Coleadium, Inc.

The network, not just the sites

Coleadium, a California company trading as Ads4Dough, sat between online merchants selling purported weight loss products and the affiliate marketers who promoted them. According to the FTC, it assembled the network, approved affiliates to market the products, monitored the traffic they generated through fake news sites, and paid them commissions on that traffic.

The products included the acai supplements AcaiOptimum, AcaiBurn-Force Max, Acai Tropic, Acai Fit and Acai Elite Blast, and the colon cleansers Natura Cleanse, Smart Colon Flush, Advanced Colon Max and Colo Flush.

What the FTC alleged, through its affiliates

That the network made false or unsupported claims of rapid and substantial weight loss, including as much as 25 pounds in four weeks. That it falsely presented stories on fake news sites as objective reporting by real journalists who had independently tested the products, and the comments beneath them as the views of independent consumers. That it failed to disclose the content was written by affiliate marketers paid by the merchants. And that it failed to disclose that consumers taking a “free trial” who did not return the product and cancel quickly would be charged and shipped more on a recurring basis.

The settlement

The defendants pay $1 million and are barred from deceptive weight loss and health claims, from failing to disclose a material connection between a marketer and an endorser, and from presenting paid advertising as journalism.

The order also makes the network responsible for its affiliates: it must vet who it hires, give them a copy of the order, monitor their advertising, approve it, immediately stop processing payments generated by any deceptive ad, and terminate the marketer responsible.

What is not established

The consent decree is for settlement purposes only and is not an admission that the law was violated.