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Wednesday, February 26, 2014

FTC Files Complaint Against Apply Knowledge, YES International

The FTC announced on Monday that it has filed a complaint against Apply Knowledge, a work-from-home business opportunity that "conned millions of dollars from consumers by falsely telling them they could easily earn thousands of dollars a month by purchasing bogus business coaching services and establishing their own Internet businesses." The FTC noted that consumers who purchased the company's "product(s)" lost thousands if not tens of thousands of dollars.

From the FTC Press Release: "U.S. District Court for the District of Utah froze the assets of the defendants, who did business under a variety of names, including Essent Media, LLC, Net Training, LLC, YES International, Coaching Department, and Apply Knowledge, and appointed a temporary receiver to take control of the operations, pending the outcome of a preliminary injunction hearing set for March 20, 2014. The FTC seeks to put a permanent stop to the operations and return money to consumers."

According to the FTC’s complaint, the defendants’ websites told numerous false “rags to riches” stories, using photos – obtained from stock photo agencies – of supposed users of the defendants’ services, and made false and unsubstantiated claims about how much money consumers could earn.

ERSP had previously examined the advertising claims made by defendant YES International, pursuant to an anonymous consumer challenge (ERSP Case #311). In particular, ERSP reviewed earnings and testimonial claims that appeared on a variety of different lead-generation websites.

In examining the sites, ERSP noted that each site displayed at least four testimonials. However, the exact text of each testimonial appeared on multiple sites, attributed to different consumers. ERSP recommended that the marketer discontinue the use of such testimonials.

The company agreed to modify the claims at issue, and said it would provide an appropriate disclaimer on its website regarding the testimonials. Further, the company said, it “will strive to eliminate duplicate or replicated testimonials from any website it operates for the purpose of advertising its services and products, and to ensure that the testimonials are substantiated and do not overstate results from YES’ products and services.”

Tuesday, February 4, 2014

ERSP Finds Direct Digital Can Support Performance Claims for ‘Nugenix,’ Recommends Marketer Modify Certain Claims

The Electronic Retailing Self-Regulation Program (ERSP) has determined that Direct Digital, LLC can support certain claims for Nugenix, a dietary supplement intended to increase testosterone levels. ERSP recommended the advertiser discontinue claims related to increased “muscle mass.”

ERSP is an investigative unit of the advertising industry’s system of self-regulation and is administered by the Council of Better Business Bureaus. The marketer’s advertising came to the attention of ERSP pursuant to an anonymous competitive challenge.

ERSP reviewed online advertising for Nugenix and identified several claims for review, including:
  • “Helps increase testosterone”
  • “Helps increase libido and sexual performance
  • “Helps increase muscle mass”
  • “Helps increase energy”
  • Studies and tests show the main ingredient in Nugenix is effective”
  • Nugenix is the #1 bestselling men’s vitality product in GNC Stores in the Unites States for 2013 for a reason."
During the course of ERSP’s inquiry, the marketer said that it had voluntarily discontinued several claims cited by ERSP and had significantly revised its website. However, the marketer indicated it would continue to disseminate a number of core claims such as “helps increase free testosterone.”

The marketer also informed ERSP that it had discontinued any and all claims indicating that the product or its ingredients are “clinically proven” to provide the indicated benefits. The marketer also noted that it will discontinue claims relating to Tribulus terrestris.

As support for general performance claims made in the advertising, the marketer submitted a number of studies on the ingredients contained within Nugenix. ERSP found that the marketer could support general performance claims that Nugenix “helps increase” testosterone, libido, sexual performance, and energy.

However, after reviewing the evidence in the case record, ERSP determined that unqualified claims relating to increased muscle mass were not adequately supported.

ERSP found that the marketer provided a reasonable basis for claims regarding zinc, Vitamin B, and L-citrulline. ERSP further concluded that the evidence submitted supported claims that the product is “the #1 bestselling men’s vitality product in GNC Stores in the Unites States for 2013...

The company, in its marketer’s statement, said “While we disagree with ERSP’s conclusion that the claim “helps increase muscle mass” is not adequately qualified, with the goal of full cooperation with advertising self-regulation, we will take ERSP’s conclusion into account when developing future advertisements.  Direct Digital, LLC is committed to ensuring that its advertising is truthful, accurate, and substantiated, and we value and support industry self-regulation.”