It might be the ad that ate the Internet.
"1 Tip for a Tiny Belly" reads the headline, rendered in whatappears to be hand-lettered type and positioned above a crudelyanimated drawing of a woman's bare midriff. Try as you might toconcentrate on something else, the midriff distracts your eye byshrinking and reinflating - flabby to svelte, svelte to flabby.
"Cut down a bit of your belly everyday by following this 1 weirdold tip," it reads. The "weird old tip" is revealed only after youabandon what you were reading and click on the ad.
For months, versions of the ad have been just about everywhere.They have run as pop-ups and display ads on some of the most popularWeb sites around, including Facebook, Weather.com and About.com.They have also shown up on the home pages of news organizations suchas the Los Angeles Times, MSNBC, The Washington Post and theGuardian newspaper in Britain.
The ad is so broadly distributed that it's likely you've seen itnot just once or twice but hundreds of times. The accumulated numberof "impressions" - the number of times it has flashed by someone onthe Internet over the past 18 months- runs into "the tens ofbillions," estimates Steve Wernikoff, a government lawyer who hastracked it. "It's just a tremendous amount."
The innocent-seeming "1 Tip" ad is actually the tip of somethingmuch larger: a vast array of diet and weight-loss companies hawkingeverything from pills made from African mangoes to potions made fromexotic acai berries. Federal officials have alleged that thecompanies behind the ads make inflated claims about their productsand use deceptive means to market them.
The take so far: at least $1 billion and counting.
The "1 Tip" ads are the work of armies of "affiliates,"independent promoters who place them on behalf of small diet-product sellers with names such as HCG Ultra Lean Plus. Thepromoters profit each time someone clicks through to the productseller's site and orders a free sample. The sample, however, isn'talways so free.
In lawsuits filed over the past year, the Federal TradeCommission has alleged that the ads are the leading edge of whatamounts to a three-step scheme that has conned millions of people.
Much like a barker outside a carnival tent, "1 Tip" is merely acome-on, a lure to start the process. People who click on the ad aredirected to a second site, which looks like a diet or health-newspage. The sites go by names such as Consumeronlinetips.com andWeeklyhealthnews.com.
The sites typically feature an article in which an attractiveyoung TV reporter "investigates" the benefits of a diet involving aseries of products. Sometimes the products are made from mangoes oracai berries, a fruit grown in South and Central America. In othercases, the products come from human chorionic gonadotropin (hCG), ahormone produced by developing embryos and the pituitary gland.
"We here at Channel 7 are a little skeptical" of the hCG diet,reads the copy at Consumeronlinetips.com. "So we decided to putthese products to the test."
In each case, the sites carry favorable blurbs about the dietfrom well-known news organizations such as ABC, CNN and USA Today,along with brief, laudatory "reader comments."
"I saw this report on TV the other day and was amazed at theresults," reads one. "I am getting married next month so the timingcouldn't have been better!!"
The pages have links that lead to a third site, where consumerscan use a credit or debit card to order "trial" samples of thefeatured products.
Almost everything about these would-be news sites is bogus, thefederal government contends. It has said that the offer of free orlow-cost samples is a scheme to capture consumers' credit cardnumbers, leading to thousands of complaints about unauthorizedcharges.
In an action aimed at Internet promoters of acai berry productsin April, the FTC filed 10 lawsuits against some of the companiesand individuals behind the ads. The agency's allegations are nearlyidentical in each case: that sites such as Consumeronlinetips.comaren't legitimate news organizations, that the defendants can'tsubstantiate the claims of dramatic weight loss ("25 pounds in onlyfour weeks!") and that the sites' operators don't disclose that theyhave financial ties to the diet-product merchants they're linkingto.
Although the promoters are apparently unconnected to one another,their sites are remarkably similar. All use what the FTC contendsare fake articles. Several used the photo of the reporter supposedlyinvestigating the diet. The woman identified as "reporter JuliaMiller" on some of the sites is actually a French newscaster,Melissa Theuriau, who has said she was unaware that her image wasbeing used this way. The endorsements from the real newsorganizations, such as CNN or ABC, are a sham, too, the governmentsays.
The promoters use the same formula, and sometimes the exact samead, "because it's cheap," said David O'Toole, an FTC lawyer who hasbeen involved in the agency's crackdown. "They don't have to createa new ad from whole cloth. It's easy to use it again and againbecause it keeps costs down. And it works."
The Web site operators are known as affiliate marketers becausethey're allied with, but independent of, the merchants whoseproducts they're promoting. The relationship works like this: Theaffiliates seed the Internet with the "1 Tip" ad and put up thetestimonial Web sites with their own funds. When a would-be customerclicks the links on the affiliate site and orders products from themerchant's site, the affiliate receives a cut of the purchase. Thepayment varies from company to company, but FTC investigators foundevidence that it can be as much as $30 per order.
One of the companies the government sued, IMM Interactive of LongIsland, spent more than $1.3 million last year to place "flat belly"ads, which generated more than a billion impressions, according tothe lawsuit. Thanks to all those impressions, more than a millionpeople took the plunge and clicked on the ad, the agency said.
IMM denied almost all of the FTC's allegations in a court filingJune 13. But it conceded that "defendant does not have sufficientinformation to admit or deny whether the individuals identified onsome of the web pages who claim to have tested the products onthemselves and experienced positive results actually tested theproducts and experienced such results."
The company hedged even further in the fine print of one of itsnewslike Web sites, which is cited in the FTC complaint, saying,"This website, and any page on the website, is based loosely off atrue story, but has been modified in multiple ways including, butnot limited to: the story, the photos, and the comments. Thus, thispage, and any page on this website, are not be taken literally or asa non-fiction story."
IMM's attorney, Mark L. Rosenberg, declined to comment.
Another defendant, Ricardo Jose Labra of Grand Rapids, Mich.,began as an affiliate marketer about May 2009, when he startedregistering domain names and paying for them with his personalcredit card, the government says.
Labra eventually spent $778,000 over 18 months for ads,attracting more than 700,000 consumers to sites promoting acai berryproducts. Labra "has almost certainly received multiple times thatamount in ill-gotten commissions from this scheme," the government'scomplaint says.
Tom Cohn, a former FTC attorney who represents Labra and anotheraffiliate sued by the agency, also declined to comment.
The FTC says that none of the Web sites can back up their weight-loss claims. But the real heart of the scam, it says, is the offerof a"free" sample. In fact, the Web sites disclose only in fineprint that a consumer who hands over a credit card number is signingup for much more.
Someone who orders a sample offered by one hCG marketer, forexample, is technically agreeing to pay an additional $79.99 foranother shipment of the product two weeks later, and another $79.99six weeks after that, according to the disclaimer. The charges andthe product keep coming until the buyer calls a toll-free number tocancel.
But that's easier said than done, investigators found. Cancelingoften involved time-consuming phone calls and frequent hang-ups thatleft customers frustrated and angry, the agency said. In themeantime, the charges continued to roll on.
Collectively, the 10 cases brought by the FTC help explain theubiquity of the "1 Tip" ad. All told, the affiliate companies suedby the FTC spent more than $10 million buying Internet ads to pushacai berry diet products, the government estimates.
But that's just a fraction of the "1 Tip" phenomenon. The adshaven't gone away, despite the government's "sweep" of acai berrypromoters this spring. Dozens of other affiliate marketers still usethe same formula - the teaser ad, the newslike Web sites, the free-sample offer - to tout hCG and African mango diets. To date, the FTChasn't taken action against them.
"There are certainly many more of these out there," acknowledgesthe FTC's Wernikoff. "It looks like [other marketers] didn't get thememo."
FTC officials don't know how much money has been spent onproducts advertised in this fashion, but there are indications thatit could easily exceed $1 billion.
In May, the agency filed suit against a Canadian Web siteoperator, Jesse Willms, who used the same formula allegedly togenerate about $460 million from people in five countries, includingthe United States.
Willms's Web sites allegedly charged people for a variety ofproducts - acai berry supplements, teeth whiteners, work-at-homebusiness opportunities - that they never ordered, according to thesuit, which seeks repayment. Willms has denied the allegations: "Ourcompanies give consumers the opportunity to buy a variety ofproducts and services at significant savings," he wrote on one ofhis Web sites.
Last year, the FTC filed a separate lawsuit against Central CoastNutraceuticals, a Phoenix-based company that allegedly used boguscelebrity endorsements to sell more than $100 million worth of acaiberry diet pills and "colon cleansers." In that case, Oprah Winfreyand Rachael Ray filed statements with the court denying they'd everendorsed the products, despite representations to the contrary onCentral's Web sites. The government won a temporary restrainingorder that froze Central's assets and effectively put it out ofbusiness last summer; the litigation is ongoing.
In all of the cases, news sites such as MSNBC andwashingtonpost.com appear to be passive hosts of the "flat belly"ads. The ads are "served" to the news sites and thousands of othersby ad networks, including those operated by Google and Pulse360,based in New York. The "host" sites, in turn, receive a commissionfor being part of the network or when their visitors click on one ofthe network-fed ads.
Google feeds hundreds of ads to host sites every day and says itcan't be sure it has eliminated all that might be suspect. "We areconstantly improving and investing in our system to detect bad ads,but occasionally one will bypass our systems," said Andrea Faville,a spokeswoman for the company. "We take action as soon as wediscover ads that violate our policies to remove them and preventthem from being shown in the future."
Pulse360's representatives did not respond to requests forcomment.
A spokeswoman for The Post, which has run the ad on its Web siteafter it was distributed by the ad network, said the newspaper is"reviewing the situation."
As a practical matter, the FTC's Wernikoff said that some of "1Tip's" drawing power can be attributed to its appearance on Websites belonging to real news organizations. Seeing it on the Website of a credible news site gives consumers the false confidencethat they're not being tricked, he said.
Promoters "have created the impression of objectivity," he said."Consumers start off believing they're getting objective newsreports about these products when, in fact, it's all fake. Peoplereally were confused."
No comments:
Post a Comment