Gnanendran have been added as defendants in an amended complaint. They are based in Quebec.